Please help! I'm very confused :(
A. Assuming the combination occurred prior to 2009 and was accounted for under the purchase method, what amount will be reported for consolidated retained earnings?
B. Under the acquisition method, what amount will be reported for consolidated retained earnings?
Homework Answers
| Purchase Cost | ||
| Paid in cash | 400,000.00 | |
| Issue of Shares(10000*36) | 360,000.00 | |
| Acquisition cost | 15,000.00 | |
| Less preaquisition reserve | (480,000.00) | |
| 295,000.00 | ||
| Value of assets transferred | ||
| Cash | 80,000.00 | |
| Receivable | 160,000.00 | |
| Trademark | 40,000.00 | |
| Inventory | 300,000.00 | |
| Land | 130,000.00 | |
| Building | 280,000.00 | |
| Equipment | 75,000.00 | |
| Account Payable | (60,000.00) | |
| long term liabilities | (300,000.00) | |
| Net Assets | 705,000.00 | |
| Capital Reserve | 410,000.00 | |
| Consolidated retained Earnings | ||
| Retained earnings | 1,080,000.00 | |
| Capital Reserve | 410,000.00 | |
| Securities premium | 160,000.00 | |
| 1,650,000.00 | ||
| Acquisition method | ||
| Retained earnings | 1,080,000.00 | |
| Securities premium | 160,000.00 | |
| 1,240,000.00 | ||
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