Reference no: EM132282281
Question - Angela Corporation (a private company) acquired all of the outstanding voting stock of Eddy Tech, Inc. on January 1, 2018, in exchange for $9,820,000 in cash. At the acquisition date, Eddy Tech's stockholders' equity was $7,970,000 including retained earnings of $3,470,000.
At the acquisition date, Angela prepared the following fair value allocation schedule for its newly acquired subsidiary:
Consideration transferred $9,820,000Eddy's stockholder's equity 7,970,000Excess fair over book value $1,850,000to patented technology (5-year remaining life)$181,500 to trade names (indefinite remaining life) 522,500 to equipment (8-year remaining life) 100,000 804,000Goodwill $1,046,000
At the end of 2018, Angela and Eddy Tech report the following amounts from their individually maintained account balances, before consideration of their parent-subsidiary relationship. Parentheses indicate a credit balance.
Angela Eddy Tech Sales$ (8,280,000) $(2,770,000) Cost of goods sold 4,167,000 1,485,000 Depreciation expense 540,000 68,000 Amortization expense 252,000 20,600 Other operating expenses 76,000 53,700 Net income$(3,245,000) $(1,142,700)
Required: Prepare 2018 consolidated income statement for Angela and its subsidiary Eddy Tech. Assume that Angela, as a private company, elects to amortize goodwill over a 10 year period.
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