E Menu Determining ending conselidated balances in the second year following the

Question

E Menu Determining ending conselidated balances in the second year following the acquisitien Assume a parent company acquired a subsidary on january 1, 2015,The purchase prike was 5745,000 in excess of the subuidarys book valiue of Stocknoiders Equity on the acquistion dare,and that excess was assigned to the fotiowing JAl assets. Original Useful Life Al Asset Property plant and equipment (PPE net $360000 245,000 ndnte 745.000 The AAD sset relating to undervaliued PE with a 15 year useful life has been depreciuated as part of the parents equity method accounting The fnancial stanements of the parent and ies subsidiary for the year ended December 31, 206are as flow Parent Suleidiary 487%,000 $1,500,000 Assets 490.000 000 295313 6 70.000 34,000 047 500 447.000 Gress prof 925000 608.000 Aocournes receivable Operaing expenses Net inceme plant and equipment PPL net 14306500 00 21,804813 $2.00850 Statemens ef resained eamings 006,500 $141.000 119650 187,000 754 000 500,000 40563100 000 708,000 125.000 1,07%750 21a000 Ateouts payable 31500 Accruedbes Ending retained eannirg ?.aned ear gs

Explanation / Answer

c)operating expense = OE of parent +OE of subsidary+current year depreciation on increase value of plant

                   = 1031250+390000 + 24000=1445250

F)consolidated property plant and equipment= 827000+14206500+312000= 15345500

**carrying value of property plant and equipment (excess amount at time of acquisition ) =360000-48000= 312000

Depreciation amount =360000/15=24000 and accumulated depreciation = 24000*2years = 48000

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