Question

620_ch03_p3-25 handout-1.xlsx - Excel ? - S FILE o UT = HOMEINSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign in A X fr Foxx acquired all of Greenburg's outstanding stock on January 1, 20x1, for $600,000 cash. On that date, Greenburg's net assets had a book value of $470,000, although B F G H J K L M Foxx acquired all of Greenburg's outstanding stock on January 1, 20X1, for $600,000 cash. On that date, Greenburg's net assets had a book value of $470,000, although equipment with a 10-year remaining life was undervalued by $90,000. Greenburg reported net income of $90,000 in 20X1 and $100,000 in 20X2, while paying dividends of $20,000 in each year. Foxx Company and Greenburg Company Consolidated Worksheet For Year Ending December 31, 20X3 Investment Method: Equity Method Acquisition Date: January 1, 20X1 Foxx Greenburg Consolidation Entries Consolidated Accounts Parent Subsidiary Debit Credit Totals Income Statement Revenues (800,000) $ (600,000) Cost of Goods Sold 100,000 150,000 Depreciation Expense 300,000 350,000 Investment Income (91,000)| Net Income (491,000) (100,000) 8 Statement of Retained Earnings Retained Earnings, 1/1/20X3 Net Income (from above) Dividends Paid Retained Earnings, 12/31/20X3 (1,232,000) (491,000) 120,000 (1,603,000) (320,000) (100,000) 20,000 (400,000) 24 + Balance Sheet P3-25 Equity Method 000001 READY J - + 100% 12:11 PM 1 2 0 e Ô 9 x]

Answer 1

Foxx Company and Greenburg Company Consolidated Worksheet For Year Ending December 31, 20X3 Foxx Greenburg Consolidation Entries Parent Subsidiary Debit Credit Consolidated Totals Accounts Income statement Revenues Cost of goods sold Depreciation expense Investment Income Net Income (800,000) 100,000 300,000 (91,000) (491,000) (600,000) 150,000 350,000 - (100,000) (1,400,000) 250,000 659,000 (E) (0) 9,000 91,000 (491,000) 320,000 Statement of Retained earnings Retained earnings, 1/1/20X3 Net Income (from above) Dividends paid Retained earnings, 12/31/20X3 (1,232,000) (491,000) 120,000 (1,603,000) (320,000) (S) (100,000) 20,000 (400,000) (1,232,000) (491,000) 120,000 (1,603,000) 20,000 (A) 72,000 (E) 9,000 Balance Sheet Current assets Equipment (net) Buildings (net) Land Investment in Subsidiary 300,000 900,000 800,000 600,000 803,000 100,000 600,000 400,000 100,000 400,000 1,563,000 1,200,000 700,000 (D) 20,000 (S) (1) (A) 620,000 91,000 112,000 (A) 40,000 Goodwill Total Assets - 1,200,000 40,000 3,903,000 3,403,000

300,000 Liabilities Common stock Retained earnings 12/31/20X3 (from above) Total Liabilities and stockholders' Equity (900,000) (900,000) (1,603,000) (3,403,000) (500,000) (300,000) (S) (400,000) (1,200,000) (1,400,000) (900,000) (1,603,000) (3,903,000) 852,000 852,000 Working Notes: Acquisition Analysis Acquisition price paid less: Net Book value of subsidiary Excess of fair value over book value 600,000 (470,000) 130,000 Allocation of excess value Life [B] Amortization per year [A/B] 9,000 Initial Value 1/1/20X1 90,000 40,000 130,000 Equipment Goodwill (130,000 - 90,000) Total 0 9,000 Value of Unamortized assets as on 1/1/20X3 Equipment as on 01/01/20X1 on 20X1 Less: Depreciation on 20X1 Less: Depreciation on 20X2 Equipment as on 01/01/20X3 90,000 (9,000) (9,000) 72,000 Entry (S) to eliminate the subsidiary stockholders' equity Entry (1) to eliminate the investment income Entry (A) to record unamortized excess value of assets as on 01/01/20X3 Entry (D) to eliminate the intra company dividend Entry (E) to record the depreciation expense on excess value