Tugas22
Pile Corporation acquired 100% of Scud Corporation’s outstanding common stock at its
underlying book value on January 1, 20X4, when Scud’s equity consisted of $100,000
capital stock, $35,000 other paid-in capital, and $35,000 retained earnings. Scud’s assets
and liabilities were recorded at their fair values on this date.
Pile uses the equity method in accounting for Scud but has made no adjustment
relative to the intercompany bond holdings of Pile and Scud. Scud’s investment in Pile’s
bonds consists of $50,000 par value of Pile’s 10% bonds that were purchased by Scud for
$48,000 on January 2, 20X4. These bonds mature on January 1, 20X8 and have
semiannual interest payment dates of July 1 and January 1. The combined income and
retained earnings statements and balance sheets of Pile and Scud at and for the year
ended December 31, 20X4 are summarized as follows:
Pile
Scud
$150,000
$ 55,000
25,000
-
-
5,500
Cost of sales
(73,000)
(20,000)
Depreciation expense
(28,000)
(9,000)
Interest income
(9,000)
-
Other expenses
(30,000)
(6,500)
35,000
25,000
65,000
35,000
(10,000)
(20,000)
$ 90,000
$40,000
$ 15,000
$
Combined Income and Retained Earnings Statements
for the Year Ended December 31, 20X4
Sales
Income from Scud
Interest income
Net income
Add : Beginning retained earnings
Deduct : Dividends
Retained earnings December 31, 20X4
Balance Sheet at December 31, 20X4
Cash
Accounts receivable
Dividends receivable from Saf
9,000
20,000
10,000
-
2,500