On January 1, 2024, Pride, Incorporated acquired 80% of the outstanding voting common stock of Strong Corporation for $364,000. There is no active market for Strong’s stock. Of this payment, $28,000 was allocated to equipment (with a five-year life) that had been undervalued on Strong's books by $35,000. Any remaining excess was attributable to goodwill, which has not been impaired. As of December 31, 2024, before preparing the consolidated worksheet, the financial statements appeared as follows: Pride Strong Revenues $ 420,000 $ 280,000 Cost of goods sold (196,000) (112,000) Operating expenses (28,000) (14,000) Net income $ 196,000 $ 154,000 Retained earnings, 1/1/24 $ 420,000 $ 210,000 Net income (above) 196,000 154,000 Dividends paid 0 0 Retained earnings, 12/31/24 $ 616,000 $ 364,000 Cash and receivables $ 294,000 $ 126,000 Inventory 210,000 154,000 Investment in Strong 364,000 0 Equipment (net) 616,000 420,000 Total assets $ 1,484,000 $ 700,000 Liabilities $ 588,000 $ 196,000 Common stock 280,000 140,000 Retained earnings, 12/31/24 (above) 616,000 364,000 Total liabilities and stockholders’ equity $ 1,484,000 $ 700,000 During 2024, Pride bought inventory for $112,000 and sold it to Strong for $140,000. Only half of the inventory purchase price had been remitted to Pride by Strong at year-end. As of December 31, 2024, 60% of these goods remained in the company's possession. What is the total of consolidated operating expenses at December 31, 2024?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 19E

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Question

On January 1, 2024, Pride, Incorporated acquired 80% of the outstanding voting common stock of Strong Corporation for $364,000. There is no active market for Strong’s stock. Of this payment, $28,000 was allocated to equipment (with a five-year life) that had been undervalued on Strong's books by $35,000. Any remaining excess was attributable to goodwill, which has not been impaired.

As of December 31, 2024, before preparing the consolidated worksheet, the financial statements appeared as follows:

	Pride	Strong
Revenues	$ 420,000	$ 280,000
Cost of goods sold	(196,000)	(112,000)
Operating expenses	(28,000)	(14,000)
Net income	$ 196,000	$ 154,000
Retained earnings, 1/1/24	$ 420,000	$ 210,000
Net income (above)	196,000	154,000
Dividends paid	0	0
Retained earnings, 12/31/24	$ 616,000	$ 364,000
Cash and receivables	$ 294,000	$ 126,000
Inventory	210,000	154,000
Investment in Strong	364,000	0
Equipment (net)	616,000	420,000
Total assets	$ 1,484,000	$ 700,000
Liabilities	$ 588,000	$ 196,000
Common stock	280,000	140,000
Retained earnings, 12/31/24 (above)	616,000	364,000
Total liabilities and stockholders’ equity	$ 1,484,000	$ 700,000

During 2024, Pride bought inventory for $112,000 and sold it to Strong for $140,000. Only half of the inventory purchase price had been remitted to Pride by Strong at year-end. As of December 31, 2024, 60% of these goods remained in the company's possession.

What is the total of consolidated operating expenses at December 31, 2024?

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