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Please help! I'm very confused :(

Required information Flynn acquires 100 percent of the outstanding voting shares of Macek Company on January 1, 2018. To obta

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?

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Answer #1
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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