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Following is the consolidated information worksheet. A B C D 1 December 31, 2013, trial balances 2 3 1 answer below » Following is the consolidated information worksheet. A B C D 1 December 31, 2013, trial balances 2 3 Pecos Suaro 4 Revenues ($1,052,000) ($427,000) 5 Operating expenses $ 821,000 $262,000 6 Goodwill impairment loss ? 7 Income of Suaro ? 8 Net income ? ($165,000) 9 10 Retained earnings—Pecos 1/1/13 ? 11 Retained earnings—Suaro 1/1/13 ($201,000) 12 Net income (above) ? ($165,000) 13 Dividends paid $ 200,000 $ 35,000 14 Retained earnings 12/31/13 ? ($331,000) 15 16 Cash $ 195,000 $ 95,000 17 Receivables $ 247,000 $143,000 18 Inventory $ 415,000 $197,000 19 Investment in Suaro ? 20 21 22 23 Land $ View complete question » Following is the consolidated information worksheet. A B C D 1 December 31, 2013, trial balances 2 3 Pecos Suaro 4 Revenues ($1,052,000) ($427,000) 5 Operating expenses $ 821,000 $262,000 6 Goodwill impairment loss ? 7 Income of Suaro ? 8 Net income ? ($165,000) 9 10 Retained earnings—Pecos 1/1/13 ? 11 Retained earnings—Suaro 1/1/13 ($201,000) 12 Net income (above) ? ($165,000) 13 Dividends paid $ 200,000 $ 35,000 14 Retained earnings 12/31/13 ? ($331,000) 15 16 Cash $ 195,000 $ 95,000 17 Receivables $ 247,000 $143,000 18 Inventory $ 415,000 $197,000 19 Investment in Suaro ? 20 21 22 23 Land $ 341,000 $ 85,000 24 Equipment (net) $ 240,100 $100,000 25 Software $312,000 26 Other intangibles $ 145,000 27 Goodwill 28 Total assets ? $932,000 29 30 Liabilities ($1,537,100) ($251,000) 31 Common stock ($ 500,000) ($350,000) 32 Retained earnings (above) ? ($331,000) 33 Total liabilities and equity ? ($932,000) 34 35 Fair value allocation schedule 36 Price paid $1,450,000 37 Book value $ 476,000 38 Excess initial value $ 974,000 Amortizations 39 to land ($ 10,000) 2012 2013 40 to brand name $ 60,000 ? ? 41 to software $ 100,000 ? ? 42 to IPR&D $ 300,000 ? ? 43 to goodwill $ 524,000 ? ? 44 45 Suaro’s RE changes Income Dividends 46 2012 $ 75,000 $ 0 47 2013 $ 165,000 $ 35,000 Document Preview: Pecos Company acquired 100 percent of Suaro’s outstanding stock for $1,450,000 cash on January 1, 2012, when Suaro had the following balance sheet:
Assets
Liabilities and Equity
Cash
$ 37,000
Liabilities
$(422,000)
Receivables
82,000
Inventory
149,000
Common stock
(350,000)
Land
90,000
Retained earnings
(126,000)
Equipment (net)
225,000
Software
315,000
Total assets
$898,000
Total liabilities and equity
$(898,000)
At the acquisition date, the fair values of each identifiable asset and liability that differed from book value were as follows:
Land
$ 80,000
Brand name
60,000
(indefinite life—unrecognized on Suaro’s books)
Software
415,000
(2-year estimated useful life)
In-process R&D
300,000
Additional Information
Although at acquisition date Pecos expected future benefits from Suaro’s in-process research and development (R&D), by the end of 2012, it became clear that the research project was a failure with no future economic benefits.
During 2012, Suaro earns $75,000 and pays no dividends.
Selected amounts from Pecos and Suaro’s separate financial statements at December 31, 2013, are presented in the consolidated information worksheet. All consolidated worksheets are to be prepared as of December 31, 2013, two years subsequent to acquisition.
Pecos’s January 1, 2013, Retained Earnings balance—before any effect from Suaro’s 2012 income—is $(930,000) (credit balance).
Pecos has 500,000 common shares outstanding for EPS calculations and reported $2,943,100 for consolidated assets at the beginning of the period.
Page 143
Following is the consolidated information worksheet.
A
B
C
D
1
December 31, 2013, trial balances
2
3
Pecos
Suaro
4
Revenues
($1,052,000)
($427,000)
5
Operating expenses
$ 821,000
$262,000
6
Goodwill impairment loss
?
7
Income of Suaro
?
8
Net income
?
($165,000)
9
10
Retained earnings—Pecos 1/1/13
?
11
Retained earnings—Suaro 1/1/13
($201,000)
12
Net income… Attachments: project.docx View less …
