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Ch6bBW - At Acquisition 1 Jan 20x1 DOWNSTREAM LAND SALE...

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At Acquisition 1 Jan 20x1 DOWNSTREAM LAND SALE This is a consolidation of Parent and Sub immediately after acquisition. During the year (date has no affect in this case), Sub bought the Land from Parent at $1,600. On the pages that follow, we will explore Parent and Sub under the simplifying assumption that neither hand any revenue or expense other than that relating to the land. Parent Sub Adjustments Consolidated Ret. Earnings, beg. 6,000 3,200 3,200 j 6,000 Net Income/Loss - - - - - - - - Dividends Declared Ret. Earnings, end 6,000 3,200 3,200 - 6,000 Current Assets 2,000 3,500 5,500 Land 1,000 1,000 Investment in S 3,500 3,500 j Common Stock 500 300 300 j 500 Ret. Earnings, end 6,000 3,200 3,200 - 6,000 6,500 6,500 3,500 3,500 3,500 3,500 6,500 6,500 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved Chapter 6 b--1
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End of Year One Parent Sub Adjustments Consolidated 31 Dec 20x1 Note that this must be a partial equity solution here (cost is same, no divs.): Sales Cost of Sales Oper. Expenses Gain on Sale of Land 600 Equity in S Income 600 Consolidated Net Income 600 Ret. Earnings, beg. 6,000 3,200 Net Income/Loss 600 Dividends Declared Ret. Earnings, end 6,600 3,200 Current Assets 3,600 1,900 Land 1,600 Investment in S 3,500 NCI in Net Assets Common Stock 500 300 Ret. Earnings, end 6,600 3,200 7,100 7,100 3,500 3,500 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved Chapter 6 b--2
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End of Year One Parent Sub Adjustments Consolidated 31 Dec 20x1 Now, we have complete equity (deferred profit could be used): Sales Cost of Sales Oper. Expenses Gain on Sale of Land 600 Equity in S Income 600 Consolidated Net Income Ret. Earnings, beg. 6,000 3,200 Net Income/Loss Dividends Declared Ret. Earnings, end 6,000 3,200 Current Assets 3,600 1,900 Land 1,600 Investment in S 2,900 NCI in Net Assets Common Stock 500 300 Ret. Earnings, end 6,000 3,200 6,500 6,500 3,500 3,500 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved Chapter 6 b--3
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End of Year Two Parent Sub Adjustments Consolidated 31 Dec 20x2 Sales Cost of Sales Oper. Expenses Gain on Sale of Land Equity in S Income Consolidated Net Income Ret. Earnings, beg. 6,000 3,200 Net Income/Loss Dividends Declared Ret. Earnings, end 6,000 3,200 Current Assets 3,600 1,900 Land 1,600 Investment in S 2,900 NCI in Net Assets Common Stock 500 300 Ret. Earnings, end 6,000 3,200 6,500 6,500 3,500 3,500 AMIS 624 David E. Wallin copyright 2009 All Rights Reserved Chapter 6 b--4
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