Problem 4-22(a)
Parker, Inc, acquires 70 percent of Sawyer Company for $420,000. The remaining 30 percent of Sawyer’s outstanding shares continue to trade at a collective value of $174,000. On the acquisition date, Sawyer has the following accounts:
| Book Value | Fair Value | |
| Current assets | 210,000 | $210,000 |
| Land | 170,000 | 180,000 |
| Buildings | 300,000 | 330,000 |
| Liabilities | (280,000) | (280,000) |
The buildings have a 10-year life. In addition, Sawyer holds a patent worth $140,000 that has a five-year life but is not recorded on its financial records. At the end of the year, the two companies report the following balances:
| Parker | Sawyer | |
| Revenues | (900,000) | (600,000) |
| Expenses | 600,000 | 400,000 |
a. Assume that the acquisition took place on January 1. What figures would appear in a consolidated income statement for this year?
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