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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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