Explore BrainMass
Share

Explain the consolidation of financial statements

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Blue Corporation acquired controlling ownership of Skyler Corporation on December 31, 20X3, and a consolidated balance sheet was prepared immediately. Partial balance sheet data for the two companies and the consolidated entity at that date follow:

Please see attachment for:
BLUE CORPORATION AND SKYLER CORPORATION
Balance Sheet Data
December 31, 20X3

During 20X3, Blue provided engineering services to Skyler and has not yet been paid for them.
There were no other receivables or payables between Blue and Skyler at December 31, 20X3.

Please help answer:
a. What is the amount of unpaid engineering services at December 31, 20X3, on work done by Blue for Skyler?
b. What balance in accounts receivable did Skyler report at December 31, 20X3?
c. What amounts of wages payable did Blue and Skyler report at December 31, 20X3?
d. What was the fair value of Skyler as a whole at the date of acquisition?
e. What percentage of Skylerâ??s shares were purchased by Blue?
f. What amounts of capital stock and retained earnings must be reported in the consolidated balance sheet?

© BrainMass Inc. brainmass.com October 25, 2018, 2:56 am ad1c9bdddf
https://brainmass.com/business/mergers-and-acquisitions/explain-the-consolidation-of-financial-statements-320827

Attachments

$2.19
See Also This Related BrainMass Solution

Mergaronite and Hill Consolidation: Income Statement

See attached files.

3-26 Following are selected accounts for Mergaronite Company and Hill, Inc., as of December 31, 2013. Several of Mergaronite's accounts have been omitted. Credit balances are indicated by parenthesis.
Mergaronite Hill
Revenues............................................ (600,000) (250,000)
Cost of Goods sold............................. 280,000 100,000
Depreciation Expense...................... 120,000 50,000
Investment income............... not given N/A
Retained earnings , 1/1/13.... (900,000) (600,000)
Dividends paid........................ 130,000 40,000
Current assets....................... 200,000 690,000
Land ........................................ 300,000 90,000
Buildings (Net)..................... 500,000 140,000
Equipment (Net).................. 200,000 250,000
Liabilities................................ (400,000) (310,000)
Common stock..................... (300,000) (40,000)
Additional paid in capital... (50,000) (160,000)

Assume that Mergonite took over Hill on January 1, 2009, by issuing 7,000 shares of common stock having a par value of $10 per share but a fair value of $100 each. ON January 1, 2009, Hill's land was undervalued by $20,000, its buildings were overvalued by $30,000, and equipment was undervalued by $60,000. The buildings had a 10-year life; the equipment had a 5-year life. A customer list with an appraised value of $100,000 was developed internally by Hill and was to be written off over a 20-year period.

(a) Determine and explain the December 31, 2013, consolidated totals for the following accounts:
Revenues
Cost of Goods Sold
Depreciation Expense
Amortization Expense
Buildings
Equipment
Customer list
Common Stock
Additional Paid-in-Capital

(b) In requirement (a) why can the consolidated totals be determined without knowing which method the parent used to account for the subsidiary?
(c) If he parent uses the equity method, what consolidation entries would be used on a 2013 worksheet?

View Full Posting Details