Question
In: Accounting
On June 30, 2018, Plaster, Inc., paid $972,000 for 80 percent of Stucco Company's outstanding stock....
On June 30, 2018, Plaster, Inc., paid $972,000 for 80 percent of Stucco Company's outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $243,000. At acquisition date, Stucco reported the following book values for its assets and liabilities:
| Cash | $ | 63,500 | |
| Accounts receivable | 134,700 | ||
| Inventory | 215,600 | ||
| Land | 69,200 | ||
| Buildings | 186,200 | ||
| Equipment | 318,900 | ||
| Accounts payable | (37,100 | ) | |
On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco's assets as follows:
| Equipment (3-year remaining life) | $ | 79,200 |
| Database (10-year remaining life) | 184,800 | |
At the end of 2018, the following comparative (2017 and 2018) balance sheets and consolidated income statement were available:
| Plaster, Inc. December 31, 2017 |
Consolidated December 31, 2018 |
|||||||
| Cash | $ | 45,100 | $ | 254,700 | ||||
| Accounts receivable (net) | 379,500 | 509,100 | ||||||
| Inventory | 435,300 | 754,900 | ||||||
| Land | 314,700 | 383,900 | ||||||
| Buildings (net) | 256,900 | 388,900 | ||||||
| Equipment (net) | 1,887,500 | 2,141,800 | ||||||
| Database | 0 | 175,560 | ||||||
| Total assets | $ | 3,319,000 | $ | 4,608,860 | ||||
| Accounts payable | $ | 84,200 | $ | 112,600 | ||||
| Long-term liabilities | 421,000 | 1,317,820 | ||||||
| Common stock | 1,894,500 | 1,894,500 | ||||||
| Noncontrolling interest | 0 | 268,800 | ||||||
| Retained earnings | 919,300 | 1,015,140 | ||||||
| Total liabilities and equities | $ | 3,319,000 | $ | 4,608,860 | ||||
| PLASTER, INC., AND SUBSIDIARY STUCCO COMPANY Consolidated Income Statement For the Year Ended December 31, 2018 |
|||||||||
| Revenues | $ | 1,279,000 | |||||||
| Cost of goods sold | $ | 774,600 | |||||||
| Depreciation | 196,600 | ||||||||
| Database amortization | 9,240 | ||||||||
| Interest and other expenses | 10,400 | 990,840 | |||||||
| Consolidated net income | $ | 288,160 | |||||||
Additional Information for 2018
- On December 1, Stucco paid a $45,600 dividend. During the year, Plaster paid $156,000 in dividends.
- During the year, Plaster issued $896,820 in long-term debt at par.
- Plaster reported no asset purchases or dispositions other than the acquisition of Stucco.
Prepare a 2018 consolidated statement of cash flows for Plaster and Stucco. Use the indirect method of reporting cash flows from operating activities. (Negative amounts and amounts to be deducted should be indicated by a minus sign.)
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On June 30, 2018, Plaster, Inc., paid $996,000 for 80 percent of Stucco Company's outstanding stock....
On June 30, 2018, Plaster, Inc., paid $996,000 for 80 percent of
Stucco Company's outstanding stock. Plaster assessed the
acquisition-date fair value of the 20 percent noncontrolling
interest at $249,000. At acquisition date, Stucco reported the
following book values for its assets and liabilities:
Cash
$
65,000
Accounts receivable
138,000
Inventory
221,000
Land
71,000
Buildings
191,000
Equipment
327,000
Accounts payable
(38,000
)
On June 30, Plaster allocated the excess acquisition-date fair
value over book value to Stucco's assets as follows:...
On June 30, 2018, Plaster, Inc., paid $868,000 for 80 percent of Stucco Company's outstanding stock....
On June 30, 2018, Plaster, Inc., paid $868,000 for 80 percent of
Stucco Company's outstanding stock. Plaster assessed the
acquisition-date fair value of the 20 percent noncontrolling
interest at $217,000. At acquisition date, Stucco reported the
following book values for its assets and liabilities: Cash $ 56,800
Accounts receivable 120,400 Inventory 192,600 Land 61,800 Buildings
166,300 Equipment 284,900 Accounts payable (33,200 ) On June 30,
Plaster allocated the excess acquisition-date fair value over book
value to Stucco's assets as follows:...
On June 30, 2018, Plaster, Inc., paid $812,000 for 80 percent of Stucco Company's outstanding stock....
