Giant acquired all of Small’s common stock on January 1, 2017, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $37,500 of the fair-value price was attributed to undervalued land while $98,000 was assigned to undervalued equipment having a 10-year remaining life. The $64,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant applied the equity method to the recording of this investment. The following are individual financial statements for the year ending December 31, 2021. On that date, Small owes Giant $12,800. Small declared and paid dividends in the same period. Credits are indicated by parentheses. Giant Small Revenues $ (1,298,800 ) $ (460,000 ) Cost of goods sold 610,000 115,000 Depreciation expense 190,000 203,000 Equity in income of Small (132,200 ) 0 Net income $ (631,000 ) $ (142,000 ) Retained earnings, 1/1/21 $ (1,200,000 ) $ (688,000 ) Net income (above) (631,000 ) (142,000 ) Dividends declared 290,000 120,000 Retained earnings, 12/31/21 $ (1,541,000 ) $ (710,000 ) Current assets $ 181,000 $ 216,000 Investment in Small 1,031,000 0 Land 490,000 231,000 Buildings (net) 396,000 435,000 Equipment (net) 580,000 384,000 Goodwill 0 0 Total assets $ 2,678,000 $ 1,266,000 Liabilities $ (887,000 ) $ (386,000 ) Common stock (250,000 ) (170,000 ) Retained earnings(above) (1,541,000 ) (710,000 ) Total liabilities and equities $ (2,678,000 ) $ (1,266,000 ) Determine the totals to be reported by this business combination for the year ending December 31, 2021.
Giant acquired all of Small’s common stock on January 1, 2017, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $37,500 of the fair-value price was attributed to undervalued land while $98,000 was assigned to undervalued equipment having a 10-year remaining life. The $64,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as
The following are individual financial statements for the year ending December 31, 2021. On that date, Small owes Giant $12,800. Small declared and paid dividends in the same period. Credits are indicated by parentheses.
Giant | Small | ||||||
Revenues | $ | (1,298,800 | ) | $ | (460,000 | ) | |
Cost of goods sold | 610,000 | 115,000 | |||||
Depreciation expense | 190,000 | 203,000 | |||||
Equity in income of Small | (132,200 | ) | 0 | ||||
Net income | $ | (631,000 | ) | $ | (142,000 | ) | |
Retained earnings, 1/1/21 | $ | (1,200,000 | ) | $ | (688,000 | ) | |
Net income (above) | (631,000 | ) | (142,000 | ) | |||
Dividends declared | 290,000 | 120,000 | |||||
Retained earnings, 12/31/21 | $ | (1,541,000 | ) | $ | (710,000 | ) | |
Current assets | $ | 181,000 | $ | 216,000 | |||
Investment in Small | 1,031,000 | 0 | |||||
Land | 490,000 | 231,000 | |||||
Buildings (net) | 396,000 | 435,000 | |||||
Equipment (net) | 580,000 | 384,000 | |||||
Goodwill | 0 | 0 | |||||
Total assets | $ | 2,678,000 | $ | 1,266,000 | |||
Liabilities | $ | (887,000 | ) | $ | (386,000 | ) | |
Common stock | (250,000 | ) | (170,000 | ) | |||
Retained earnings(above) | (1,541,000 | ) | (710,000 | ) | |||
Total liabilities and equities | $ | (2,678,000 | ) | $ | (1,266,000 | ) | |
- Determine the totals to be reported by this business combination for the year ending December 31, 2021.
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Determine the totals to be reported by this business combination for the year ending December 31, 2021. (Input all amounts
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Totals
Revenues
Cost of goods sold
Depreciation expense
Income of Small
Net income
Retained earnings, 1/1/21
Dividends declared
Retained earnings, 12/31/21
Current assets
Investment in Small
Land
Building (net)
Equipment (net)
Goodwill
Total assets
Liabilities
Common stock
Retained earnings, 12/31/21
Total liabilities and equity](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5bd24d5e-ed33-4881-8643-64f182425bac%2F7bca64c9-6efb-42f6-af88-d7298063bc04%2Fvdnbty_processed.png&w=3840&q=75)
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