On January 1, 2015, Pub Corporation made a significant acquisition, purchasing 75 percent of Sub Corporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders' equity at that time was made up of the following components (all values in thousands): Capital stock with a par value of $10: $2,000 Additional paid-in capital: $1,200 Retained earnings as of December 31, 2014: $1,500 Total stockholders' equity: $4,700 The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to goodwill. Fast forward to December 31, 2019, and we have the comparative trial balances for both Pub Corporation and Sub Corporation. Pub Sub Other assets - net $5,845 $4,500 Investment in Sub - 75% 3,640 - Expenses (including cost of sales) 5,285 800 Dividends 600 300 $15,370 $5,600 Capital stock, $10 par $4,000 $2,000 Additional paid-in capital 850 1,200 Retained earnings 2,670 1,500 Sales 7,380 900 Income from Sub 470 - $15,370 $5,600
On January 1, 2015, Pub Corporation made a significant acquisition, purchasing 75 percent of Sub Corporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's
| Capital stock with a par value of $10: | $2,000 |
| Additional paid-in capital: | $1,200 |
| $1,500 | |
| Total stockholders' equity: | $4,700 |
The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to
Fast forward to December 31, 2019, and we have the comparative
| Pub | Sub | |
| Other assets - net | $5,845 | $4,500 |
| Investment in Sub - 75% | 3,640 | - |
| Expenses (including cost of sales) | 5,285 | 800 |
| Dividends | 600 | 300 |
| $15,370 | $5,600 | |
| Capital stock, $10 par | $4,000 | $2,000 |
| Additional paid-in capital | 850 | 1,200 |
| Retained earnings | 2,670 | 1,500 |
| Sales | 7,380 | 900 |
| Income from Sub | 470 | - |
| $15,370 | $5,600 |
R E Q U I R E D:
Make sure to prepare income statement for a simple group. Outline the treatment of non-controlling interest in consolidated statement of comprehensive income. Record for inter-group trading activities and the impairment of goodwill in the preparation of consolidated financial statements, with emphasis on the consolidated income statement.
Determine the amounts that would appear in the consolidated financial statements of Pub Corporation and Sub for each of the following:
1. Goodwill at December 31, 2019
2. Non-controlling interest share for 2019
3. Consolidated retained earnings at December 31, 2018
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