Cost method, consolidated statements. The trial balances of Chango Company and its subsidiary, Lhasa Inc., are as follows on December 31, 20X3:
|
Chango |
Lhasa |
|
|
Current Assets |
530,000 |
130,000 |
|
Depreciable Fixed Assets |
1,805,000 |
440,000 |
|
Accumulated Depreciation |
405,000 |
70,000 |
|
Investment in Lhasa Inc |
460,000 |
|
|
Liabilities |
900,000 |
225,000 |
|
Common Stock ($1 par) |
220,000 |
|
|
Common Stock ($5 par) |
50,000 |
|
|
Paid In Capital in Excess of Par |
1,040,000 |
15,000 |
|
Retained Earnings, January 1, 20X3 |
230,000 |
70,000 |
|
Revenues |
460,000 |
210,000 |
|
Expenses |
450,000 |
170,000 |
|
Dividends Declared |
10,000 |
|
|
Total |
0 |
0 |
On January 1, 20X1, Chango Company exchanged 20,000 shares of its common stock, with a fair value of $23 per share, for all the outstanding stock of Lhasa Inc. Any excess of cost over book value was attributed to goodwill. The stockholders’ equity of Lhasa Inc. on the purchase date was as follows:
|
Common stock ($5 par) |
$50,000 |
|
Paid in capital in excess of par |
15,000 |
|
Retained earnings |
135,000 |
|
Total equity |
$200,000 |
1. Prepare a determination and distribution of excess schedule for the investment.
2. Prepare the 20X3 consolidated statements, including the income statement, retained earnings statement, and balance sheet. (A worksheet is not required.)