Answer:
1. The balance in the "investment in investee" account in the investor company's preconsolidation balance sheet on December 31, 2013 is:
A. $900,000
2. The balance in the "income from investee" account in the investor company's preconsolidation income statement for the year ended December 31, 2013 is:
B. $82,500
3. The balance in the "income from investee" account in the investor company's pre-consolidation income statement for the year ended December 31, 2013 is:
D. $141,000
Explanation:
a) Data and Calculations:
Financial Statements for the three years ending December 31, 2013:
(At December 31) 2011 2012 2013
Current assets $310,500 $416,550 $428,205
Tangible fixed assets 844,500 861,450 992,595
Intangible assets 75,000 67,500 60,000
Total assets $1,230,000 $1,345,500 $1,480,800
Current liabilities $150,000 $165,000 $181,500
Noncurrent liabilities 330,000 363,000 399,300
Common stock 150,000 150,000 150,000
Additional paid-in capital 150,000 150,000 150,000
Retained earnings 450,000 517,500 600,000
Total liabilities and equity $1,230,000 $1,345,500 $1,480,800
(At December 31) 2011 2012 2013
Revenues $1,275,000 $1,380,000 $1,455,000
Expenses 1,162,500 1,260,000 1,314,000
Net income $112,500 $120,000 $141,000
Dividends $37,500 $52,500 $58,500
Income retained for the current year $82,500
Retained income for year 2012 517,500
Retained income for year 2013 $600,000
Common stock 150,000
Additional paid-in capital 150,000
Total equity $900,000
