The Financial Statements for Jode Inc

question 37

Essay

The financial statements for Jode Inc. and Lakely Corp., just prior to their combination, for the year ending December 31, 2020, follow. Lakely's buildings were undervalued on its financial records by $60,000.
On December 31, 2020, Jode issued 54,000 new shares of its $10 par value stock in exchange for all the outstanding shares of Lakely. Jode's shares had a fair value on that date of $35 per share. Jode paid $34,000 to an investment bank for assisting in the arrangements. Jode also paid $24,000 in stock issuance costs to effect the acquisition of Lakely. Lakely will retain its incorporation.Required: Determine consolidated net income for the year ended December 31, 2020.

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Definitions:

Direct Labor-Hours

The total time spent by workers directly involved in the manufacturing process.

Unit Product Cost

The total cost (direct materials, direct labor, and overhead) to produce a single unit of a product.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to apply manufacturing overhead costs to products based on a specific activity base.

Machine-Hours

An assessment of manufacturing productivity or performance, determined by the duration for which machinery is active in the production cycle.