Question

Assume an investor acquired 100% of the voting common stock of an investee on January 1, 2012 in a transaction that qualifies as a business combination. As a result of the acquisition, the investor recognized no goodwill and no bargain purchase gain in the post-acquisition consolidated financial statements (i.e., all of the resulting Acquisition Accounting Premium relates to identifiable net assets). The investor uses the equity method to account for its pre-consolidation investment in the investee. In addition, there are no intercompany transactions between the investor and investee. The following summarized pre-consolidation financial statement information is for the year ending December 31, 2019:

Income Statement	Investor	Investee
Revenues	$2,232,000	$307,200
Income from Investee	141,600	0
Expenses	(1,800,000)	(156,000)
Consolidated net income	573,000	151,200
NCI	-	-
Net income	$573,600	$151,200
Statement of Retained Earnings
Retained earnings, January 1	$720,000	$36,000
Net income	573,600	151,200
Dividends declared	(60,000)	(36,000)
Retained earnings, December 31	$1,233,600	$151,200
Balance Sheet
Investment in Investee	$283,200	$0
All other assets	4,598,400	384,000
Total assets	$4,881,600	$384,000
Liabilities	$2,880,000	$148,800
Common stock and additional paid-in capital	768,000	84,000
Retained earnings	1,233,600	151,200
Total liabilities and equity	$4,881,600	$384,000

Understanding consolidated balances

What amount of “total assets” will appear in the consolidated balance sheet at December 31, 2019?

$5,030,400

$5,265,600

$4,881,600

$4,598,400

Answer 1

Option 1) $5,030,400 is the correct answer.

Calculation:

Excel Formulas used:

Thank you, please give an upvote