On January 1, 2012, the Parent Company paid $80,000,000 cash to acquire all of the Subsidiary Compan'y common stock. On
December 31, 2012, the trial balances for the two companies were as follows:
| |
|
|
|
Parent company |
Subsidiary |
Subsidiary |
| |
|
|
|
book value |
|
book value |
|
fair value |
| |
|
|
|
|
|
|
|
|
| Cash |
|
|
|
2,000,000 |
|
1,000,000 |
|
1,000,000 |
| Accounts Receivable |
|
3,000,000 |
|
2,000,000 |
|
2,000,000 |
| Inventory |
|
|
6,000,000 |
|
5,000,000 |
|
4,000,000 |
| Equipment (net) |
|
|
15,000,000 |
|
10,000,000 |
|
14,000,000 |
| Building (net) |
|
|
60,000,000 |
|
20,000,000 |
|
40,000,000 |
| Land |
|
|
|
40,000,000 |
|
15,000,000 |
|
30,000,000 |
| Investment in Subsidiary |
|
81,000,000 |
|
|
|
|
| Costs of Goods Sold |
|
|
25,000,000 |
|
10,000,000 |
|
|
| Depreciation Expense |
|
4,000,000 |
|
2,000,000 |
|
|
| Other Expenses |
|
|
11,000,000 |
|
3,000,000 |
|
|
| Dividends Declared |
|
|
5,000,000 |
|
1,000,000 |
|
|
| Total Debits |
|
|
252,000,000 |
|
69,000,000 |
|
91,000,000 |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Accounts Payable |
|
|
5,000,000 |
|
2,000,000 |
|
2,000,000 |
| Taxes Payable |
|
|
8,000,000 |
|
4,000,000 |
|
4,000,000 |
| Notes Payable |
|
|
17,000,000 |
|
6,000,000 |
|
5,000,000 |
| Bonds Payable |
|
|
30,000,000 |
|
7,000,000 |
|
8,000,000 |
| Common Stock |
|
|
40,000,000 |
|
6,000,000 |
|
|
| Additional Paid-in Capital |
|
80,000,000 |
|
10,000,000 |
|
|
| Retained Earnings |
|
|
10,000,000 |
|
14,000,000 |
|
|
| Sales Revenue |
|
|
60,000,000 |
|
20,000,000 |
|
|
| Income from Subsidiary |
|
2,000,000 |
|
|
|
|
| Total Credits |
|
|
252,000,000 |
|
69,000,000 |
|
19,000,000 |
The remaining usable life of the Equipment is 4 years.
The remaining usable life of the Building is 10 years.
Subsidiary Company owers $1,000,000 to Parent Company.
Required
1. Prepare Consolidated Worksheet