On January 1, 2011, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong Corp
REFERENCE: Ref. 05_04
On January 1, 2011, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong Corp. for $364,000. There is no active market for Strong’s stock. Of this payment, $28,000 was allocated to equipment (with a five-year life) that had been undervalued on Strong’s books by $35,000. Any remaining excess was attributable to goodwill which has not been impaired.
As of December 31, 2011, before preparing the consolidated worksheet, the financial statements appeared as follows:
|
| Pride, Inc.
| Strong Corp.
|
| Revenues
| $ 420,000
| $280,000
|
| Cost of goods sold
| (196,000)
| (112,000)
|
| Operating expenses
| (28,000)
| (14,000)
|
| Net income
| $ 196,000
| $154,000
|
|
|
|
|
| Retained earnings, 1/1/11
| $ 420,000
| $210,000
|
| Net income (above)
| 196,000
| 154,000
|
| Dividends paid
| 0
| 0
|
| Retained earnings, 12/31/11
| $ 616,000
| $364,000
|
|
|
|
|
| Cash and receivables
| $ 294,000
| $126,000
|
| Inventory
| 210,000
| 154,000
|
| Investment in Strong Corp
| 364,000
| 0
|
| Equipment (net)
| 616,000
| 420,000
|
| Total assets
| $1,484,000
| $700,000
|
|
|
|
|
| Liabilities
| $ 588,000
| $196,000
|
| Common stock
| 280,000
| 140,000
|
| Retained earnings, 12/31/11 (above)
| 616,000
| 364,000
|
| Total liabilities and stockholders’ equity
| $1,484,000
| $700,000
|
During 2011, Pride bought inventory for $112,000 and sold it to Strong for $140,000. Only half of this purchase had been paid for by Strong by the end of the year. 60% of these goods were still in the company’s possession on December 31.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more