Question
PAM Co. acquired all of the common stock of Sista Co. on January 1, 2017. As...
PAM Co. acquired all of the common stock of Sista Co. on January 1, 2017. As of that date, Sista had the following trial balance:
|
Debit |
Credit |
||||
|
Accounts payable |
$ |
60,000 |
|||
|
Accounts receivable |
$ |
50,000 |
|||
|
Additional paid-in capital |
60,000 |
||||
|
Buildings (net) (20-year life) |
140,000 |
||||
|
Cash and short-term investments |
70,000 |
||||
|
Common stock |
300,000 |
||||
|
Equipment (net) (8-year life) |
240,000 |
||||
|
Intangible assets (indefinite life) |
110,000 |
||||
|
Land |
90,000 |
||||
|
Long-term liabilities (mature 12/31/19) |
180,000 |
||||
|
Retained earnings, 1/1/17 |
120,000 |
||||
|
Supplies |
20,000 |
||||
|
Totals |
$ |
720,000 |
$ |
720,000 |
|
During 2017, Sista Co. reported net income of $96,000 while paying
dividends of $12,000. During 2018, Sista Co. reported net income of
$132,000 while paying dividends of $36,000.
Assume that PAM Co. acquired the common stock of Sista Co. for $588,000 in cash. As of January 1, 2017, Sista's land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unamortized patent to be amortized over 10 years.
PAM Co. decided to use the equity method for this investment.
Required:
(A.) Prepare consolidation worksheet entries for December 31, 2017. (Please use the proper labels/Letters)
(B.) Prepare consolidation worksheet entries for December 31, 2018. (Please use the proper labels/Letters)
Homework Answers
Answer #1
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