P Company S Corporation Revenues $(700,000) $(400,000) Expenses 400,000 300,000 Investment Income Not given -0- Dividends declared 80,000 60,000 Retained Earnings, 1/1/18 (600,000) (200,000) Current Assets 400,000 500,000 Equipment 700,000 300,000 Copyrights 900,000 405,000 Royalty Agreements 600,000 1,000,000 Investment in S Not given -0- Liabilities (500,000) (1,380,000) Common Stock (600,000) ($20...

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Accounting

P Company S Corporation
Revenues $(700,000) $(400,000)
Expenses 400,000 300,000
Investment Income Not given -0-
Dividends declared 80,000 60,000
Retained Earnings, 1/1/18 (600,000) (200,000)
Current Assets 400,000 500,000
Equipment 700,000 300,000
Copyrights 900,000 405,000
Royalty Agreements 600,000 1,000,000
Investment in S Not given -0-
Liabilities (500,000) (1,380,000)
Common Stock (600,000) ($20 par) (200,000) ($10 par)
Additional Paid-in-Capital (150,000) (80,000)
On January 1, 2018, P acquired all of S's outstanding stock for$680,000 cash. At the date of acquisition, copyrights (with a10-year remaining life) have a $450,000 book value but a fair valueof $550,000. P company uses the equity method to account for itsinvestment in S. Investment income is not included in P'sRevenues.
Required:
a. As of December 31, 2018, what is the investment in Sbalance?
b. As of December 31, 2018, what is the consolidated copyrightbalance?
c. As of December 31, 2018, what is the consolidated RoyaltyAgreements balance?
d. As of December 31, 2018, what is the consolidated balance forgoodwill?
e. For the year ending December 31, 2018, what is theconsolidated net income?

Answer & Explanation Solved by verified expert

3.6 Ratings (614 Votes)

1 Investment in S Balance as of Dec 31 2018 Particulars Purchase price of outstanding stock of S 680000 Less Dividend income received from S It is assumed that dividend declared is a preacquisition income that is required to be adjusted against the purchasse price of the investment 60000 See Answer

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P CompanyS CorporationRevenues$(700,000)$(400,000)Expenses400,000300,000Investment IncomeNot given-0-Dividends declared80,00060,000Retained Earnings, 1/1/18(600,000)(200,000)Current Assets400,000500,000Equipment700,000300,000Copyrights900,000405,000Royalty Agreements600,0001,000,000Investment in SNot given-0-Liabilities(500,000)(1,380,000)Common Stock(600,000) ($20 par)(200,000) ($10 par)Additional Paid-in-Capital(150,000)(80,000)On January 1, 2018, P acquired all of S's outstanding stock for$680,000 cash. At the date of acquisition, copyrights (with a10-year remaining life) have a $450,000 book value but a fair valueof $550,000. P company uses the equity method to account for itsinvestment in S. Investment income is not included in P'sRevenues.Required:a. As of December 31, 2018, what is the investment in Sbalance?b. As of December 31, 2018, what is the consolidated copyrightbalance?c. As of December 31, 2018, what is the consolidated RoyaltyAgreements balance?d. As of December 31, 2018, what is the consolidated balance forgoodwill?e. For the year ending December 31, 2018, what is theconsolidated net income?

	P Company	S Corporation
Revenues	$(700,000)	$(400,000)
Expenses	400,000	300,000
Investment Income	Not given	-0-
Dividends declared	80,000	60,000
Retained Earnings, 1/1/18	(600,000)	(200,000)
Current Assets	400,000	500,000
Equipment	700,000	300,000
Copyrights	900,000	405,000
Royalty Agreements	600,000	1,000,000
Investment in S	Not given	-0-
Liabilities	(500,000)	(1,380,000)
Common Stock	(600,000) ($20 par)	(200,000) ($10 par)
Additional Paid-in-Capital	(150,000)	(80,000)