Book Value Fair Value Current assets Land..... Buildings (net) (6-year remaining life) Equipment (net) (4-year remaining life) Patent (10-year remaining life) . Liabilities... $150,000 200,000 300,000 300,000 $150,000 200,000 280,000 100,000 (400,000) -0- (400,000) Nascent Sea-Breeze $ (600,000) 410,000 $ (300,000) Revenues. Operating expenses. 210,000 Investment income (42,000) $ (232,000) $ (700,000) (232,000) 92,000 $ (840,000) $ 330,000 220,000 700,000 Net income.. 2$ (90,000) Retained earnings, 1/1/18. Net income... Dividends declared.. $ (300,000) (90,000) 70,000 $ (320,000) $ 100,000 200,000 200,000 500,000 Retained earnings, 12/31/18 Current assets . Land...... Buildings (net) Equipment (net) . Investment in Sea-Breeze. 400,000 414,000 -0- $ 2,064,000 $ (500,000) (724,000) (840,000) $(2,064,000) $ 1,000,000 $ (200,000) (480,000) (320,000) $(1,000,000) Total assets Liabilities.. Common stock Retained earnings, 12/31/18 Total liabilities and equities..
Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2015. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2015, Sea-Breeze had the following assets and liabilities:
The companies’ financial statements for the year ending December 31, 2018, follow:
Answer the following questions:
a. How can the accountant determine that the parent has applied the initial value method?
b. What is the annual excess amortization initially recognized in connection with this acquisition?
c. If the parent had applied the equity method, what investment income would the parent have recorded in 2018?
d. What amount should the parent report as
e. What is consolidated net income for 2018 and what amounts are attributable to the controlling and noncontrolling interests?
f. Within consolidated statements at January 1, 2018, what balance is included for the subsidiary’s Buildings account?
g. What is the consolidated Buildings reported balance as of December 31, 2018?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 8 images
