Question

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

BALANCE SHEETS
December 31, 2020
	Patrick		Sean
Cash	$	78,000	$	66,000
Accounts receivable (net)		130,000		38,000
Inventories		88,000		72,000
Plant and equipment (net)		632,000		276,000
Investment in Sean		464,000		-
Total assets	$	1,392,000	$	452,000
Accounts payable		152,000		94,000
Long-term debt		116,000		32,000
Common stock ($10 par)		320,000		54,000
Additional paid-in capital				8,000
Retained earnings		804,000		264,000
Total liabilities and shareholders' equity	$	1,392,000	$	452,000

Additional Information:

• On December 31, 2020, Patrick acquired 100 percent of Sean’s voting stock in exchange for $464,000.
• 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 $24,000 more than their carrying amounts.

In the December 31, 2020, consolidated balance sheet of Patrick and its subsidiary, what amount of total assets should be reported?

Multiple Choice

• $1,518,000

• $1,982,000

• $1,392,000

• $1,372,000

Answer 1

Assets	Consolidated Amounts
Cash ( $ 78,000 + $ 66,000 )	$ 144,000
Accounts Receivable ( $ 130,000 + $ 38,000 )	$ 168,000
Inventories ( $ 88,000 + $ 72,000 + $ 24,000 )	$ 184,000
Plant and equipment ( $ 632,000 + $ 276,000 )	$ 908,000
Goodwill - Workings :	$ 114,000
Total amount of total assets should be reported	$ 1,518,000
Option (a ) is Correct

Workings :
Particulars	Amount (in $ )
Cash	$ 66,000
Acounts Receivable	$ 38,000
Inventories ( $ 72,000 + $ 24,000 )	$ 96,000
Plant and equipment	$ 276,000
Total Assets	$ 476,000
Particulars	Amount (in $ )
Accounts payable	$ 94,000
Long-term debt	$ 32,000
Total Liabilities	$ 126,000
Assest Acquired          = $ 476,000 (-) $ 126,000 )	$ 350,000
Goodwill             = Acquisition Cost (-) Assets Acquired             =    $ 464,000 (-) $ 350,000 )	$ 114,000