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1)Presents Inc. acquired all of the outstanding common stock of Santa Co. on January 1, 2017,...

1)Presents Inc. acquired all of the outstanding common stock of Santa Co. on January 1, 2017, for $257,000. Annual amortization of $19,000 resulted from this acquisition. Presents reported net income of $70,000 in 2017 and $50,000 in 2018 and paid $22,000 in dividends each year.

Santa reported net income of $40,000 in 2017 and $47,000 in 2018 and paid $10,000 in dividends each year. On the consolidated financial statements for 2017,

a)what amount should have been shown for Equity in Subsidiary Earnings?

A. $0.
B. $30,000.
C. $60,000.
D. $70,000.

b)what amount should have been shown for consolidated dividends?
A. $0.
C. $22,000.
D. $32,000.
E. $64,000.

2)Presents Inc. acquired all of the outstanding common stock of Santa Co. on January 1, 2017. On that date, Santa had a building with a book value of $200,000 and a fair value of $410,000. Santa had equipment with a book value of $350,000 and a fair value of $340,000. The building had a 10-year remaining useful life and the equipment had a 5-year remaining useful life. How much total expense will be in the consolidated financial statements for the year ended December 31, 2017 related to Santa’s building acquired by Presents?

A. $19,000.
C. $20,000.
D. $41,000.
E. 0.

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Expert Solution

ekkarill92 answered 2 years ago
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