Advanced Accounting Project
Due February 15 – Submit through blackboard
Power Corporation acquired 80% of Snyder Company’s 1,250 shares of outstanding $100 par common stock on July 1, 2013 for $158,600. The excess of the current fair value of Snyder’s identifiable net assets over the carrying amounts on July 1, 2013, was attributable as follows:
To inventories (fifo) $3,000
(five year remaining life) 4,000
In addition, on July 1, 2013, Power acquired in the open market for $37,000, $39,000 of Snyder Company’s 6% bonds payable at a yield of 7%. Interest is payable by Snyder each June 30 and
Separate financial statements for Power Corporation and Snyder Company for the periods ended December 31, 2013, were as follows:
(year ended (six months
12/31/2013) ended 12/31/2013)
Net Sales $961,905 $505,000
Interest Revenue 1,295
Income of Subsidiary 16,000 _______
Cost of Goods Sold $770,000 $384,000
Operating Expenses 124,140 98,450
Interest Expense 2,550
Loss on Sale of Equipment 2,000 _______
Net Income $83,060 $20,000
Retained Earnings, Beginning of Period $220,000 $50,000
Add: Net Income 83,060 20,000
Subtotal $303,060 $70,000
Less: Dividends Declared 36,000 9,000
Retained Earnings, End of Period $267,060 $61,000
Intercompany Accounts Receivable $100
Inventory (fifo) 300,000 $75,000
Investment in Snyder Stock 167,400
Investment in Snyder Bonds 37,125
Plant Assets 794,000 280,600
Accumulated Depreciation on Plant Assets (260,000) (30,000)
Other Assets 613,775 73,400
Total Assets $1,652,400 $399,000
Liabilities and Equity
Intercompany Accounts Payable $100
Bonds Payable $600,000 85,000
Other Liabilities 376,340 115,900
Common Stock, $100 par 360,000 125,000
Excess Paid In Capital 49,000 12,000
Retained Earnings 267,060 61,000
Total Liabilities and Equity $1,652,400 $399,000
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