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linda_us, Master's Degree
Category: Multiple Problems
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Experience:  A tutor for Business, Finance, Accounts and other related topics.
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On January 1, 2014, Parent, Inc., issued securities with a

Customer Question

On January 1, 2014, Parent, Inc., issued securities with a total fair value of $450,000 for 100 percent of Subsidiary Corporation's outstanding ownership shares. Subsidiary has long supplied inventory to Parent, which hopes to achieve synergies with production scheduling and product development with this combination.
Although Subsidiary's book value at the acquisition date was $300,000, the fair value of its trademarks was assessed to be $30,000 more than their carrying amounts. Additionally, Subsidiary's patented technology was undervalued in its accounting records by $120,000. The trademarks were considered to have indefinite lives, and the estimated remaining life of the patented technology was eight years.
In 2014, Subsidiary sold Parent inventory costing $30,000 for $50,000. As of December 31, 2014, Parent had resold only 28 percent of this inventory. In 2015, Parent bought from Subsidiary $80,000 of inventory that had an original cost of $40,000. At the end of 2015, Parent held $28,000 of inventory acquired from Subsidiary, all from its 2015 purchases.
During 2015, Parent sold Subsidiary a parcel of land for $95,000 and recorded a gain of $18,000 on the sale. Subsidiary still owes Parent $65,000 related to the land sale.
At the end of 2015, Parent and Subsidiary prepared the following statements in preparation for consolidation.
$ (627,000)
$ (358,000)
Cost of goods sold
Other operating expenses
Gain on sale of land
Equity in Subsidiary
Net income
$ (241,400)
$ (88,000)
Retained earnings, 1/1/15
$ (314,600)
$ (292,000)
Net income
Dividends declared
Retained earnings, 12/31/15
$ (486,000)
$ (360,000)
Cash and receivables
$ 134,000
$ 150,000
Investment in subsidiary
Land, buildings, and equip. (net)
Patented technology
Total assets
$ 1,650,000
$ 725,000
$ (463,000)
$ (215,000)
Common stock
Additional paid-in capital
Retained earnings, 12/31/15
Total liabilities and equity
$ (1,650,000)
$ (725,000)
(A) Prepare all worksheet entries to consolidate these two companies as of December 31, 2015.
(B) Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2015.
Submitted: 1 year ago.
Category: Multiple Problems
Customer: replied 1 year ago.
Parent Company info is the first number listed, Subsidiary is the number below it.
Customer: replied 1 year ago.
See attached.
Expert:  F. Naz replied 1 year ago.
what is your deadline, thanks.
Customer: replied 1 year ago.
11:59 tonight (4/11/16)
Customer: replied 1 year ago.
Hope this isn't an issue.
Customer: replied 1 year ago.
Any update?
Expert:  F. Naz replied 1 year ago.
Please accept the offer so the answer may be provided in next 18 to 24 hours, thanks.

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