On January 1, 20×1, Peanut acquired 80% of Salt for $ 200,000



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On January 1, 20×1, Peanut acquired 80% of Salt for $ 200,000. On this date, Salt had owners’ equity of $ 200,000 (including Retained earnings of $ 100,000). Any excess cost over book value is attributable to inventory (worth $ 12,500 over book value) equipment (worth $ 25,000 over book value, with a remaining life of 4 years) and to goodwill.

On January 1, 20×2, Peanut held merchandise acquired from Salt for $ 20,000. During 20×2, Salt sold merchandise to Peanut for $ 40,000, $ 10,000 of which is still held by Peanut on December 31, 20×2. Salt’s usual gross profit is 50%

On January 1, 20×1, Peanut sold equipment to Salt at a gain of $ 15,000. Depreciation is computed using the straight line method over 5 years.

This is the trial balance for the two companies on December 31, 20×2

Peanut Salt

Inventory 130,000 50,000

Other Current Assets 241,000 235,000

Investment in Salt 200,000

Other Investments 20,000

Land 140,000 80,000

Bldg and Equip (net) 255,000 170,000

Other intangible assets 20,000

Current Liabilities 150,000 70,000

Bonds Payable 100,000

Other Long term Liabilities 200,000 50,000

Common Stock 200,000 50,000

APIC 100,000 50,000

RE (1/1) 280,000 150,000

Sales 600,000 315,000

COGS 350,000 150,000

Operating expenses 150,000 60,000

Income from Salt 16,000

Dividends declared 60,000 20,000

Provide consolidated financial statements for 20×2.



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