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On January 1 2017 the balance sheets of Potter Co. and Hogwarts Co. were as follows:...

On January 1 2017 the balance sheets of Potter Co. and Hogwarts Co. were as follows:
Potter Hogwarts
cash 1,000,000 50,000
equipment 1,000,000 100,000
a/d equip 100,000 10,000
Land 2,000,000 20,000
building 3,000,000 100,000
a/d building 1,000,000 30,000
patent 50,000 50,000
total assets 5,950,000 280,000
accounts payable 1,000,000 40,000
notes payable 1,000,000 40,000
common stock $5 par 3,000,000 150,000
apic c/s 100,000 0
r/e 850,000 50,000
On January 2nd Potter acquired all of the stock of Hogwarts by issuing 50,000 shares of common stock when the stock was
selling for $11 per share. At that time the fair market value of Hogwarts assets were:
equipment 60,000
Land 30,000
building 110,000
patent 40,000
THIS IS A CONTINUATION OF 80%BAL
On December 31, 2017 Potter and Hogwarts had the following balance sheets
Income statements
Potter Hogwarts
revenue 5,000,000 80,000
depreciation expense equip 100000 10000 Note: the building, equipment and patent of Hogwarts
depreciation expense bldg 200,000 10,000 each have a 10 year remaining life with no salvage and
amortization exp patent 5000 5000 straight line depreciation is used.
investment income A 0
income B 55,000
Potter Hogwarts
cash 3,000,000 100,000
equipment 1,000,000 100,000
a/d equip 200,000 20,000
Land 2,000,000 20,000
building 3,000,000 100,000
a/d building 1,200,000 40,000
patent 45,000 45,000
Investment in Hogwarts C
total assets D 305,000
accounts payable 1,000,000 40,000
notes payable 1,000,000 40,000
common stock $5 par E 150,000 The only stock transaction Potter had in 2017 was the purchase of Hogwarts
apic c/s F 0
r/e G 75,000
Remember, On January 2nd Potter acquired all of the stock of Hogwarts by issuing 50,000 shares of common stock when the stock was
selling for $11 per share. At that time the fair market value of Hogwarts assets were: equipment
Land 60,000
building 30,000
patent 110,000
40,000
REQUIRED: A) MAKE THE JOURNAL ENTRY POTTER MAKES CONNECTED WITH ITS INVESTMENT IN HOGWARTS (YOU DO NOT HAVE TO MAKE THE ENTRY OF JAN. 2 ACQUIRING THE COMPANY)
B) FILL IN THE ANSWERS FOR A THROUGH G LET ME KNOW WHAT METHOD (INITIAL VALUE, EQUITY, PARTIAL EQUITY) YOU ARE USING
C) MAKE ANY NECESSARY WORKSHEET ENTRIES
D) PREPARE A CONSOLIDATED BALANCE SHEET ON 12/31/2017
E) PREPARE A CONSOLIDATED INCOME STATEMENT FOR 2017
HINT: DON'T FORGET ABOUT DIVIDENDS THAT HOGWARTS AND/OR POTTER MAY HAVE PAID.  

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ekkarill92 answered 2 years ago
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