60.1K

Verified Solution

Link Copied!

Information for questions 5-9 (20 points) The following are selected account balances from Parent Company and Sub Corporation as of December 31, 2021: Show your work! Parent Sub Revenues (700,000) $ (400,000) Cost of goods sold 250,000 100,000 Depreciation expense 150,000 200,000 Investment income Not given 0 Dividends declared 80,000 60,000 Retained earnings, 1/1/21 (600,000) (200,000) Current assets 400,000 500,000 Copyrights 900,000 400,000 Royalty agreements 600,000 1,000,000 Investment in Stanza Not given 0 Liabilities (500,000) (1,380,000) Common stock (600,000)(S20 par) (200,000)($10 par) Additional paid-in capital (150,000) (80,000) Note: Parentheses indicate a credit balance. On January 1, 2021, Parent acquired all of Sub's outstanding stock for $680,000 fair value in cash and common stock. Parent also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights owned by the sub (with a six-year remaining life) have a $440,000 book value but a fair value of $560,000. 5. As of December 31, 2021, what is the consolidated copyrights balance? (4 points) (hint - you need parent and sub, and the sub needs to be adjusted for date of acquisition value, and amortization) 6. For the year ending December 31, 2021, what is consolidated net income? (4 points) (Hint - you need parent and sub, and you need to adjust for amortization) 7. As of December 31, 2021, what is the consolidated retained earnings balance? (4 points) 8. As of December 31, 2021, what is the consolidated balance to be reported for goodwill? (4 points) 9. As of December 31, 2021, what is the consolidated figure to be reported for dividends declared? (4 points) Information for questions 5-9 (20 points) The following are selected account balances from Parent Company and Sub Corporation as of December 31, 2021: Show your work! Parent Sub Revenues (700,000) $ (400,000) Cost of goods sold 250,000 100,000 Depreciation expense 150,000 200,000 Investment income Not given 0 Dividends declared 80,000 60,000 Retained earnings, 1/1/21 (600,000) (200,000) Current assets 400,000 500,000 Copyrights 900,000 400,000 Royalty agreements 600,000 1,000,000 Investment in Stanza Not given 0 Liabilities (500,000) (1,380,000) Common stock (600,000)(S20 par) (200,000)($10 par) Additional paid-in capital (150,000) (80,000) Note: Parentheses indicate a credit balance. On January 1, 2021, Parent acquired all of Sub's outstanding stock for $680,000 fair value in cash and common stock. Parent also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights owned by the sub (with a six-year remaining life) have a $440,000 book value but a fair value of $560,000. 5. As of December 31, 2021, what is the consolidated copyrights balance? (4 points) (hint - you need parent and sub, and the sub needs to be adjusted for date of acquisition value, and amortization) 6. For the year ending December 31, 2021, what is consolidated net income? (4 points) (Hint - you need parent and sub, and you need to adjust for amortization) 7. As of December 31, 2021, what is the consolidated retained earnings balance? (4 points) 8. As of December 31, 2021, what is the consolidated balance to be reported for goodwill? (4 points) 9. As of December 31, 2021, what is the consolidated figure to be reported for dividends declared? (4 points)

Answer & Explanation Solved by verified expert

See Answer