Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $280,200 in...
Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $280,200 in cash. Jasmine had a book value of only $199,400 on that date. However, equipment (having an eight-year remaining life) was undervalued by $56,000 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $15,900. Subsequent to the acquisition, Jasmine reported the following:
| Net Income | Dividends Declared | |||||
| 2016 | $ | 79,800 | $ | 10,000 | ||
| 2017 | 64,200 | 40,000 | ||||
| 2018 | 42,200 | 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 | $ | (442,000 | ) | $ | (167,000 | ) | |
| Expenses | 234,000 | 124,800 | |||||
| Equipment (net) | 398,000 | 57,000 | |||||
| Buildings (net) | 286,000 | 70,500 | |||||
| Common stock | (290,000 | ) | (57,600 | ) | |||
| Retained earnings, 12/31/18 | (586,000 | ) | (226,000 | ) | |||
Determine the following account balances as of December 31, 2018:
| a. | Investment in Jasmine Company | |
| b. | Equity in Subsidiary Earnings | |
| c. | Consolidated Net Income | |
| d. | Consolidated Equipment (net) | |
| e. | Consolidated Buildings (net) | |
| f. | Consolidated Goodwill (net) | |
| g. | Consolidated Common Stock | |
| h. | Consolidated Retained Earnings, 12/31/18 |
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Tyler Company acquired all of Jasmine Company’s outstanding
stock on January 1, 2016, for $280,200 in...
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