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Zybrea Knight
Answers (2)
ZK
Answered
Keen Inc. and Lax Inc. had the following balance sheets on October 31, 2019:
Keen Inc Lax Inc Lax Inc (carrying value) (carrying value) (fair value) Cash $300,000$80,000$80,000 Accounts Receivable $60,000$24,000$24,000 Inventory $30,000$54,000$50,000 Plant and Equipment (net) $310,000$280,000$300,000 Trademark $12,000$16,000 Total Assets $700,000$450,000 Accounts Payable $150,000$200,000$200,000 Bonds Payable $400,000$120,000$100,000 Common Shares $100,000$60,000 Retained Earnings $50,000$70,000 Total Liabilities and Equity $700,000$450,000\begin{array}{|l|r|r|r|}\hline & \text { Keen Inc } & \text { Lax Inc } & \text { Lax Inc } \\\hline & \text { (carrying value) } & \text { (carrying value) } & \text { (fair value) } \\\hline \text { Cash } & \$ 300,000 & \$ 80,000 & \$ 80,000 \\\hline \text { Accounts Receivable } & \$ 60,000 & \$ 24,000 & \$ 24,000 \\\hline \text { Inventory } & \$ 30,000 & \$ 54,000 & \$ 50,000 \\\hline \text { Plant and Equipment (net) } & \$ 310,000 & \$ 280,000 & \$ 300,000 \\\hline \text { Trademark } & & \$ 12,000 & \$ 16,000 \\\hline \text { Total Assets } & \$ 700,000 & \$ 450,000 \\\hline \text { Accounts Payable } & \$ 150,000 & \$ 200,000 &\$200,000\\\hline \text { Bonds Payable } & \$ 400,000 & \$ 120,000&\$100,000 \\\hline \text { Common Shares } & \$ 100,000 & \$ 60,000 \\\hline \text { Retained Earnings } & \$ 50,000 & \$ 70,000 \\\hline \text { Total Liabilities and Equity } & \$ 700,000 & \$ 450,000 \\\hline\end{array} Cash Accounts Receivable Inventory Plant and Equipment (net) Trademark Total Assets Accounts Payable Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Keen Inc (carrying value) $300,000$60,000$30,000$310,000$700,000$150,000$400,000$100,000$50,000$700,000 Lax Inc (carrying value) $80,000$24,000$54,000$280,000$12,000$450,000$200,000$120,000$60,000$70,000$450,000 Lax Inc (fair value) $80,000$24,000$50,000$300,000$16,000$200,000$100,000 On November 1, 2019, Keen acquired 80% of Lax Inc. for cash consideration of $240,000. Assume that the following draft balance sheet was prepared by a co-worker on the date of acquisition. Assuming this balance sheet is devoid of technical errors, what can be concluded about the balance sheet below?
Keen Inc Lax Inc Lax Inc (carrying value) (carrying value) (fair value) Cash $300,000$80,000$80,000 Accounts Receivable $60,000$24,000$24,000 Inventory $30,000$54,000$50,000 Plant and Equipment (net) $310,000$280,000$300,000 Trademark $12,000$16,000 Total Assets $700,000$450,000 Accounts Payable $150,000$200,000$200,000 Bonds Payable $400,000$120,000$100,000 Common Shares $100,000$60,000 Retained Earnings $50,000$70,000 Total Liabilities and Equity $700,000$450,000\begin{array}{|l|r|r|r|}\hline & \text { Keen Inc } & \text { Lax Inc } & \text { Lax Inc } \\\hline & \text { (carrying value) } & \text { (carrying value) } & \text { (fair value) } \\\hline \text { Cash } & \$ 300,000 & \$ 80,000 & \$ 80,000 \\\hline \text { Accounts Receivable } & \$ 60,000 & \$ 24,000 & \$ 24,000 \\\hline \text { Inventory } & \$ 30,000 & \$ 54,000 & \$ 50,000 \\\hline \text { Plant and Equipment (net) } & \$ 310,000 & \$ 280,000 & \$ 300,000 \\\hline \text { Trademark } & & \$ 12,000 & \$ 16,000 \\\hline \text { Total Assets } & \$ 700,000 & \$ 450,000 \\\hline \text { Accounts Payable } & \$ 150,000 & \$ 200,000 &\$200,000\\\hline \text { Bonds Payable } & \$ 400,000 & \$ 120,000&\$100,000 \\\hline \text { Common Shares } & \$ 100,000 & \$ 60,000 \\\hline \text { Retained Earnings } & \$ 50,000 & \$ 70,000 \\\hline \text { Total Liabilities and Equity } & \$ 700,000 & \$ 450,000 \\\hline\end{array} Cash Accounts Receivable Inventory Plant and Equipment (net) Trademark Total Assets Accounts Payable Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity Keen Inc (carrying value) $300,000$60,000$30,000$310,000$700,000$150,000$400,000$100,000$50,000$700,000 Lax Inc (carrying value) $80,000$24,000$54,000$280,000$12,000$450,000$200,000$120,000$60,000$70,000$450,000 Lax Inc (fair value) $80,000$24,000$50,000$300,000$16,000$200,000$100,000 On November 1, 2019, Keen acquired 80% of Lax Inc. for cash consideration of $240,000. Assume that the following draft balance sheet was prepared by a co-worker on the date of acquisition. Assuming this balance sheet is devoid of technical errors, what can be concluded about the balance sheet below?
