Plaster reported no asset purchases or dispositions other than the acquisition of Stucco. Prepare a…


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On June 30, 2011, Plaster, Inc., paid $916,000 for 80 percent of Stucco Company’s outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $229,000. At acquisition date, Stucco reported the following book values for its assets and liabilities: Cash $ 60,000 Accounts receivable 127,000 Inventory 203,000 Land 65,000 Buildings 175,000 Equipment 300,000 Accounts payable (35,000) On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco’s assets as follows: Equipment (3-year life) $ 75,000 Database (10-year life) 175,000 At the end of 2011, the following comparative (2010 and 2011) balance sheets and consolidated income statement were available: Plaster, Inc December 31, 2010 Consolidated December 31, 2011 Cash $ 43,000 $ 242,850 Accounts receivable (net) 362,000 485,400 Inventory 415,000 720,000 Land 300,000 365,000 Buildings (net) 245,000 370,000 Equipment (net) 1,800,000 2,037,500 Database –0– 166,250 Total assets $3,165,000 $4,387,000 Accounts payable $ 80,000 $ 107,000 Long-term liabilities 400,000 1,200,000 Common stock 1,800,000 1,800,000 Noncontrolling interest –0– 255,500 Retained earnings 885,000 1,024,500 Total liabilities and equities $3,165,000 $4,387,000 PLASTER, INC, AND SUBSIDIARY STUCCO COMPANY Consolidated Income Statement For the Year Ended December 31, 2011 PLASTER, INC, AND SUBSIDIARY STUCCO COMPANY Consolidated Income Statement For the Year Ended December 31, 2011 PLASTER, INC, AND SUBSIDIARY STUCCO COMPANY Consolidated Income Statement For the Year Ended December 31, 2011 Revenues $1,217,500 Cost of goods sold $737,500 Depreciation 187,500 Database amortization 8,750 Interest and other expenses 9,750 943,500 Consolidated net income $ 274,000 Additional Information for 2011 • On December 1, Stucco paid a $40,000 dividend. During the year, Plaster paid $100,000 in dividends. • During the year, Plaster issued $800,000 in long-term debt at par. • Plaster reported no asset purchases or dispositions other than the acquisition of Stucco. Prepare a 2011 consolidated statement of cash flows for Plaster and Stucco. Use the indirect method of reporting cash flows from operating activities.

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