On June 30, 2018, Plaster, Inc., paid $812,000 for 80 percent of
Stucco Company's outstanding stock. Plaster assessed the
acquisition-date fair value of the 20 percent noncontrolling
interest at $203,000. At acquisition date, Stucco reported the
following book values for its assets and liabilities:
Cash
$
53,300
Accounts receivable
112,700
Inventory
180,000
Land
57,600
Buildings
155,100
Equipment
266,000
Accounts payable
(31,100
)
On June 30, Plaster allocated the excess acquisition-date fair
value over book value to Stucco's assets as follows:...
Bolero Company holds 80 percent of the common stock of Rivera, Inc., and 30 percent of...
Bolero Company holds 80 percent of the common stock of Rivera,
Inc., and 30 percent of this subsidiary’s convertible bonds. The
following consolidated financial statements are for 2017 and
2018:
2017
2018
Revenues
$
(875,000
)
$
(1,005,000
)
Cost of goods sold
605,000
645,000
Depreciation and
amortization
95,000
110,000
Gain on sale of building
0
(25,000
)
Interest expense
35,000
35,000
Consolidated net income
(140,000
)
(240,000
)
to noncontrolling interest
14,000
16,000
to parent company
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)...
Purple Company acquired 80 percent of Silver Company's outstanding common stock for $592,000 on January 1,...
Purple Company acquired 80 percent of Silver Company's
outstanding common stock for $592,000 on January 1, 20X7. On the
date of acquisition, the book value and fair value of Silver
Company's net assets were equal. Purple Company uses the equity
method to account for investments. Trial balance data for Purple
and Silver as of January 1, 20X7 are as follows:
Purple Company
Silver Company
Assets:
Cash
218,000
50,000
Receivables
130,000
74,000
Inventory
250,000
174,000
Investment in Silver Company
592,000
Land...
Pesto Company possesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value...
Pesto Company possesses 80 percent of Salerno Company's
outstanding voting stock. Pesto uses the initial value method to
account for this investment. On January 1, 2014, Pesto sold 6
percent bonds payable with a $14.0 million face value (maturing in
20 years) on the open market at a premium of $1,070,000. On January
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outside party at 96.6 percent of face value. Both companies use the
straight-line method of...
Pesto Company possesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value...
Pesto Company possesses 80 percent of Salerno Company's
outstanding voting stock. Pesto uses the initial value method to
account for this investment. On January 1, 2014, Pesto sold 10
percent bonds payable with a $18.0 million face value (maturing in
20 years) on the open market at a premium of $760,000. On January
1, 2017, Salerno acquired 40 percent of these same bonds from an
outside party at 96.6 percent of face value. Both companies use the
straight-line method of...
Pesto Company posesses 80 percent of Salerno Company's outstanding voting stock. Pesto uses the initial value...
Pesto Company posesses 80 percent of Salerno Company's
outstanding voting stock. Pesto uses the initial value method to
account for this investment. On January 1, 2014, Pesto sold 9
percent bonds payable with a 10 million dollar face value (maturing
in 20 years) on the open market at a premium of 600,000. On January
1 2017, Salerno acquired 40 percent of these same bonds from an
outside party at 96.6 percent of face value. Both companies use the
straight line...
On June 30, 2019 the Ricardo Company purchased 100% of the outstanding stock of Leslie Inc....
On June 30, 2019 the Ricardo Company purchased 100% of the
outstanding stock of Leslie Inc. Just prior to the acquisition
there is $1,250,000 of goodwill on the books of Ricardo and
$625,000 of goodwill on the books of Leslie. In determining the
fair value of the acquisition, the accountants for Ricardo
allocated $550,000 of the purchase price to goodwill. The
consolidated goodwill after the acquisition should total...
A. 550,000
B. 1,800,000
C. 1,175,000
D. 1,875,000
E. 2,425,000
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1,...
Padre, Inc., buys 80 percent of the outstanding common stock of
Sierra Corporation on January 1, 2021, for $760,960 cash. At the
acquisition date, Sierra’s total fair value, including the
noncontrolling interest, was assessed at $951,200 although Sierra’s
book value was only $619,000. Also, several individual items on
Sierra’s financial records had fair values that differed from their
book values as follows:
Book Value
Fair Value
Land
$
67,400
$
290,400
Buildings and equipment (10-year remaining life)
335,000
299,000
Copyright...
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