| Income Statement was realized for the period after acquisition |
| of Small by Big | | | CH.3 | | Homework |
| USE This | | | | | In the period of operations Dividends Small to Big = | $ 100,000 |
| To Do: |
| Prepare Consolidated Income Statement and |
| Consolidated Balance Sheet of the Form set forth in the Excel Examples |
| | AND reflect changes due to amortizing FV adjustments | | | | Data Set |
| Consolidating Balance Sheet Before operations |
| | | | Big | Small |
| Assets: | | | $s | $s | debit | Credit | Consol. |
| Cash | | | 640,000 | 440,000 | 0 | 0 | 1,080,000 |
| A/R | | | 3,200,000 | 1,100,000 | 50,000 | 0 | 4,350,000 |
| Inventory | | | 2,100,000 | 1,450,000 | 0 | | 3,550,000 |
| Current Assets | | | 5,940,000 | 2,990,000 | | | 8,980,000 |
| Net PPE | | | 4,400,000 | 1,800,000 | 120,000 | 0 | 6,320,000 | | | Small | Small |
| Investments | | | 2,750,000 | 0 | 0 | 2,750,000 | 0 | | | Book | FV |
| Intangibles [patents & trademarks] | | | 0 | 0 | 275,000 | 0 | 275,000 | | Intangibles |
| Goodwill | | | 110,000 | 0 | 75,000 | 0 | 185,000 | | Patents | 0 | 100,000 |
| Total Assets | | | 13,200,000 | 4,790,000 | | | 15,760,000 | | Trademarks | 0 | 175,000 |
| | | | | | | | | | Total intangibles | | 275,000 |
| Current Liabilities | | | 3,000,000 | 790,000 | 30,000 | 0 | 3,760,000 |
| 0 | | | 0 | 0 | 0 | 0 | 0 |
| Long term Debt | | | 2,900,000 | 1,800,000 | 0 | 0 | 4,700,000 |
| Total Liabilities | | | 5,900,000 | 2,590,000 | | | 8,460,000 |
| Equity: Capital | | | 6,300,000 | 1,800,000 | 1,800,000 | 0 | 6,300,000 |
| Equity: Retained earnings | | | 1,000,000 | 400,000 | 400,000 | 0 | 1,000,000 |
| Total Equity | | | 7,300,000 | 2,200,000 | | | 7,300,000 |
| Total Liabilities & Equity | | | 13,200,000 | 4,790,000 | 2,750,000 | 2,750,000 | 15,760,000 |
| | | check | 0 | 0 | | | 0 |
| Fair Value adjustments are in the BS above | | | | Calculate | enter whether Debit or credit |
| | | FV Greater/(Less) | Life | Period amortzn.. | Debit or Credit |
| | A/R | | 1 |
| | Net PPE | | 5 |
| | Inventory | | 1 |
| | Curr. Liab. | | 1 |
| | Patents | | 4 |
| | Trademarks | | Indefinite |
| | Goodwill | | N/A |
| | Total: | | | | Sum |
| Consolidated Income Statement |
| | | | | | Consolidating entries | | Income statement |
| | | | Small | Big | Debit | Credit | Consolidated |
| | | Net Revenue | 1,550,000 | 4,000,000 |
| | | CoGS | 750,000 | 3,300,000 |
| | | Gross Profit | 800,000 | 700,000 |
| | | Expenses | 350,000 | 480,000 |
| | | Small equity-Other (Income)/Expense | 0 |
| | | Income before tax | 450,000 |
| | | Taxes | 85,000 | 130,000 |
| | | Net Income | 365,000 |
| Show calculations for |
| | Small equity-Other (Income)/Expense |
| | | Then enter into box E57 then Big Income before tax then Big Net Income |
| | | | Then do consolidating entries Then do consolidated Income statement |
| Shown calculations [see Excel] |
| First complete Big investments |
| Then Big RE then Small Capital then Small RE then Total Equity |
| | Then use cash for both Big & Small to balance then CA and CL then Total Liabilties add A = L + Eq --- must balance |
| After operations | | | | | Consolidating | Consolidating |
| | | | BIG PE | Small PE | Adjustments | Adjustments |
| Assets: | | | $s | $s | Debit | Credit | Consolidated |
| Cash | | Back into cash |
| A/R | | | 3,000,000 | 1,050,000 |
| Inventory | | | 2,100,000 | 1,400,000 |
| Intangible: Customer contracts | | | 0 | 0 |
| Current Assets |
| Net PPE | | | 4,350,000 | 1,775,000 |
| Investments | | | | 0 |
| Intangibles [Patents/trademarks] | | | 0 | 0 |
| Goodwill | | | 110,000 | 0 |
| Total Assets | | | 4,460,000 | 1,775,000 |
| Current Liabilities | | | 3,100,000 | 7,950,000 |
| | | | 0 | 0 |
| Long term Debt | | | 3,000,000 | 2,600,000 |
| Total Liabilities | | | 6,100,000 | 10,550,000 |
| Equity: Capital | | | 6,300,000 |
| Equity: Retained earnings |
| Total Equity |
| Total Liabilities & Equity |
| | | Check |
serjoo331
chapter_3_hw_hct.xlsx
