Ch3bBW - At Purchase---1/1/07 Parent Sub Adjustments...

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Unformatted text preview: At Purchase---1/1/07 Parent Sub Adjustments Consolidated MV=BV Revenue Expenses Eq. in Net Inc. of Sub. Net Income/Loss Retained Earnings, beg. 267 132 Net Income/Loss Dividends Declared Retained Earnings, end 267 132 Cash 100 80 Inventory 100 70 Equipment 100 90 Accum. Depr.-Equip. 30 18 Land 100 50 Investment in Sub. 197 Liabilities 100 75 Common Stock 200 65 Retained Earnings, end 267 132 597 597 290 290 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved C h a p t e r 3 b-- 1 Yr 1---12/31/07---Equity Parent Sub Adjustments Consolidated MV=BV Revenue 500 200 Expenses 400 120 Eq. in Net Inc. of Sub. 80 Net Income/Loss 180 80 Retained Earnings, beg. 267 132 Net Income/Loss 180 80 Dividends Declared Retained Earnings, end 447 212 Cash 210 189 Inventory 100 50 Equipment 100 90 Accum. Depr.-Equip. 40 27 Land 100 50 Investment in Sub. 277 Liabilities 100 75 Common Stock 200 65 Retained Earnings, end 447 212 787 787 379 379 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved C h a p t e r 3 b-- 2 Yr 2---12/31/08---Equity Parent Sub Adjustments Consolidated MV=BV Revenue 600 250 Expenses 475 200 Eq. in Net Inc. of Sub. 50 Net Income/Loss 175 50 Retained Earnings, beg. 447 212 Net Income/Loss 175 50 Dividends Declared 65 Retained Earnings, end 622 197 Cash 410 173 Inventory 100 60 Equipment 100 90 Accum. Depr.-Equip. 50 36 Land 100 50 Investment in Sub. 262 Liabilities 100 75 Common Stock 200 65 Retained Earnings, end 622 197 972 972 373 373 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved C h a p t e r 3 b-- 3 Yr 1---12/31/07---Cost Parent Sub Adjustments Consolidated MV=BV Revenue 500 200 Expenses 400 120 Dividend Income Net Income/Loss 100 80 Retained Earnings, beg. 267 132 Net Income/Loss 100 80 Dividends Declared Retained Earnings, end 367 212 Cash 210 189 Inventory 100 50 Equipment 100 90 Accum. Depr.-Equip. 40 27 Land 100 50 Investment in Sub. 197 Liabilities 100 75 Common Stock 200 65 Retained Earnings, end 367 212 707 707 379 379 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved C h a p t e r 3 b-- 4 Yr 2---12/31/08---Cost Parent Sub MV=BV Revenue 600 250 Expenses 475 200 Dividend Income 65 Net Income/Loss 190 50 Retained Earnings, beg. 367 212 Net Income/Loss 190 50 Dividends Declared 65 Retained Earnings, end 557 197 Cash 410 173 Inventory 100 60 Equipment 100 90 Accum. Depr.-Equip. 50 36 Land 100 50 Investment in Sub. 197 Liabilities 100 75 Common Stock 200 65 Retained Earnings, end 557 197 907 907 373 373 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved C h a p t e r 3 b-- 5 Account Current Value Book Value Adjustment Necessary Cash 80 $ 80 $ - $ Inventory 75 70 5 Equipment* 88 72 16 Land 67 50 17 Liabilities (75) (75)- Net Assets (no goodwill) 235 $ 197 $ 38 $ Purchase Price (Market Value of Equity) 260 Goodwill 25 $ 25 Excess of Purchase Price (Market Value of Equity) over Book Value of Equity ($260 - $197) 63 $ * Note, we must compare the net book value of the Equipment, $72 ($90 - $18), not the gross book value ($90), to the current value....
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Ch3bBW - At Purchase---1/1/07 Parent Sub Adjustments...

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