Chapter_3_Homework_examples - Following are separate...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
(610,000) (370,000) Cost of goods sold 270,000 140,000 Amortizations expense 115,000 80,000 Dividend income (5,000) - Net income (230,000) (150,000) Retained earnings, 1/1/13 (880,000) (490,000) Net income (above) (230,000) (150,000) Dividends paid 90,000 5,000 Retained earnings, 12/31/13 (1,020,000) (635,000) Cash 110,000 15,000 Receivables 380,000 220,000 Inventory 560,000 280,000 Investment in Aaron Company 470,000 - Copyrights 460,000 340,000 Royalty agreements 920,000 380,000 Total assets 2,900,000 1,235,000 Liabilities (780,000) (470,000) Preferred stock (300,000) - Common stock (500,000) (100,000) Additional paid-in capital (300,000) (30,000) Retained earnings, 12/31/13 (1,020,000) (635,000) Total liabilities and equity (2,900,000) (1,235,000) a. Acquisition-Date Fair Value Allocation and Annual Amortization: Aaron fair value (stock exchanged at fair value = $23.50 x 20,000 shares) 470,000 Book value of subsidiary 360,000 Excess fair value over book value 110,000 Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2013 (credit balances indicated by parentheses). Michael acquired all of Aaron's outstanding voting stock on January 1, 2009, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company's stock acctively traded at $23.50 per share. Michael Company 12/31/13 Aaron Company 12/31/13 On the date of acquisition. Aaron reported retained earnings of $230,000 and a total book value of $360,000. At that time, its royalty agreements were undervalued by $60,000. This intangible was assumed to have a six-year life with no residual value. Additionally, Aaron owned a trademark with a fair value of $50,000 and a 10-year remaining life that was not reflected on its books. Using the preceding information, prepare a consolidation worksheet for these two companies
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/27/2011 for the course INCOME TAX 4404 taught by Professor Bulie during the Spring '11 term at University of Minnesota Duluth.

Page1 / 10

Chapter_3_Homework_examples - Following are separate...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online