Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $892,000 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,115,000. Also at the acquisition date, Stanford's book value was $535,100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Trade names (indefinite life) Property and equipment (net, 8-year remaining life) Patent (14-year remaining life) For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Stanford Net income Accounts Retained earnings, 1/1/24 Net income Dividends declared Retained earnings, 12/31/24 Current assets Investment in Stanford Trade names Property and equipment (net) Patents Total assets Accounts payable Common stock Book Value Fair Value $ 294,200 $ 340,500 259, 200 238,400 111,500 150,700 Plaza $ (775,500) 428,700 181,700 0 (308,000) $ (473,100) $ (1,043,400) (473,100) 245, 600 $ (1,270,900) Additional paid-in capital Retained earnings (above) Total liabilities and equities At year-end, there were no intra-entity receivables or payables. $ 703,700 1,179,200 196,500 843,400 0 $ 2,922,800 $ (116,300) (245,600) (1,290,000) (1,270,900) $ (2,922,800) Stanford $ (767,100) 323,800 29,800 23,100 0 $ (390,400) $ (433,100) (390,400) 26,000 $ (797,500) $ 353,300 0 294, 200 208,600 88,400 $ 944,500 $ (45,000) (90,000) (12,000) (797,500) $ (944,500) Required: Prepare a worksheet to consolidate the financial statements of Plaza, Incorporated, and its subsidiary Stanford.
Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $892,000 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,115,000. Also at the acquisition date, Stanford's book value was $535,100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Trade names (indefinite life) Property and equipment (net, 8-year remaining life) Patent (14-year remaining life) For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Stanford Net income Accounts Retained earnings, 1/1/24 Net income Dividends declared Retained earnings, 12/31/24 Current assets Investment in Stanford Trade names Property and equipment (net) Patents Total assets Accounts payable Common stock Book Value Fair Value $ 294,200 $ 340,500 259, 200 238,400 111,500 150,700 Plaza $ (775,500) 428,700 181,700 0 (308,000) $ (473,100) $ (1,043,400) (473,100) 245, 600 $ (1,270,900) Additional paid-in capital Retained earnings (above) Total liabilities and equities At year-end, there were no intra-entity receivables or payables. $ 703,700 1,179,200 196,500 843,400 0 $ 2,922,800 $ (116,300) (245,600) (1,290,000) (1,270,900) $ (2,922,800) Stanford $ (767,100) 323,800 29,800 23,100 0 $ (390,400) $ (433,100) (390,400) 26,000 $ (797,500) $ 353,300 0 294, 200 208,600 88,400 $ 944,500 $ (45,000) (90,000) (12,000) (797,500) $ (944,500) Required: Prepare a worksheet to consolidate the financial statements of Plaza, Incorporated, and its subsidiary Stanford.
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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Transcribed Image Text:Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange
for $892,000 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,115,000.
Also at the acquisition date, Stanford's book value was $535,100.
Several individual items on Stanford's financial records had fair values that differed from their book values as follows:
Items
Trade names (indefinite life)
Property and equipment (net, 8-year remaining life)
Patent (14-year remaining life)
For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account
balances are for the year ending December 31, 2024, for both companies.
Revenues
Cost of goods sold
Depreciation expense
Amortization expense
Equity in income of Stanford.
Net income
Accounts
Retained earnings, 1/1/24
Net income
Dividends declared
Retained earnings, 12/31/24
Current assets
Investment in Stanford
Trade names
Property and equipment (net)
Patents
Total assets
Accounts payable
Common stock
Book Value Fair Value
$ 294,200 $340,500
238,400
259, 200
111,500
150,700
Plaza
$ (775,500)
428,700
181,700
0
(308,000)
$ (473,100)
$ (1,043,400)
(473,100)
245,600
$ (1,270,900)
Additional paid-in capital
Retained earnings (above)
Total liabilities and equities
At year-end, there were no intra-entity receivables or payables.
$ 703,700
1,179,200
196,500
843,400
0
$ 2,922,800
$ (116,300)
(245,600)
(1,290,000)
(1,270,900)
$ (2,922,800)
Stanford
$ (767,100)
323,800
29,800
23,100
0
$ (390,400)
$ (433,100)
(390,400)
26,000
$ (797,500)
$ 353,300
0
294, 200
208,600
88,400
$ 944,500
$ (45,000)
(90,000)
(12,000)
(797,500)
$ (944,500)
Required:
Prepare a worksheet to consolidate the financial statements of Plaza, Incorporated, and its subsidiary Stanford.
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