FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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On January 1, Year 4, Pane Corp. exchanged 150,000 shares of its $20 par value common
stock for all of Sky Corp.s common stock. At that date, the fair value of Panes common stock
issued was equal to the fair value of the identifiable assets acquired and liabilities assumed.
Both corporations continued to operate as separate businesses, maintaining accounting
records with years ending December 31. In its separate statements, Pane accounts for the
investment using the equity method. Information from separate company operations
follows:PaneSkyRetained earnings -- 12/31/Yr 3$3, 200, 000$925,000 Dividends paid
-- 3/25/Yr 4750, 000200, 000lf consolidated net income was $800,000, what amount of
retained earnings should Pane report in its December 31, Year 4, consolidated balance sheet?
A. $3,250,000B. $3,050,000C. $4, 125, 000D. $4, 925,000
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Transcribed Image Text:On January 1, Year 4, Pane Corp. exchanged 150,000 shares of its $20 par value common stock for all of Sky Corp.s common stock. At that date, the fair value of Panes common stock issued was equal to the fair value of the identifiable assets acquired and liabilities assumed. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. In its separate statements, Pane accounts for the investment using the equity method. Information from separate company operations follows:PaneSkyRetained earnings -- 12/31/Yr 3$3, 200, 000$925,000 Dividends paid -- 3/25/Yr 4750, 000200, 000lf consolidated net income was $800,000, what amount of retained earnings should Pane report in its December 31, Year 4, consolidated balance sheet? A. $3,250,000B. $3,050,000C. $4, 125, 000D. $4, 925,000
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