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Tyler Company acquired all of Jasmine Companys outstanding stock on January 1, 2016, for $269,500 in cash. Jasmine had a book value of only $188,500 on that date. However, equipment (having an eight-year remaining life) was undervalued by $56,800 on Jasmines financial records. A building with a 20-year remaining life was overvalued by $13,600. Subsequent to the acquisition, Jasmine reported the following: Dividends Net Income Declared 2016 2017 2018 $75,300 64,500 34,800 $10,000 40,000 20,000 In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow: Tyler Company Jasmine Company Revenues-operating Expenses Equipment (net) Buildings (net) Common stock Retained earnings, 12/31/18 (352,000) $(198,000) 210,00 502,000 278,00 (290,000) 88,500 58,000 69,900 (77,100) (414,000) 187,000) Determine the following account balances as of December 31, 2018: a. Investment in Jasmine Company b. Equity in Subsidiary Eanings c. Consolidated Net Income d. Consolidated Equipment (net) e. Consolidated Buildings (net) f Consolidated Goodwill (net) g. Consolidated Common Stock h. Consolidated Retained Earnings

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Answer #1
a.
Acquistion date fair value 269500
book value of jasmine -188500
Fair value in excess of book value 81000
Excess fair value assigned to specific
accounts based on individual fair values Life Annual amortization
Equipment 56800 8 years 7100
Buidlings(overvalued) -13600 20 years -680
Goodwill 37800 indefinite 6420
Investment in Jasmine
Jasmine acquisition date fair value 269500
Increase in equity income-2016
(75300-10000) 65300
Excess amortization -6420
Increase in equity income-2017
(64500-40000) 24500
Excess amortization -6420
Increase in equity income-2018
(34800-20000) 14800
Excess amortization -6420
Investment in Jasmine 354840
b.
Income accrual 34800
Excess amortization -6420
Equity in subsidiary earnings 28380
c.
Consolidated revenues(add book values) 550000
Consolidated expenses(add book values) -298500
Excess amortization expenses -6420
Consolidated net income 245080
d.
Book values asses together 560000
Allocation of excess 56800
excess depriciation(7100 * 3years) -21300
consolidated equipment 595500
e.
Book values asses together 347900
Allocation of excess -13600
excess depriciation(680 * 3years) 2040
consolidated buildings 336340
f.
goodwill 37800
g.
consolidated common stock 290000
only parents balance is showed
h.
Consolidared retained earnings 414000
again only tyler balance is showed as
equity method is used
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