60.1K

Verified Solution

Link Copied!

Assume that on January 1, 2017, Company P acquires 70% of the common stock of Company S by paying $7,000 in cash to the shareholders of Company S. The preacquisition balance sheets and income statements of Company P and Company S are shown below. Prepare Company P's post-acquisition B/S right afer the acquisition (Jan. 1) and at the end of the year of 2017 by the equity and acquisition method s. Also, prepare Company P's post-acquisition I/S for the year of 2017 by the equity and acquisition methods.

Pre-Acquisition Balance Sheets January 1,2017 Assets Total Assets Company P Company S $80,000 $80,000 $24,000 $24,000 $40,000 $14,000 Current liabilities Equity Common stock Retained earnings Total Liabilities & Equity 28,000 12,000 $80,000 6,000 4,000 $24,000 Income statements Year ended December 31, 2017 Revenue Expenses Net income Dividends paid $60,000 (40,000) $20,000 $20,000 (16,000 $4,000 Company P Post-Acquisiton Balance Shoot January 1, 2017 Equity Mathod Acquisition Mothod Investment in S Total Assots Current liabiliias Common stock Rdtainad earnings Total Liabiliias & Equity Company P Post-Acquisiton Income Statamant Equity Mathod Acquisition Mothod Year ended December 31, 2017 Oparating income Income from equity investment is S Not Income Income attributable to NCI Income attributable to Ps common stock Not income atributable to Ps Camman stock) Company P Post-Acquisiton Balance Shoot December 31, 2017 Equity Mathod Acquisition Mothod Investment in S Total Assots Current liabiliias Common stock Ratained earnings Total Liabilitos&Equiy

Answer & Explanation Solved by verified expert

See Answer