On June 30, 2013, Plaster, Inc., paid $916,000 for 80 percent of Stucco Company’s outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $229,000. At acquisition date, Stucco reported the following book values for its assets and liabilities:
Cash | $ 60,000 |
Accounts receivable | 127,000 |
Inventory | 203,000 |
Land | 65,000 |
Buildings | 175,000 |
Equipment | 300,000 |
Accounts payable | (35,000) |
On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco’s assets as follows:
Equipment (3-year life) | $ 75,000 |
Database (10-year life) | 175,000 |
At the end of 2013, the following comparative (2012 and 2013) balance sheets and consolidated income statement were available:
| Plaster, Inc. December 31,2012 | Consolidated December 31,2013 |
Cash | $ 43,000 | $ 242,850 |
Accounts receivable (net) | 362,000 | 485,400 |
Inventory | 415,000 | 720,000 |
Land | 300,000 | 365,000 |
Buildings (net) | 245,000. | 370,000 |
Equipment (net) | 1,800,000 | 2,037,500 |
Database | -0- | 166,250 |
Total assets | $3,165,000 | $4,387,000 |
Accounts payable | $ 80,000 | $ 107,000 |
Long-term liabilities | 400,000 | 1,200,000v |
Common stock | 1,800,000 | 1,800,000 |
Noncontrolling interest | -0- | 255,500 |
Retained earnings | 885,000 | 1,024,500 • |
Total liabilities and equities | $3,165,000 | $4,387,000 |
PLASTER, INC., AND SUBSIDIARY STUCCO COMPANY Consolidated Income Statement For the Year Ended December 31,2013 | ||
Revenues |
| $1,217,500 |
Cost of goods sold | $737,500 |
|
Depreciation | 187,500 |
|
Database amortization | 8,750 |
|
Interest and other expenses | 9,750 | 943,500 |
Consolidated net income |
| $ 274,000 |
Additional Information for 2013
•On December 1, Stucco paid a $40,000 dividend. During the year, Plaster paid $100,000 in dividends.
•During the year, Plaster issued $800,000 in long-term debt at par.
•Plaster reported no asset purchases or dispositions other than the acquisition of Stucco.
Prepare a 2013 consolidated statement of cash flows for Plaster and Stucco. Use the indirect method of reporting cash flows from operating activities.
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