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On January 1, 2013, Apple Company acquired Netflix Company. Apple paid $820,000 for 80% of Netflix' common stock. On the date of acquisition, Netflix...
On January 1, 2013, Apple Company acquired Netflix Company. Apple paid $820,000 for 80% of Netflix' common stock. On the date of acquisition, Netflix had
the following balance sheet:
January 1, 2013
AssetsLiabilities and Equity
Accounts Receivable$182,400 Accounts Payable$165,500
Inventory 124,600Bonds Payable208,500
Buildings272,500Paid-In Capital in Excess of Par 220,000
Accumulated Depreciation (74,500)Retained Earnings188,000
Accumulated Depreciation (126,000)
Total Assets$1,062,000 Total Liabilities and Equity $1,062,000
Buildings, which have a 25 year life, are overstated by $45,000. Equipment, which has a 18 year life, is overstated by $45,900. Any remaining excess is attributed to
goodwill. Apple uses the partial equity method to account for its investment in Netflix.
On January 1, 2015, Netflix held merchandise sold to it from Apple for $210,000. This beginning inventory had an applicable gross profit of 30%. During 2015, Apple sold
merchandise to Netflix for $528,000. On December 31, 2015, Netflix held $75,000 of this merchandise in its inventory. This ending inventory had an applicable gross profit of
35%. Netflix owed Apple $74,000 on December 31, as a result of this intercompany sale.
On January 1, 2013, Apple sold equipment to Netflix at a profit of $120,000. Depreciation on this equipment is computed over an 15 year life, using the straight-line method.
On January 1, 2014, Netflix sold equipment with a book value of $125,500 to Apple for $160,500. This equipment has a 20 year life and is depreciated using the straight line
Apple and Netflix had the following trial balances on December 31, 2015:
Apple CoNetflix Co
Accounts Receivable192,400 254,000
Investment in Netflix996,400
Accumulated Depreciation - Buildings(255,000)(140,000)
Accumulated Depreciation - Equipment(142,000)(48,400)
Paid-In Capital in Excess of Par(400,000)(220,000)
Cost of Goods Sold512,800 354,000
Depreciation Expense - Buildings82,200 38,000
Depreciation Expense - Equipment42,000 28,000
Other Expenses148,700 134,000
Dividends Declared62,000 100,000
How would I make an allocation and amortization schedule for the investment in Netflix?
How would I complete the consolidated entries and the consolidated financial statements for Apple Company and its Subsidiary Netflix Company as of December 31, 2015?