Question

Arrange Padre, Inc, buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $796,960 cash. At the acquisition date, Sierra's total fair value. Including the noncontrolling interest was assessed et $996,200 although Sierra's book value was only $623.000. Also, several individual items on Sierra's financial records had fair values thot differed from their book values as follows: Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) Book Value Fair value s60,600 286,600 322,000 322,000 32,000) (116,800) 340,000 172,000 For intermal reporting purposes, Padre, Inc, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies. Sierra Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra (1,396,980) 736,900 298,000 (657,250) 399,000 15,100 8,600 5, 550 50,100 Net income Retained earnings, 1/1/18 Net incone Dividends declared (499,000) (1,380,000) (490,000) 260,000 (1,610,000) (229,e00) (463,000) (229,000) 65,009 854,920569, 100 60,600 % (627,000) Retained earnings,12/33/18 Current assets Investsent in Sierra Land Buildings and equipment (net) Copyright 922,080 69,000 955,000 324,900 Total assets 3,101,0001,118,000 Picture Styles Arrange s (220,00)(199,000) Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings (above) (521,000) (300,000) 450,000) (132,009) (100,000) (60,000) 1,610 809 (627,000) Total liabilities and equities s (3,101,000) (1,118,000) At year-end, there were no intra-entity receivebles or payables the acquisition method, prepare the worksheet to consolidate these two companies. (For accounts where multiple entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) PADRE INC., AND SIERRA CORPORATION For Year Ending December 31, 2018 Accounts Padre Sierra Debit Credit Interest Consoli $(1.396980) (657 250) 736,00039900 15,100 8,600 5,550 Cost of goods sold 298,000 Amortization expense Interest expense Equity in income of Sierra Separate company net income Consolidated net income 50.100 (177.120) s (490,000) (229,000) Ni to noncontrolling interest Ni to Padre Company Retained earnings 1/1 Net income (above) Dividends déclared $(1380.000) (463.000) (490.000)(229.000) 65.000 $ (1,610,000) S (627,000) 854.920 $ 569 100 260.000 Retained eamings 12/31 Current assets 260,000 65.000 Dividends declared $ (1,610,000)S (627 000) Retained earnings 12/31 Current assets investment in Siemra 5 854,920 $ 569,100 922 080 368.000 55,000 60.000 324 900 163 400 S 3.101.,000$1.118.000 $ (220,000) 4190000) (521,000) (132.000) Buildings and equipment (net) Total assets Accounts payable Notes payable NCI in Sierra 1/1 NCI in Sierra 12/31 Common stock daisonal paid-in capita Retained earnings 12/31 (above Total ablies and stockhoiders equity 300,000)(100.000) 450,000) (60.000) 1,610.000)(627,000) 5 (3,101,000) $(1,18,000) S

Answer 1

623, 0O O Fask Value n exai ^ book alue suocatoơn, to APdPc accounts based on teene 323, 200 land 8,00O 50, oo0 15,200 3 3,200 Notes paupble Tota 1,500 1,00 ($15,20。+1yee ) payable Total Ndu *Tevenwes =f 4,054,230 (add the hoo book vlite) that on expenk 3",ו。o (add Ke too book ualue1 .le从$',to cxag

odiustmerd Snlsest neuenuex ad expenses 4 to Subt Net inco Retained eoort ct consel gd Aubsid.cuh as $7,600 amat. 82e n in Come the expente muiplied 20 decaaenon eonbo ncQ. k Retained esns, 12131 :$1, 60,000 Ccndidated b lan 了ncone RE 2a.ue Mentemdegs 从 ecjuet no tiod

3 land F $ 655,6oo 926, осо сх allacobon us the adllocation pus amoitaffon 3,000 common stock (Roed comp"b blanc $100, 000 r * Coman

Revenus 236,000 379,000 31, 300 16,10 O -O Intinest expene 50, 100 ,S5o LE) I00 57,SSo 1뀨 -o- 11) ,120 484420 420,coo) (420j00o bt Income Caboue Didend potd 60,000 curent asse 854,20 5,l00 Investment in ka

Land 655,6co Copaiald Totad asuet 3,641,230 (419po) d20, 000 91,000 (930,20) (230,20) Cormmon & 0,oo 300,00 tj6lo, CCo 118 000 3,lol,00o>8,