Parent Inc acquired 90% of Sub Inc on January 1, 20X8. Parent paid 50% of the acquisition price by cash and fund the rest with a
notes payable. The book value of Sub’s individual assets and liabilities approximated their acquisition-date fair values. On the date of acquisition, Sub reported the following:
Cash and Receivables $116,000
Accounts Payable 531,000
Inventory 331,000
Buildings & Equipment (net) 621,000
Common Stock 585,000
Land 748,000
Retained Earnings 700,000
Total $1,816,000
Total 1,816,000
During the year Sub reported $800,000 in net income and declared $432,000 in dividends. Parent reported $506,000 in net income and declared $196,000 in dividends. Parent accounts for their investment using the equity method.
Required:
a. What journal entry will Parent make on the date of acquisition to record the investment in Son Inc.?
b. If Parent were to prepare a consolidated balance sheet on the acquisition date (January 31, 20X2), what is the basic consolidation entry Parent would use in the consolidation worksheet?
c. What is Parent’s balance in "Investment in Son Inc." prior to consolidation on December 31, 20X2?
d. What is the basic consolidation entry Parent would use in the consolidation worksheet on December 31, 20X2?
Cash and Receivables $116,000
Accounts Payable 531,000
Inventory 331,000
Buildings & Equipment (net) 621,000
Common Stock 585,000
Land 748,000
Retained Earnings 700,000
Total $1,816,000
Total 1,816,000
During the year Sub reported $800,000 in net income and declared $432,000 in dividends. Parent reported $506,000 in net income and declared $196,000 in dividends. Parent accounts for their investment using the equity method.
Required:
a. What journal entry will Parent make on the date of acquisition to record the investment in Son Inc.?
b. If Parent were to prepare a consolidated balance sheet on the acquisition date (January 31, 20X2), what is the basic consolidation entry Parent would use in the consolidation worksheet?
c. What is Parent’s balance in "Investment in Son Inc." prior to consolidation on December 31, 20X2?
d. What is the basic consolidation entry Parent would use in the consolidation worksheet on December 31, 20X2?
1 answer:
You might be interested in
Answer:
a) maximize 12x+16y subject to x+y≤60; x+2y≤80; 2x-3y≥0; x-9y≤0.
b) 40 fish and 20 beef dinners
c) $800
Explanation:
Let x and y represent the numbers of fish and beef dinners to prepare, respectively. Then the relations these values must satisfy are ...
x + y ≤ 60 . . . . . a maximum of 60 dinners will be sold
0.25x + 0.50y ≤ 20 . . . . . kitchen hours cannot exceed 20
x/y ≥ 3/2 . . . . . . at least 3 fish dinners for each 2 beef dinners will be sold
y ≥ 0.10(x +y) . . . . at least 10% of dinners sold will be beef
While satisfying these relations, we want to maximize the profit function:
p = 12x +16y
a) The linear programming problem can be formulated as ...
Maximize 12x +16y, subject to ...
- x + y ≤ 60
- x + 2y ≤ 80
- 2x - 3y ≥ 0
- x - 9y ≤ 0
__
b) The graph shows the constraint inequalities with the comparison symbol reversed. The effect of that is to shade the area that is NOT part of the solution set, leaving the feasible region white. The vertex of the (white) feasible region that makes the profit line farthest from the origin is the solution we're looking for. Once the profit line is plotted so we can compare its slope to the lines bounding the feasible region, it becomes clear which vertex is the one that maximizes profit.
The solution is (x, y) = (40, 20).
- 40 fish dinners
- 20 beef dinners
__
c) The maximum earnings are estimated to be ...
($12)(40) +($16)(20) = $800
