On January 1,2009, Alpha acquired 80 percent of Delta. Of Deltas total business fair value, $125,000 was
Question:
On January 1,2009, Alpha acquired 80 percent of Delta. Of Delta’s total business fair value, $125,000 was allocated to copyrights with a 20-year remaining life. Subsequently, on January 1, 2010, Delta obtained, 70 percent of Omega’s outstanding voting shares. In this second acquisition, $120,000 of Omega’s total business fair value was assigned to copyrights that had a remaining life of 12 years. Delta’s book value was $490,000 on January 1,2009, and Omega reported a book value of $140,000 on January 1, 2010. LO9 Delta has made numerous inventory transfers to Alpha since the business combination was formed. Unrealized gains of $15,000 were present in Alpha’s inventory as ofJanuary 1,2011. During the year, $200,000 in additional intercompany sales were made with $22,000 in gains remaining unre¬ alized at the end ofthe period.
Both Alpha and Delta utilized the partial equity method to account for their investment balances. Following are the individual financial statements for the companies for 2011 with consolidated totals. Develop the worksheet entries necessary to derive these reported balances:
Alpha Delta Omega Consolidated Company Company Company Totals Sales.
. . . . $ (900,000)
$ (500,000)
$(200,000)
$(1,400,000)
Cost of goodssold.
500,000 240,000 80,000 627,000 Operatingexpenses.
_ 294,000 129,000 50,000 489,250 Income ofsubsidiary.
(144,000)
(49,000)
-0-
-0-
Separate company net income.
Consolidated netincome.
Noncontrolling interest in income of Delta Company.
Noncontrolling interest in income of OmegaCompany.
Controlling interest in consolidated netincome.
. . . . $ (250,000)
$ (180,000)
$ (70,000)
$ (283,750)
31,950 18,000
$ (233,800)
Retained earnings, 1/1/11.
... $ (600,000)
$ (400,000)
$(100,000)
$ (572,400)
Net income(above).
(250,000)
(180,000)
(70,000)
(233,800)
Dividendspaid.
50,000 40,000 50,000 50,000 Retained earnings, 12/31/11.
... $ (800,000)
$ (540,000)
$(120,000)
$ (756,200)
Cash and receivables.
... $ 262,000
$ 206,000
$ 70,000
$ 538,000 Inventory.
290,000 310,000 160,000 738,000 Investment in Delta Company.
628,000
-0-
-0-
-0-
Investment in Omega Company.
-0-
238,000
-0-
-0-
Property, plant, and equipment.
420,000 316,000 270,000 1,006,000 Copyrights.
-0
-0-
-0-
206,250 Totalassets.
... $1,600,000
$ 1,070,000
$ 500,000
$ 2,488,250 Liabilities.
... $ (600,000)
$ (410,000)
$(280,000)
$(1,290,000)
Commonstock.
(200,000)
(120,000)
(100,000)
(200,000)
Retained earnings, 12/31/11 .... Noncontrolling interest
(800,000)
(540,000)
(120,000)
(756,200)
in Delta Company, 12/31/11.
Noncontrolling interest
-0-
-0-
-0-
(146,050)
in Omega Company, 12/31/11.
-0-
-0-
-0-
(96,000)
Total liabilities and equities.
... $(1,600,000)
$(1,070,000)
$(500,000)
$(2,488,250)
Step by Step Answer:
Advanced Accounting
ISBN: 9780073379456
9th Edition
Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle