1.
Lowell, Inc., acquires 80 percent of the outstanding common stock of Boston Corporation on January 1, 2018, in exchange for $920,700 cash. At the acquisition date, Boston's total fair value, including the noncontrolling interest, was assessed at $1,150,875. Also at the acquisition date, Boston's book value was $492,500. Several individual items on Boston's financial records had fair values that differed from their book values as follows: Book Value Fair Value Tradenames (indefinite life) $ 253,300 $ 371,100 Property and equipment (net, 8-year remaining life) 208,800 227,200 Patent (14-year remaining life) 119,800 152,000 For internal reporting purposes, Lowell, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies. Lowell Boston Revenues $ (782,200) $(630,400) Cost of goods sold 432,400 278,800 Depreciation expense 183,300 26,100 Amortization expense 19,900 Equity in income of Boston (240,800) 0 Net income $ (407,300) $(305,600) Retained earnings, 1/1/18 $ (898,300) $ (372,900) Net income (407,300) (305,600) Dividends declared 211,400 23,000 Retained earnings, 12/31/18 $(1,094,200) $(655,500) Current assets Investment in Boston Tradenames Property and equipment (net) Patents Total assets $ 605,900 $ 304,200 1,143,100 0 169,200 253,300 726,200 182,700 0 99,900 $ 2,644,400 $ 840,100 Accounts payable Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities $ (100,100) $ (65,000) (211,400) (114,000) (1,238,700) (5,600) (1.094,200) (655,500) $(2,644,400) $ (840,100) At year-end, there were no intra-entity receivables or payables. LOWELL CORPORATION AND BOSTON CORPORATION Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Noncontrolling Lowell Boston Debit Credit Interest $ (782,200) $ (630,400) 432,400 278,800 183,300 26,100 2,300 0 19,900 2,300 (240,800) 0 240,800 $ (407,300) S (305,600) Consolidated Totals $ 1,412,600 711,200 211,700 22,200 $ 2,357,700 $ 2,357,700 Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Boston Net income Consolidated net income NCI share of consolidated NI Lowell share of consolidated NI Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Current assets Investment in Boston Tradenames Property and equipment (net) Patents Goodwill Total assets Accounts payable Common stock Additional paid-in capital Noncontrolling interest Retained earnings, 12/31 Total liabilities and equities $ $ (898,300) $ (372,900) (407,300) (305,600) 211,400 23,000 $ $ (655,500) (1,094,200) $ 605,900 $ 304,200 1,143,100 0 169,200 253,300 726,200 182,700 0 99,900 $ 0 $ 2,644,400 $ (100, 100) (211,400) (1,238,700) 840,100 (65,000) (114,000) (5,600) (1,094,200) $ (2,644,400)| (655,500) $ (840,100) $ 245,400 $ 0 $ 0 Lowell, Inc., acquires 80 percent of the outstanding common stock of Boston Corporation on January 1, 2018, in exchange for $920,700 cash. At the acquisition date, Boston's total fair value, including the noncontrolling interest, was assessed at $1,150,875. Also at the acquisition date, Boston's book value was $492,500. Several individual items on Boston's financial records had fair values that differed from their book values as follows: Book Value Fair Value Tradenames (indefinite life) $ 253,300 $ 371,100 Property and equipment (net, 8-year remaining life) 208,800 227,200 Patent (14-year remaining life) 119,800 152,000 For internal reporting purposes, Lowell, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies. Lowell Boston Revenues $ (782,200) $(630,400) Cost of goods sold 432,400 278,800 Depreciation expense 183,300 26,100 Amortization expense 19,900 Equity in income of Boston (240,800) 0 Net income $ (407,300) $(305,600) Retained earnings, 1/1/18 $ (898,300) $ (372,900) Net income (407,300) (305,600) Dividends declared 211,400 23,000 Retained earnings, 12/31/18 $(1,094,200) $(655,500) Current assets Investment in Boston Tradenames Property and equipment (net) Patents Total assets $ 605,900 $ 304,200 1,143,100 0 169,200 253,300 726,200 182,700 0 99,900 $ 2,644,400 $ 840,100 Accounts payable Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities $ (100,100) $ (65,000) (211,400) (114,000) (1,238,700) (5,600) (1.094,200) (655,500) $(2,644,400) $ (840,100) At year-end, there were no intra-entity receivables or payables. LOWELL CORPORATION AND BOSTON CORPORATION Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Noncontrolling Lowell Boston Debit Credit Interest $ (782,200) $ (630,400) 432,400 278,800 183,300 26,100 2,300 0 19,900 2,300 (240,800) 0 240,800 $ (407,300) S (305,600) Consolidated Totals $ 1,412,600 711,200 211,700 22,200 $ 2,357,700 $ 2,357,700 Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Boston Net income Consolidated net income NCI share of consolidated NI Lowell share of consolidated NI Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Current assets Investment in Boston Tradenames Property and equipment (net) Patents Goodwill Total assets Accounts payable Common stock Additional paid-in capital Noncontrolling interest Retained earnings, 12/31 Total liabilities and equities $ $ (898,300) $ (372,900) (407,300) (305,600) 211,400 23,000 $ $ (655,500) (1,094,200) $ 605,900 $ 304,200 1,143,100 0 169,200 253,300 726,200 182,700 0 99,900 $ 0 $ 2,644,400 $ (100, 100) (211,400) (1,238,700) 840,100 (65,000) (114,000) (5,600) (1,094,200) $ (2,644,400)| (655,500) $ (840,100) $ 245,400 $ 0 $ 0
