On June 30, 2011, Plaster, Inc., paid $916,000 for 80 percent of Stucco Company’s outstanding stock. Plaster assessed the acquisition date fair value of the 20 percent noncontrolling interest at $229,000. At acquisition date, Stucco reported the following book values for its assets and liabilities:
|
Cash |
$ 60,000 |
|
Accounts receivable |
127,000 |
|
Inventory |
203,000 |
|
Land |
65,000 |
|
Buildings |
175,000 |
|
Equipment |
300,000 |
|
Accounts payable |
(35,000) |
On June 30, Plaster allocated the excess acquisition date fair value over book value to Stucco’s assets as follows:
|
Equipment (3 year life) |
$ 75,000 |
|
Database (10 year life) |
175,000 |
At the end of 2011, the following comparative (2010 and 2011) balance sheets and consolidated income statement were available:
|
Plaster, Inc |
Consolidated |
|
|
Cash |
$ 43,000 |
$ 242,850 |
|
Accounts receivable (net) |
362,000 |
485,400 |
|
Inventory |
415,000 |
720,000 |
|
Land |
300,000 |
365,000 |
|
Buildings (net) |
245,000 |
370,000 |
|
Equipment (net) |
1,800,000 |
2,037,500 |
|
Database |
–0– |
166,250 |
|
Total assets |
$3,165,000 |
$4,387,000 |
|
Accounts payable |
$ 80,000 |
$ 107,000 |
|
Long term liabilities |
400,000 |
1,200,000 |
|
Common stock |
1,800,000 |
1,800,000 |
|
Noncontrolling interest |
–0– |
255,500 |
|
Retained earnings |
885,000 |
1,024,500 |
|
Total liabilities and equities |
$3,165,000 |
$4,387,000 |
|
PLASTER, INC, AND SUBSIDIARY STUCCO COMPANY |
||
|
Revenues |
$1,217,500 |
|
|
Cost of goods sold |
$737,500 |
|
|
Depreciation |
187,500 |
|
|
Database amortization |
8,750 |
|
|
Interest and other expenses |
9,750 |
943,500 |
|
Consolidated net income |
$ 274,000 |
|
Additional Information for 2011
• On December 1, Stucco paid a $40,000 dividend. During the year, Plaster paid $100,000 in dividends.
• During the year, Plaster issued $800,000 in long term debt at par.
• Plaster reported no asset purchases or dispositions other than the acquisition of Stucco. Prepare a 2011 consolidated statement of cash flows for Plaster and Stucco. Use the indirect method of reporting cash flows from operating activities.