How much is the goodwill to be reported on the consolidated balance sheet on January 1, 2019? On January 5, 20x9, Parent Company acquired 80% of the outstanding shares of Subsidiary Company forP350,000. The financial statements of Parent and Subsidiary Company before the acquisition follow:ParentSubsidiaryParentCompanyCompanyValueCash700,000100,000100,000Inventory300,00050,00055,000PPE1,000,000350,000365,000Liabilities500,000200,000200,000Outstanding SharesRetained earnings1,000,000200,000500,000100,000Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow:INCOME AND RETAINED EARNINGSParentSubsidiaryCompanyCompanySales800,000550,000Dividend income40,000Cost of salesOperating expenses(480,000)(60,000)300,000(250,000)(150,000)Net income150,000Retained earnings, Jan 1, 2019500,000100,000Dividends declared(100,000)(50,000)Retained earnings end700,000200,000BALANCE SHEETCash300,000125,000Receivables100,00030,000Inventory650,00045,000Investment in Subsidiary350,000PPE900,0002,300,000350,000Total550,000Liabilities600,000150,000Outstanding sharesRetained earnings1,000,000200,000700,000200,000Total2,300,000550,000Additional Information:The undervalued PPE of Subsidiary on the date of acquisition has a remaining useful life of 5-years.• Subsidiary Company owes Parent Company P5,000 on December 31, 2x19.

Consolidated financial statements are the financial statements of a group consisting of multiple…

Answered: How much is the goodwill to be reported…

Business

Accounting

How much is the goodwill to be reported on the consolidated balance sheet on January 1, 2019?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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