Parent Corp bought 80% of Sub Corp on January 1, 2019, paying $200,000. Any excess...
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Parent Corp bought 80% of Sub Corp on January 1, 2019, paying $200,000. Any excess differential at this date was attributed 30% to patent (with a 5 year remaining life) and 70% to goodwill. Data from the balance sheets of the two companies at the date of acquisition: Parent Corp Sub Corp Cash $ 60,000 $ 30,000 A/R 180,000 10,000 Inventory 70,000 30,000 Patent 0 80,000 PP&E 220,000 190,000 A/D (100,000) (20,000) Investment in sub 200,000 0 Total Assets $620,000 $320,000 A/P $180,000 $ 35,000 Bonds Payable 90,000 60,000 Common Stock 125,000 45,000 Retained Earnings 235,000 180,000 Total Liabilities & Equity $630,000 $320,000 In the year following the acquisition, the sub reported net income of $55,000 and paid dividends of $5,000 . Excluding the income from its sub, the parent reported net income of $90,000. Please answer the following questions: 1. What income from sub (equity investment income) was reported by the parent on its own books and records for the first year? 2. What was the consolidated entity's net income for the first year? 3. What was the ending NCI value at the end of the first year? 4. What is the goodwill that will be on the consolidated financial statements?
Parent Corp bought 80% of Sub Corp on January 1, 2019, paying $200,000. Any excess differential at this date was attributed 30% to patent (with a 5 year remaining life) and 70% to goodwill.
Data from the balance sheets of the two companies at the date of acquisition:
Parent Corp
Sub Corp
Cash
$ 60,000
$ 30,000
A/R
180,000
10,000
Inventory
70,000
30,000
Patent
0
80,000
PP&E
220,000
190,000
A/D
(100,000)
(20,000)
Investment in sub
200,000
0
Total Assets
$620,000
$320,000
A/P
$180,000
$ 35,000
Bonds Payable
90,000
60,000
Common Stock
125,000
45,000
Retained Earnings
235,000
180,000
Total Liabilities & Equity
$630,000
$320,000
In the year following the acquisition, the sub reported net income of $55,000 and paid dividends of $5,000 . Excluding the income from its sub, the parent reported net income of $90,000.
Please answer the following questions:
1. What income from sub (equity investment income) was reported by the parent on its own books and records for the first year?
2. What was the consolidated entity's net income for the first year?
3. What was the ending NCI value at the end of the first year?
4. What is the goodwill that will be on the consolidated financial statements?
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