Question

Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $317,300 in...

Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $317,300 in cash. Jasmine had a book value of only $232,100 on that date. However, equipment (having an eight-year remaining life) was undervalued by $64,800 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $11,400. Subsequent to the acquisition, Jasmine reported the following:

Net Income Dividends Declared
2016 $ 78,600 $ 10,000
2017 85,500 40,000
2018 31,800 20,000


In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow:

Tyler Company Jasmine Company
Revenues—operating $ (388,000 ) $ (149,000 )
Expenses 205,000 101,500
Equipment (net) 434,000 56,000
Buildings (net) 346,000 87,900
Common stock (290,000 ) (65,100 )
Retained earnings, 12/31/18 (422,000 ) (238,000 )

Determine the following account balances as of December 31, 2018:

a.Investment in Jasmine Company

b.Equity in Subsidiary Earning

c.Consolidated Net Incomed.

Consolidated Equipment (net)

e.Consolidated Buildings (net)

f.Consolidated Goodwill (net)

g.Consolidated Common Stock

h.Consolidated Retained Earnings, 12/31/18

Business   Accounting   
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Answer #1
As on 31 Dec 3018
a) Investment in Jasmine company 420610
(317300+78600-10000+85500-40000+31800-20000-7530*3)
Depreciation expense due to acquistion
Equipment undervalied (64800/8) 8100
Building overvalued (11400/20) -570
Depreciation expense 7530
b)
Equity in subsidairy earnings (31800-7530) 24270
(income of 2018 of Jasmine)
c)
Consolidated Net income 207270
388000-205000+31800-7530
d) Consolidated equipment 530500
(434000+56000)+64800-(8100*3)
e) Consolidated Building 424210
346000+87900-11400+570*3
g) Consolidated common stock 290000
h) Consolidated Retained earnings 422000
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