Compute consolidated retained earnings as a result of this acquisition

A)  $1,160.

B)  $1,170.

C)  $1,265.

D)  $1,280.

E)  $1,650.

Answer: D

Learning Objective: 02-06a 

Learning Objective: 02-06b

Learning Objective: 02-07

Topic: Costs of combination

Topic: Acquisition―Calculate consolidated balances

Topic: Consolidation worksheet

Difficulty: 3 Hard

Blooms: Apply

AACSB: Knowledge Application

AICPA: BB Critical Thinking

AICPA: FN Measurement

Feedback: Components of ending retained earnings (revenues and expenses) are extended across the worksheet, then combined vertically.

Atwood’s Total Expenses = Balance Sheet Expenses + Transaction Expenses = $2,760 + $10 = $2,770

Atwood’s Ending Retained Earnings = Revenues ($2,880) – Total Expenses ($2,770) = $110

Total Ending Retained Earnings = $1,170 + $110 = $1,280