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What balance will allen show in its subsidiary earnings acco

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Reference no: EM131760535

Allen Company acquired 100 percent of Bradford Company's voting stock on January 1, 2014, by issuing 10,000 shares of its $10 par value common stock (having a fair value of $21.5 per share). As of that date, Bradford had stockholders' equity totaling $168,850. Land shown on Bradford's accounting records was undervalued by $15,500. Equipment (with a five-year remaining life) was undervalued by $8,650. A secret formula developed by Bradford was appraised at $22,000 with an estimated life of 20 years.

Following are the separate financial statements for the two companies for the year ending December 31, 2018. There were no intra-entity payables on that date. Credit balances are indicated by parentheses.

  Allen
Company		   Bradford
Company
Revenues $ (518,000 )   $ (192,500 )
Cost of goods sold   171,000       71,000  
Depreciation expense   144,000       60,000  
Subsidiary earnings   (58,670 )     0  
Net income $ (261,670 )   $ (61,500 )
Retained earnings, 1/1/18 $ (836,000 )   $ (99,600 )
Net income (above)   (261,670 )     (61,500 )
Dividends declared   175,500       40,000  
Retained earnings ,12/31/18 $ (922,170 )   $ (121,100 )
Current assets $ 418,000     $ 123,500  
Investment in Bradford   218,100       0  
Company              
Land   524,000       60,000  
Buildings and equipment (net)   742,000       231,000  
Total assets $ 1,902,100     $ 414,500  
Current liabilities $ (289,930 )   $ (228,400 )
Common stock   (600,000 )     (60,000 )
Additional paid-in capital   (90,000 )     (5,000 )
Retained earnings, 12/31/18   (922,170 )     (121,100 )
Total liabilities and equity $ (1,902,100 )   $ (414,500 )
  1. Complete the table to show the allocation of the fair value in excess of book value.
  2. What balance will Allen show in its Subsidiary Earnings account?
  3. Complete the worksheet by consolidating the financial information for these two companies.

Reference no: EM131760535

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