Show the detailed calculations arriving at each of the following accounts at December 31, 2022

Selected accounts from the parent, subsidiary and consolidated financial statements for the year ended December 31, 2022 can be found in the accompanying Excel file.

PROBLEM 1: Parsley Parent acquired 100% of Sage Subsidiary on January 1, 2018. The purchase price was $370,000 in excess of Sage’s book value of Stockholders Equity on the acquisition date. Such excess was assigned to the following assets:

Original Amount   Original  Useful Life

Property, Plant & Equipment (PP&E), net     $80,000                   8 years

License Agreement                                              $90,000                    6 years

Goodwill                                                                 $200,000                 Indefinite

$370,000

Selected accounts from the parent, subsidiary and consolidated financial statements for the year ended December 31, 2022 can be found in the accompanying Excel file.

Questions:

  1. Show the detailed calculations arriving at each of the following accounts at December 31, 2022:
  • i. Consolidated Property, Plant and Equipment, net
  • ii. Consolidated License Agreement
  • iii. Consolidated Retained Earnings
  1. What is the relationship between Parsley’s Net Income and Consolidated Net Income? Why?