On May 06, 2024
Keen Inc.
Consolidated Balance Sheet,
as at November 1, 2019
Cash $124,000 Accounts Receivable $79,200 Inventory $70,000 Plant and Equipment (net) $550,000 Trademark $12,800 Goodwill $104,000 Total Assets $940,000 Accounts Payable $310,000 Bonds Payable $480,000 Common Shares $100,000 Retained Earnings $50,000 Total Liabilities and Equity $940,000\begin{array}{|l|c|}\hline \text { Cash } & \$ 124,000 \\\hline \text { Accounts Receivable } & \$ 79,200 \\\hline \text { Inventory } & \$ 70,000 \\\hline \text { Plant and Equipment (net) } & \$ 550,000 \\\hline \text { Trademark } & \$ 12,800 \\\hline \text { Goodwill } & \$ 104,000 \\\hline \text { Total Assets } & \$ 940,000 \\\hline \text { Accounts Payable } & \$ 310,000 \\\hline \text { Bonds Payable } & \$ 480,000 \\\hline \text { Common Shares } & \$ 100,000 \\\hline \text { Retained Earnings } & \$ 50,000 \\\hline \text { Total Liabilities and Equity } & \$ 940,000\\\hline\end{array} Cash Accounts Receivable Inventory Plant and Equipment (net) Trademark Goodwill Total Assets Accounts Payable Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity $124,000$79,200$70,000$550,000$12,800$104,000$940,000$310,000$480,000$100,000$50,000$940,000 This balance sheet was prepared using the Proportionate Consolidation Method. There is no non-controlling interest (NCI) section on the balance sheet, and Keen's consolidated balance sheet amounts (with the exception of the shareholders' equity section) include Keen's book values and 80% of Lax's fair values.
Consolidated Balance Sheet,
as at November 1, 2019
Cash $124,000 Accounts Receivable $79,200 Inventory $70,000 Plant and Equipment (net) $550,000 Trademark $12,800 Goodwill $104,000 Total Assets $940,000 Accounts Payable $310,000 Bonds Payable $480,000 Common Shares $100,000 Retained Earnings $50,000 Total Liabilities and Equity $940,000\begin{array}{|l|c|}\hline \text { Cash } & \$ 124,000 \\\hline \text { Accounts Receivable } & \$ 79,200 \\\hline \text { Inventory } & \$ 70,000 \\\hline \text { Plant and Equipment (net) } & \$ 550,000 \\\hline \text { Trademark } & \$ 12,800 \\\hline \text { Goodwill } & \$ 104,000 \\\hline \text { Total Assets } & \$ 940,000 \\\hline \text { Accounts Payable } & \$ 310,000 \\\hline \text { Bonds Payable } & \$ 480,000 \\\hline \text { Common Shares } & \$ 100,000 \\\hline \text { Retained Earnings } & \$ 50,000 \\\hline \text { Total Liabilities and Equity } & \$ 940,000\\\hline\end{array} Cash Accounts Receivable Inventory Plant and Equipment (net) Trademark Goodwill Total Assets Accounts Payable Bonds Payable Common Shares Retained Earnings Total Liabilities and Equity $124,000$79,200$70,000$550,000$12,800$104,000$940,000$310,000$480,000$100,000$50,000$940,000 This balance sheet was prepared using the Proportionate Consolidation Method. There is no non-controlling interest (NCI) section on the balance sheet, and Keen's consolidated balance sheet amounts (with the exception of the shareholders' equity section) include Keen's book values and 80% of Lax's fair values.
ZK
Answered
Fixed costs are those costs that continue even if no units are produced.
On May 05, 2024
True