REFERENCE: Ref.03_13 Fesler Inc.acquired All of the Outstanding Common Stock of Pickett

question 43

Essay

REFERENCE: Ref.03_13
Fesler Inc.acquired all of the outstanding common stock of Pickett Company on January 1,2009.Annual amortization of $22,000 resulted from this transaction.On the date of the takeover,Fesler reported retained earnings of $520,000 while Pickett reported a $240,000 balance.Fesler reported net income of $100,000 in 2009 and $68,000 in 20010,and paid dividends of $25,000 in dividends each year.Pickett reported net income of $24,000 in 2009 and $36,000 in 2010,and paid dividends of $10,000 in dividends each year.
Assume that Fesler's reported net income includes Equity in Subsidiary Income.
-If the parent's net income reflected use of the initial value method,what were the consolidated retained earnings on December 31,2010?

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Definitions:

Fixed Proportion

A production scenario where inputs are used in rigid, unchanging ratios to produce outputs.

Crew Members

Individuals who work together as part of a team, especially on ships, aircraft, or in film and television productions.

Aircraft

A vehicle designed to navigate through the air.

Returns to Scale

The change in output resulting from a proportional change in all inputs (factors of production) in the long run.