House Corporation has been operating profitably since its creation in 1959. At the beginning of 2011, House

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House Corporation has been operating profitably since its creation in 1959. At the beginning of 2011, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule:

House Corporation has been operating profitably since its creation in

House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House's purchases during 2011 and 2012 and related ending inventory balances follow:
................................................ Remaining Intra-Entity
....................... Intra-Entity .......... Inventory-End of Year
Year ................. Purchases ................ (At transfer price)
2011 ................. $120,000 ...................... $40,000
2012 ................. 150,000 ........................ 60,000
On January 1, 2013, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's outstanding common stock. The total price of these shares was $240,000, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2013, House acquired additional inventory from Wilson at a price of $200,000. Of this merchandise, 45 percent is still held at year-end.
Using the three companies' following financial records for 2013, prepare a consolidation worksheet. The partial equity method based on operating income has been applied to each investment.

House Corporation has been operating profitably since its creation in


Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Advanced Accounting

ISBN: 978-0078025402

11th edition

Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik

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