Please see the following problem, thank you! EXCEL CASE 2 CPA sklls On January 1

Question

Please see the following problem, thank you!

EXCEL CASE 2 CPA sklls On January 1. 2017. Hi-Speed.com acquired 100 percent of the common stock of Wi Free Co. for cash of $730,000. The consideration transferred was allocated among Wi-Free's net assets as follows: Page 151 Wi-Free fair value (cash paid by Hi-Speed) Book value of Wi-Free: $730,000 Common stock and additional paid-in capital (APIC) Retained earnings $130,000 370,000 500,000 230,000 Excess fair value over book value to In 1-process R&D; Computer software (overvalued) Internet domain name Goodwill $ 75,000 (30.000) 120,000 65,000 65.000 At the acquisition date, the computer software had a 4-year remaining life, and the Internet domain name was estimated to have a 10-year remaining life. By the end of 2017, it became clear that the acquired in-process research and development would yield no economic benefits and Hi-Speed.com recognized an impairment loss. At December 31, 2018. Wi-Free's accounts payable included a $30,000 amount owed to Hi-Speed The December 31, 2018, trial balances for the parent and subsidiary follow: Hi-Speed.com Wi-Free Co. S (1.100,000) S (325.000) Revenues Cost of goods sold Depreciation expense 625,000 140.000 122,000 12.000 S (460,500) (180,000) S (1.552,500) S (450,000) (180,000) 50,000 Net income Retained earnings 1/1/18 Net income Dividends declared (460,500) 250,000 Retained earnings 12/31/18 S (1,763,000) (580,000) $ 1.034.000 345.000 Current assets Investment in Wi-Free Equipment (net) Computer software Internet domain name Goodwill 856,000 713,000 650,000 305,000 130,000 100,000 Total assets $ 3,253,000 880,000 Liabilities Common stock Additional paid-in capital Retained earnings 12/31/18 S (870.000) (170,000) (110,000) (20.000) (580.000) Total liabilities and equity S 3,253,000) (880,000) (500,000) (120,000) (1.763,000) Required a. Using Excel, prepare calculations showing how Hi-Speed derived the $856,000 amount for its investment in Wi-Free. b. Using Excel, compute consolidated balances for Hi-Speed and Wi-Free. Either use a worksheet approach or compute the balances directly

Explanation / Answer

Part a: Investment in Wi-Free account balance 12/31/18 Wi-Free's acquisition-date fair value $730000 Change in Wi-Free's retained earnings for 2017 80000 2017 amortization -4500 2017 in process R&D write off -75000 2018 reported Wi-Free income 180000 2018-Wi-Free Dividend -50000 2018 amortization -4500 Balance 12/31/18 $856,000 Partb:          Consolidation entries Consolidated Hi-Speed Wi-Free Debit Credit Totals Revenues -1100000 -325000 -1425000 Cost of goods sold 625000 122000 747000 Depreciation expense 140000 12000 152000 Amortization expense 50000 11000 (E) 12000 (E) 7500 65500 Equity in subsidiary earnings -175500 0 (I) 175500 0 Net Income -460500 -180000 -460500 Retained earnings 1/1 -1552500 -450000 (S) 450000 -1552000 Net Income -460500 -180000 -460500 Dividend paid 250000 50000 D 50000 250000 Retained earnings 12/31 -1763000 -580000 -1763000 Current assets 1034000 345000 (P) 30000 1349000 Investment in Wi-Free 856000 (D) 50000 (I) 175500 (S) 580000 (A) 150500 0 Equipment(net) 713000 305000 1018000 Comouter software 650000 130000 (E) 7500 (A) 22500 765000 Internet domain name 0 100000 (A) 108000 (E) 12000 196000 Goodwill 0 0 (A) 65000 65000 Total assets 3253000 880000 3393000 Liabilities -870000 -170000 (P) 30000 -1010000 Common stock -500000 -110000 (S) 110000 -500000 Additional paid in capital -120000 -20000 (S) 20000 -120000 Retauned earnings 12/31 -1763000 -580000 -1763000 Total liabilities and equity -3253000 -880000 1028000 1028000 -3393000

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