Question

Required information Use the following information to answer questions 19-20 [The following information applies to the...

Required information

Use the following information to answer questions 19-20

[The following information applies to the questions displayed below.]

The separate condensed balance sheets of Patrick Corporation and its wholly owned subsidiary, Sean Corporation, are as follows:

BALANCE SHEETS
December 31, 2017
Patrick Sean
Cash $ 74,000 $ 52,000
Accounts receivable (net) 130,000 40,000
Inventories 86,000 72,000
Plant and equipment (net) 622,000 278,000
Investment in Sean 468,000 -
Total assets $ 1,380,000 $ 442,000
Accounts payable 156,000 84,000
Long-term debt 116,000 20,000
Common stock ($10 par) 308,000 44,000
Additional paid-in capital 10,000
Retained earnings 800,000 284,000
Total liabilities and shareholders' equity $ 1,380,000 $ 442,000

Additional Information:

  • On December 31, 2017, Patrick acquired 100 percent of Sean’s voting stock in exchange for $468,000.
  • At the acquisition date, the fair values of Sean’s assets and liabilities equaled their carrying amounts, respectively, except that the fair value of certain items in Sean’s inventory were $22,000 more than their carrying amounts.

Problem 2-20 (LO 2-4, 2-5)

In the December 31, 2017, consolidated balance sheet of Patrick and its subsidiary, what amount of total stockholders’ equity should be reported?

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Answer #1

In the consolidated balance sheet of 31 Dec. 2017, Total amount of stockholders' equity will be same that of parent company i.e. Patrick's amounting to $ 800,000+308,000 = 11,08,000.

Common stock, additional paid in capital and retained earnings of Sean will be eliminated as a part of consolidation procedures.

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