Accumulated Depreciation (200,000) (85,000)
Equipment 140,000 150,000
Accumulated Depreciation (80,000) (78,000)
Patent (net) 24,000
Current Liabilities (150,000) (50,000)
Mortgage Payable (200,000)
Common Stock (100,000) (100,000)
Paid-In Capital in Excess of Par (1,500,000) (200,000)
Retained Earnings, Jan. 1, 20X2 (680,500) (217,500)
Cost of Goods Sold 380,000 260,000
Depreciation Expense—Buildings 10,000 17,500
Depreciation Expense—Equipment 7,000 24,000
Other Expenses 50,000 115,000
Interest Expense 16,000
Subsidiary Income (67,500)
Dividends Declared 20,000 10,000
Totals 0 0
1. Prepare a zone analysis and a determination and distribution of excess schedule for the in- M M M M M Required vestment in HD Air.
2. Complete a consolidated worksheet for Fast Cool Company and its subsidiary HD Air Company as of December 31, 20X2. Prepare supporting amortization and income distribution schedules.
Problem 3-16 (LO 2, 5) 100% bargain, complicated equity, second year. Refer to the preceding information for Fast Cool's acquisition of HD Air's common stock. Assume Fast Cool issued 25,000 shares of its $20 fair value common stock for 100% of HD Air's common stock. Fast Cool uses the simple equity method to account for its investment in HD Air. Fast Cool and HD Air had the following trial balances on December 31, 20X2:
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