On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $100,000, and $150,000, respectively. Net income and dividends for two years for Solar are as follows: 2015 2016Net income . . . . . . . . . . . . . . . . . . . . . . $60,000 $90,000Dividends. . . . . . . . . . . . . . . . . . . . . . . . 20,000 30,000On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of 10 years, and straight-line depreciation is used. The remaining excess of cost over book value is attributed to goodwill.1. Using this information and the information in the following trial balances on December 31, 2016, prepare a value analysis and a determination and distribution of excess schedule: Paro Company Solar Company Inventory, December 31 Other Current Assets Investment in Solar Company Land. Buildings and Equipment. Accumulated Depreciation Goodwill Other Intangibles Current Liabilities Bonds Payable. Other Long-Term Liabilities Common Stock—Paro Company Other Paid-In Capital in Excess of Par-Paro C Retained Earnings—Paro Company Common Stock—Solar Company Other Paid-In Capital in Excess of Par-Solar C Retained Earnings—Solar Company Net Sales Cost of Goods Sold Operating Expenses Subsidiary Income. Dividends Declared—Paro Company Dividends Declared—Solar Company Totals 100,000 136,000 400,000 50,000 350,000 (100,000) 20,000 (120,000) (200,000) (200,000) (100,000) (214,000) (520,000) 300,000 120,000 (72,000) 50,000 0 50,000 180,000 50,000 320,000 (60,000) (40,000) (100,000) (50,000) (100,000) (190,000) (450,000) 260,000 100,000 30,000 0 2. Complete a worksheet for consolidated financial statements for 2016. Include columns for eliminations and adjustments, consolidated income, NCI, controlling retained earnings, and consolidated balance sheet.
On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital in excess of par, and
2015 2016
Net income . . . . . . . . . . . . . . . . . . . . . . $60,000 $90,000
Dividends. . . . . . . . . . . . . . . . . . . . . . . . 20,000 30,000
On January 1, 2015, the only undervalued tangible assets of Solar are inventory and the building. Inventory, for which FIFO is used, is worth $10,000 more than cost. The inventory is sold in 2015. The building, which is worth $30,000 more than book value, has a remaining life of 10 years, and straight-line
1. Using this information and the information in the following
| Paro Company | Solar Company | |
|
Inventory, December 31 Other Current Assets Investment in Solar Company Land. Buildings and Equipment. Goodwill Other Intangibles Current Liabilities Bonds Payable. Other Long-Term Liabilities Common Stock—Paro Company Other Paid-In Capital in Excess of Par-Paro C Retained Earnings—Paro Company Common Stock—Solar Company Other Paid-In Capital in Excess of Par-Solar C Retained Earnings—Solar Company Net Sales Cost of Goods Sold Operating Expenses Subsidiary Income. Dividends Declared—Paro Company Dividends Declared—Solar Company Totals |
100,000 136,000 400,000 50,000 350,000 (100,000)
20,000 (120,000)
(200,000) (200,000) (100,000) (214,000)
(520,000) 300,000 120,000 (72,000) 50,000
0 |
50,000 180,000
50,000 320,000 (60,000)
(40,000) (100,000)
(50,000) (100,000) (190,000) (450,000) 260,000 100,000
30,000 0 |
2. Complete a worksheet for consolidated financial statements for 2016. Include columns for eliminations and adjustments, consolidated income, NCI, controlling retained earnings, and consolidated balance sheet.
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