Ch3dBW - Prior to Acquisition Parent Sub Adjustments...

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Unformatted text preview: Prior to Acquisition Parent Sub Adjustments Consolidated 1 Jan 20x1 Sales Cost of Sales Oper. Expenses Equity in S Income Consolidated Net Inc. NCI in Net Income Net Income/Loss Parent Ret. Earnings, beg. 8,000 1,900 Net Income/Loss Dividends Declared Ret. Earnings, end 8,000 1,900 Current Assets 6,000 1,400 Property, P, E, net 3,000 1,200 Investment in S Common Stock 1,000 700 Ret. Earnings, end 8,000 1,900 9,000 9,000 2,600 2,600 C h a p t e r 3 d-- 1 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved Setup: Parent paid $3,000 to obtain 100% of Sub. There are no indentifiable intangible acquired in the acquisition. The Property, Plant & Equipment (10 years remaining) on the Sub's books had a fair value of $1,600. No other assets or liabilities on Sub's books at acquisition were under- or over-valued. At the end of year one, Sub reported $400 in earnings. At end of year two, Sub reported a loss of $200. Acquisition: End Year One: End Year Two: Cash price paid 3,000 $ Total Total Reported Net Inc. 400 $ Reported Net Inc. (200) $ Adjustments: Adjustments: Total goodwill Equity in S NI Equity in S NI C h a p t e r 3 d-- 2 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved At Acquisition Parent Sub Adjustments Consolidated 1 Jan 20x1 Sales Cost of Sales Oper. Expenses Equity in S Income Equity in S NI Ret. Earnings, beg. 8,000 1,900 Net Income/Loss Dividends Declared Ret. Earnings, end 8,000 1,900 Current Assets 3,000 1,400 Property, P, E, net...
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Ch3dBW - Prior to Acquisition Parent Sub Adjustments...

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