Required information Use the following information to answer questions 19-20 The

Question

Required information Use the following information to answer questions 19-20 The sowowing nformation appies to the questions displayed below, The separate condensed balance sheets of Patrick Corporation and its wholly owned subsidiary, Sean Corporation, are as follows: December 31, 2017 Patrick Cash Accounts receivable (net) Inventories Plant and equipment (net) Investment in Sean Total assets Accounts payable Long-term debt Conmon stock ($10 par) Additional paid-in capital Retained earnings Total liabilities and $1,400,000 $418,000 $ 76, 000 $ 76,000 26,000 46,000 640, 000 270,000 136,000 94,000 454,000 $1,400,000 $418,000 102,000 306, 000 20,000 40,000 14,000 824,000262.000 shareholders'equity . On December 31, 2017, Patrick acquired 100 percent of Sean's voting stock in exchange for $454,000. . At the acquisition date, the fair values of Sean's assets and liabillities equaled their carrying amounts, respectively, except that the fair value of certain Items in Sean's inventory were $20,000 more than their carrying amounts Problem 2-19 (LO 2-4, 2-5) In the December 31, 2017, consolidated balance sheet of Patrick and its subsidiary, what amount of total assets should be reported? Muitiple Choice $1,380,000 $1,400,000 $1,502,000 $1,956,000

Explanation / Answer

problem 2.19

answer:  1,502,000

working note:

the value of total assets in consolidated balance sheet of patric and its subsidiary as on december 31 2017

amount

$

amount

$

assets

the assets are taken over at the carrying value which is equal to fairvalue

calculation of goodwill:

the difference of total assets taken over - (total liabilities taken over + purchase consideration which is a negetive value = GOODWILL

amount

$

amount

$

66,000

* taken at fair value which is 20,000 higher of carrying value

(118,000)

problem 2.20

answer : 1,130,000

working note:

The calculation of amount of stock holders equity to be reported on consolidated balancesheet of patric

amount

$

amount

$

* As sean is a 100 % subsidiary of Patric the the total stock holders equity in consolidated balance sheet will not reflect the stock holders equity value of sean as per the consolidation procedure

consolidated balancesheet of patric as on december 31 2017

amount

$

amount

$

assets

particulars

amount

$

amount

$

assets

fixed assets: plant and machinery 910,000 intangible assets (goodwill) 118,000 current assets: cash 152,000 accounts recievable 162,000 inventory 160,000 total assets 1,502,000

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