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28.

Patrick Corporation acquired 100 percent of OBrien Comp


OBrien reported net assets with a carrying amount of $ 350,0
( having been internally developed) or had fair values that diff

Trademarks (indefinite life)


Customer relationships (5-year life)
Equipment (10-year life)

Any goodwill is considered to have an indefinite life with no im

Following are financial statements at the end of the first year


maintained accounting systems. Credit balances are indicated

Revenues
Cost of goods sold
Depreciation expense
Amortization expense
Income from O'Brien
Net Income
Retained Earnings 1/1
Net income
Dividends declared
Retained earnings 12/31
Cash
Receivables

Inventory
Investment in O'Brien
Trademarks
Customer relationships
Euipement (net)
Goodwill
Total assets
Liabilities
Common stock
Retained earnings 12/31
Total liabilites and equities

a. Show how Patrick computed the $ 210,000 Income of OBrie


b. Without preparing a worksheet or consolidation entries, det
c. Verify the totals determined in part ( b) by producing a cons

36. Tyler Company acquired all of Jasmine Companys outstan


However, equipment ( having an eight-year life) was underval
Subsequent to the acquisition, Jasmine reported the following

2013
2014
2015

In accounting for this investment, Tyler has used the equity m

Revenues- operating
Expenses
Equipment (net)
Buildings (net)
Common stock
Retained earnings, 12/31/15 balance

Determine and explain the following account balances as of D


a. Investment in Jasmine Company ( on Tylers individual finan
b. Equity in Subsidiary Earnings ( on Tylers individual financia
c. Consolidated Net Income.
d. Consolidated Equipment (net).
e. Consolidated Buildings (net).
f. Consolidated Goodwill (net).
g. Consolidated Common Stock.
h. Consolidated Retained Earnings, 12/31/15.

ercent of OBrien Companys outstanding common stock on January


rying amount of $ 350,000 at that time. Some of OBriens assets eith
had fair values that differed from book values as follows:
Book values
60,000
342,000

Fair values
160,000
75,000
312,000

indefinite life with no impairment charges during the year.

he end of the first year for these two companies prepared from their
t balances are indicated by parentheses.
Patrick
(1,125,000)
300,000
75,000
25,000
(210,000)
(935,000)

O'Brien
(520,000)
228,000
70,000
(222,000)

(700,000)
(935,000)
142,000
(1,493,000)

(250,000)
(222,000)
80,000
(392,000)

185,000
225,000

105,000
56,000

175,000
680,000
474,000
925,000
2,664,000
(771,000)
(400,000)
(1,493,000)
(2,664,000)

135,000
60,000
272,000
628,000
(136,000)
(100,000)
(392,000)
(628,000)

10,000 Income of OBrien balance. Discuss how you determined whic


onsolidation entries, determine and explain the totals to be reported
( b) by producing a consolidation worksheet for Patrick and OBrien fo

mine Companys outstanding stock on January 1, 2013, for $ 206,000


-year life) was undervalued by $ 54,400 on Jasmines financial record
e reported the following:
Net Income Dividends Declared
50,000
10,000
60,000
40,000
30,000
20,000

r has used the equity method. Selected accounts taken from the fina
Tyler Company

Jasmine Company

(310,000)
198,000
320,000
220,000
(290,000)
(410,000)

(104,000)
74,000
50,000
68,000
(50,000)
(160,000)

ccount balances as of December 31, 2015:


n Tylers individual financial records).
ylers individual financial records).

31/15.

g common stock on January 1, for $ 550,000 in cash.


Some of OBriens assets either were unrecorded
alues as follows:

s during the year.

mpanies prepared from their separately

ss how you determined which accounting method Patrick uses for its
ain the totals to be reported for this business combination for the yea
eet for Patrick and OBrien for the year ending December 31.

uary 1, 2013, for $ 206,000 in cash. Jasmine had a book value of onl
on Jasmines financial records. A building with a 20- year life was ove

accounts taken from the financial records of these two companies as

Patrick uses for its investment in OBrien.


nation for the year ending December 31.
mber 31.

book value of only $ 140,000 on that date.


year life was overvalued by $ 10,000.

wo companies as of December 31, 2015, follow: