The following balances were taken from the records of Cullumber Company: Common stock (1/1/20 and 12/31/20) Retained earnings 1/1/20 Net income for 2023 Dividends declared in 2023 Retained earnings, 12/31/20 Total stockholders' equity on 12/31/20 (a) 1. 2. 1. Pharoah Company purchased 75% of Cullumber Company's common stock on January 1, 2021 for $902,400. The difference between implied value and book value is attributable to assets with a remaining useful life on January 1, 2023 of ten years. 2. Parent company theory. Economic unit theory. Compute the difference between cost/(implied) and book value applying: Parent company theory Economic unit theory $160,900 $ 182,600 $ (42,200) $723,900 301,300 Difference $1,025,200
The following balances were taken from the records of Cullumber Company: Common stock (1/1/20 and 12/31/20) Retained earnings 1/1/20 Net income for 2023 Dividends declared in 2023 Retained earnings, 12/31/20 Total stockholders' equity on 12/31/20 (a) 1. 2. 1. Pharoah Company purchased 75% of Cullumber Company's common stock on January 1, 2021 for $902,400. The difference between implied value and book value is attributable to assets with a remaining useful life on January 1, 2023 of ten years. 2. Parent company theory. Economic unit theory. Compute the difference between cost/(implied) and book value applying: Parent company theory Economic unit theory $160,900 $ 182,600 $ (42,200) $723,900 301,300 Difference $1,025,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following balances were taken from the records of Cullumber Company:
Common stock (1/1/20 and 12/31/20)
Retained earnings 1/1/20
Net income for 2023
Dividends declared in 2023
Retained earnings, 12/31/20
Total stockholders' equity on 12/31/20
(a)
1.
2.
1.
2.
Pharoah Company purchased 75% of Cullumber Company's common stock on January 1, 2021 for $902,400. The difference
between implied value and book value is attributable to assets with a remaining useful life on January 1, 2023 of ten years.
Parent company theory.
Economic unit theory.
Compute the difference between cost/(implied) and book value applying:
Parent company theory
Economic unit theory
$
LA
$160,900
69
182,600
$
(42,200)
$723,900
301,300
Difference
$1,025,200
b
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