4 plower corporation acquired all of the outstanding voting common stock of the squa 4307604

4 plower corporation acquired all of the outstanding voting common stock of the squa 4307604

4) Plower Corporation acquired all of the outstanding voting common stock of the Squab Corporation several years ago when the book values and fair values of Squab's net assets were equal.

On April 1, 2010, Plower sold land that cost $25,000 to Squab for $40,000. Squab resold the land for $45,000 on December 1, 2012.

On July 1, 2012, Plower sold equipment with a book value of $10,000 to Squab for $26,000. Squab is depreciating the equipment over a four-year period using the straight-line method.  The equipment has no salvage value.

Required:

The first two columns in the working papers presented below summarize income statement information from the separate company financial statements of Plower and Squab for the year ended December 31, 2012. Fill in the consolidated working paper columns to show how each of the items from the separate company reports will appear in the consolidated income statement for the year ended December 31, 2012.

Plower

Squab

Consolidated

Sales

450,000

200,000

Invest. income from Squab

57,000

Gain on sale of equipment

16,000

Gain on sale of land

5,000

Cost of sales

(211,500)

(91,500)

Depreciation expense

(45,500)

(23,500)

Other expenses

(120,000)

(34,000)

Net income

146,000

56,000

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