Question;Advanced Accounting Project;Power Corporation acquired 80% of Snyder Company?s 1,250 shares of;outstanding $100 par common stock on July 1, 2012 for $158,600. The excess of the current fair value of;Snyder?s identifiable net assets over the carrying amounts on July 1, 2012, was;attributable as follows;To;inventories (fifo) $3,000;To;equipment;(five year remaining life) 4,000;In addition, on July 1, 2012, Power acquired in the open market for;$37,000, $39,000 of Snyder Company?s 6% bonds payable at a yield of 7%. Interest is payable by Snyder each June 30;and;December 31.;Separate financial statements for Power Corporation and Snyder;Company for the periods ended December 31, 2012, were as follows;Power Snyder;(year ended (six months;12/31/2012) ended;12/31/2012);Revenue;Net Sales $961,905 $505,000;Interest;Revenue 1,295;Income of;Subsidiary 16,000;$979,200 $505,000;Cost/Expenses/Losses;Cost of Goods;Sold $770,000 $384,000;Operating;Expenses 124,140 98,450;Interest;Expense 2,550;Loss on Sale of;Equipment 2,000;$896,140 $485,000;Net;Income $83,060 $20,000;Retained Earnings, Beginning of Period $220,000;$50,000;Add: Net Income 83,060 20,000;Subtotal $303,060 $70,000;Less: Dividends Declared 36,000 9,000;Retained Earnings, End of Period $267,060 $61,000;Assets;Intercompany Accounts Receivable $100;Inventory (fifo);300,000;$75,000;Investment in Snyder Stock 167,400;Investment in Snyder Bonds 37,125;Plant Assets;794,000;280,600;Accumulated Depreciation on Plant Assets;(260,000) (30,000);Other Assets 613,775 73,400;Total Assets $1,652,400 $399,000;Liabilities;and Equity;Intercompany Accounts Payable $100;Bonds Payable $600,000 85,000;Other Liabilities 376,340 115,900;Common Stock, $100 par 360,000 125,000;Excess Paid In Capital 49,000 12,000;Retained Earnings 267,060 61,000;Total Liabilities and Equity $1,652,400;$399,000;Additional Information;During 2012 Power sold to Snyder;inventory for $50,000 that had cost Power $40,000. Snyder held $18,000 of this purchase in;inventory at the end of the year.During 2012 Snyder sold to Power;inventory for $100,000 that had cost Snyder $85,000. Power held $25,000 of this purchase in;inventory at the end of the year.On October 1, 2012, Power had sold to;Snyder for $10,000 equipment having a carrying amount of $12,000 on that;date. Snyder established a;five-year remaining economic life, no residual value, and the;straight-line method of depreciation for the equipment. Snyder includes depreciation expense in;operating expenses.Goodwill was unimpaired as of December;31, 2012.;Required;Prepare the journal entries for Power to;acquire the ownership in Snyder and prepare the entries made by Power;under the simple equity method.;Prove that the ending amounts for the investment account and the;income of subsidiary account are correct as shown in the financial;statements.Prepare a working paper for a;consolidated income statement, statement of retained earnings, for the;year ending December 31, 2012 and a consolidated balance sheet as of;December 31, 2012. You will need to convert the financial;statements given into trial balances for the worksheet ? meaning that the;beginning retained earnings should be shown on the trial balance together;with all asset, liability, equity, revenue, expense, and dividend accounts;? as though the books had not been closed.Prepare the consolidated income statement;for the year ending December 31, 2012 and the consolidated balance sheet;as of December 31, 2012.
Paper#42072 | Written in 18-Jul-2015Price : $32