On June 30, 2018, Plaster, Inc., paid $972,000 for 80 percent ofStucco Company's outstanding stock. Plaster assessed theacquisition-date fair value of the 20 percent noncontrollinginterest at $243,000. At acquisition date, Stucco reported thefollowing book values for its assets and liabilities:
| | | |
| Cash | $ | 63,500 | |
| Accounts receivable | | 134,700 | |
| Inventory | | 215,600 | |
| Land | | 69,200 | |
| Buildings | | 186,200 | |
| Equipment | | 318,900 | |
| Accounts payable | | (37,100 | ) |
|
On June 30, Plaster allocated the excess acquisition-date fairvalue over book value to Stucco's assets as follows:
| | |
| Equipment (3-year remaining life) | $ | 79,200 |
| Database (10-year remaining life) | | 184,800 |
|
At the end of 2018, the following comparative (2017 and 2018)balance sheets and consolidated income statement wereavailable:
| Plaster, Inc.
December 31, 2017 | | Consolidated
December 31, 2018 |
| Cash | $ | 45,100 | | | $ | 254,700 | |
| Accounts receivable (net) | | 379,500 | | | | 509,100 | |
| Inventory | | 435,300 | | | | 754,900 | |
| Land | | 314,700 | | | | 383,900 | |
| Buildings (net) | | 256,900 | | | | 388,900 | |
| Equipment (net) | | 1,887,500 | | | | 2,141,800 | |
| Database | | 0 | | | | 175,560 | |
| Total assets | $ | 3,319,000 | | | $ | 4,608,860 | |
| Accounts payable | $ | 84,200 | | | $ | 112,600 | |
| Long-term liabilities | | 421,000 | | | | 1,317,820 | |
| Common stock | | 1,894,500 | | | | 1,894,500 | |
| Noncontrolling interest | | 0 | | | | 268,800 | |
| Retained earnings | | 919,300 | | | | 1,015,140 | |
| Total liabilities and equities | $ | 3,319,000 | | | $ | 4,608,860 | |
|
PLASTER, INC., AND SUBSIDIARY STUCCO COMPANY
Consolidated Income Statement
For the Year Ended December 31, 2018 |
| Revenues | | | | $ | 1,279,000 |
| Cost of goods sold | $ | 774,600 | | | |
| Depreciation | | 196,600 | | | |
| Database amortization | | 9,240 | | | |
| Interest and other expenses | | 10,400 | | | 990,840 |
| Consolidated net income | | | | $ | 288,160 |
|
Additional Information for 2018
- On December 1, Stucco paid a $45,600 dividend. During the year,Plaster paid $156,000 in dividends.
- During the year, Plaster issued $896,820 in long-term debt atpar.
- Plaster reported no asset purchases or dispositions other thanthe acquisition of Stucco.
Prepare a 2018 consolidated statement of cash flows for Plasterand Stucco. Use the indirect method of reporting cash flows fromoperating activities. (Negative amounts and amounts to bededucted should be indicated by a minus sign.)
