Accounting
PROBLEM 1: Parsley Parent acquired 100% of Sage Subsidiary on January 1, 2018. The purchase price was $370,000 in excess of Sage’s book value of Stockholders Equity on the acquisition date. Such excess was assigned to the following assets:
Original Amount Original Useful Life
Property, Plant & Equipment (PP&E), net $80,000 8 years
License Agreement $90,000 6 years
Goodwill $200,000 Indefinite
$370,000
Selected accounts from the parent, subsidiary and consolidated financial statements for the year ended December 31, 2022 can be found in the accompanying Excel file.
Questions:
c. Show the detailed calculations arriving at each of the following accounts at December 31, 2022:
i. Consolidated Property, Plant and Equipment, net
ii. Consolidated License Agreement
iii. Consolidated Retained Earnings
d. What is the relationship between Parsley’s Net Income and Consolidated Net Income? Why?
What is the relationship between Parsley’s Net Income and Consolidated Net Income? Why?
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