Question

Gamble Company convinced Conservative Corporation that the two companies should establish Simpletown Corporation to build a new gambling casino in Simpletown Corner. Although chances for the casino’s success were relatively low, a local bank loaned $140,000,000 to the new corporation, which built the casino at a cost of $130,000,000. Conservative purchased 100 percent of the initial capital stock offering for $5,600,000, and Gamble agreed to supply 100 percent of the management and guarantee the bank loan. Gamble also guaranteed a 20 percent return to Conservative on its investment for the first 10 years. Gamble will receive all profits in excess of the 20 percent return to Conservative. Immediately after the casino’s construction, Gamble reported the following amounts: Cash $ 3,000,000 Buildings and Equipment 240,600,000 Accumulated Depreciation 10,100,000 Accounts Payable 5,000,000 Bonds Payable 20,300,000 Common Stock 103,000,000 Retained Earnings 105,200,000 The only disclosure that Gamble currently provides in its financial reports about its relationships to Conservative and Simpletown is a brief footnote indicating that a contingent liability exists on its guarantee of Simpletown Corporation’s debt.Required:Prepare a consolidated balance sheet for Gamble immediately following the casino’s construction.(Amounts to be deducted should be indicated by minus sign.)

Answer 1

Answer:

See explaination

Explanation:

The consolidated balance sheet for Gamble immediately following the casino’s construction is prepared in details as an attached file.

Please see attachment for the step by step solution of the given problem.

Answer 2

Answer:

Answer: A consolidated Balance Sheet for Gamble

Explanation:

  Cash                                   18,600,000  

  Buildings and Equipment          370,600,000  

  Accumulated Depreciation -10,100,000    360,500,000  

                                                        379,100,000  

  Accounts Payable           5,000,000  

  Bonds Payable                   20,300,000  

  Banks Notes Payable          140,000,000  

  Non controlling interest    5,600,000  

  Common Stock                         103,000,000  

  Retained Earnings                 105,200,000           208,200,000  

Total Liablities and equities          379,100,000

*

           18,600,000           3,000,000+5,600,000+(140,000,000-130,000,000

           37,060,000   240,600,000+130,000,000