Reference no: EM132948964
On January 1, 2015, the Herco Company purchased 70% of the outstanding voting share of the Wing Company for $ 850,000 in cash. On that date, the Wing Company had retained earnings of $ 400,000 and common shares of $ 500,000. On the acquisition date, the identifiable assets and liabilities of the Wing Company had fair values that were equal to their carrying values except for the building, which had a fair value 200,000 greater that its carrying value, and long term liabilities which had fair values that were $ 100,000 great than their carrying values. The building had a remaining useful life of ten years on January 1, 2015 and the long term liabilities mature on December 31, 2021. Both companies use the straight line method to calculate all depreciation and amortization. The trial balances of the Herco Company and Wing Company on December 31, 2019 are contained on the attached excel sheet.
- Included in Wing's Dec. 31, 2019 inventory were goods purchased from Herco in 2019 for $ 30,000. Herco charges all customers 20% over cost. Included in Herco's Dec. 31, 2019 inventory were goods purchased from Wing in 2019 for $40,000. Wing charges all customers a markup on cost of 25%.
- On Dec. 31, 2019 Herco purchased a bond investment at a cost of $ 250,000 in the open market which represented 50% of the bond payable that had been issued at par value by Wing in January 2019.
- Goodwill was impaired by $ 50,000 at December 31, 2019.
- No changes in common shares have occurred in Wing since the date of acquisition.
Required:
For the Herco Company and its subsidiary, the Wing Company, prepare in worksheet format:
Problem 1 (a). The consolidated income statement for the year ended December 31, 2019.
Problem 1 (b). The consolidated statement of financial position at December 31, 2019.
Problem 2. Prepare all required consolidation journal entries on a second excel page attached to your consolidation worksheet.
|
Determine which segments are reportable
: Determine whether a substantial portion of cherise Ltd.'s total operations is represented by reportable segments. Determine which segments are reportable.
|
|
What are the net present values of the expected future cash
: On the basis of the current value of business as of January 1, 2021, what are the net present values of the expected future cash flows
|
|
Why should not be consolidated from theoretical perspective
: Explain two situations where A Company will not consolidate Company X. In your answers, describe why it should not be consolidated
|
|
Arithmetic progression and dimensional analysis examples
: Illustrate the wide-ranging uses of calculus within different construction disciplines by solving problems of differential and integral calculus
|
|
Prepare the consolidated income statement for the year
: Prepare the consolidated income statement for the year ended December 31, 2019. On January 1, 2015, the Herco Company purchased 70%.
|
|
Explain if br is a variable interest entity or not
: Explain whether Bullworks or Rodeo must consolidate BR? Support your explanation with facts. Explain if BR is a variable interest entity or not.
|
|
What is the net amount to be presented
: Based on the above data, answer the following: What is the net amount to be presented in the Statement of Comprehensive Income for the period ended 2012
|
|
Find what the amount the company would have to borrow is
: If the company has a policy of maintaining an end-of-the-month cash balance of$40,000, the amount the company would have to borrow is
|
|
Journalize the adjusting entry needed on december
: Journalize the adjusting entry needed on December 31, the company's year-end, for each of the independent cases affecting Prairie Construction
|