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On June 30, 2021, Plaster, Inc
On June 30, 2021, Plaster, Inc., paid $980,000 for 80 percent of Stucco Company's outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $245,000. At acquisition date, Stucco reported the following book values for its assets and liabilities:
| Cash | $ | 64,000 | |
| Accounts receivable | 135,800 | ||
| Inventory | 217,400 | ||
| Land | 69,800 | ||
| Buildings | 187,800 | ||
| Equipment | 321,600 | ||
| Accounts payable | (37,400 | ) | |
(Parentheses indicate credit balances.)
On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco's assets as follows:
| Equipment (3-year remaining life) | $ | 79,800 |
| Database (10-year remaining life) | 186,200 | |
At the end of 2021, the following comparative (2020 and 2021) balance sheets and consolidated income statement were available:
| Plaster, Inc. December 31, 2020 |
Consolidated December 31, 2021 |
|||||||
| Cash | $ | 45,400 | $ | 256,400 | ||||
| Accounts receivable (net) | 382,000 | 512,500 | ||||||
| Inventory | 438,200 | 759,900 | ||||||
| Land | 316,800 | 386,600 | ||||||
| Buildings (net) | 258,600 | 396,400 | ||||||
| Equipment (net) | 1,900,000 | 2,153,500 | ||||||
| Database | 0 | 176,890 | ||||||
| Total assets | $ | 3,341,000 | $ | 4,642,190 | ||||
| Accounts payable | $ | 84,800 | $ | 113,400 | ||||
| Long-term liabilities | 424,000 | 1,334,680 | ||||||
| Common stock | 1,908,000 | 1,908,000 | ||||||
| Noncontrolling interest | 0 | 270,700 | ||||||
| Retained earnings | 924,200 | 1,015,410 | ||||||
| Total liabilities and equities | $ | 3,341,000 | $ | 4,642,190 | ||||
| PLASTER, INC., AND SUBSIDIARY STUCCO COMPANY Consolidated Income Statement For the Year Ended December 31, 2021 |
|||||||||
| Revenues | $ | 1,287,800 | |||||||
| Cost of goods sold | $ | 779,900 | |||||||
| Depreciation | 197,900 | ||||||||
| Database amortization | 9,310 | ||||||||
| Interest and other expenses | 10,500 | 997,610 | |||||||
| Consolidated net income | $ | 290,190 | |||||||
Additional Information for 2021
- On December 1, Stucco paid a $46,400 dividend. During the year, Plaster paid $164,000 in dividends.
- During the year, Plaster issued $910,680 in long-term debt at par.
- Plaster reported no asset purchases or dispositions other than the acquisition of Stucco.
Prepare a 2021 consolidated statement of cash flows for Plaster and Stucco. Use the indirect method of reporting cash flows from operating activities.
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