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

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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?