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On January 1, 2017, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $325,200. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $192,300. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $216,800. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $74,200 and an unrecorded customer list (15-year remaining life) assessed at a $50,100 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Transfer Price Ending Balance Year Cost to McIlroy (at transfer price) $124,280 $155, 250 $51,750 112,880 150,400 37,600 to Stinson 2017 2018 The individual financial statements for these two companies as of December 31, 2018, and the year then ended follow: Sales Cost of goods sold Operating expenses Equity in earnings in Stinson Net income Retained earnings, 1/1/18 Net income Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) McIlroy, Inc. $ (715,000) 469,900 193,210 (32,654) $ (84,544) $ (754,700) (84,544) 46,500 $ (792,744) $ 270,200 253,800 384,548 325,000 232,100 Stinson, Inc. $ (353, 000) 215,800 73,600 @ $ (63,600) $ (281,300) (63,600) 16,500 $ (328,400) $ 149,600 130,400 @ 203,600 87,000 21.700 232, 100 Equipment (net) Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equities $ 1,465,648 $ (372,984) (300,000) (792,744) $(1,465,648) 87,000 21,700 $ 592,300 $ (163,990) (100,000) (328,400) $ (592,300) a. Show how Mcllroy determined the $384,548 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2018, Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Show how Mcllroy determined the $384,548 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. $ 325,200 Consideration transferred Increase in Stinson's retained earnings 1/1/17 to 1/1/18 Excess fair value amortization 7 andinn 10,760 Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Show how Mcllroy determined the $384,548 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. 325,200 + 10,760 Consideration transferred Increase in Stinson's retained earnings 1/1/17 to 1/1/18 Excess fair value amortization 2017 ending inventory profit deferral Mcllroy's equity in earnings of Stinson for 2018 Stinson 2018 dividends declared to Mcllroy Investment account balance 12/31/18 10,760 $ 335,960 RATE Required 3 > Required A Required B Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2018. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the NCI and Consolidated Totals columns should be entered with minus sign.) Show less MCILROY, INC., AND STINSON, INC. Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Accounts Mcllroy Stinson Debit Credit NCI $ $ $ (353,000) 215,800 150,400 9,400 Consolidated Totals 917,600 534,350 277,570 (715,000) 469,900 193,210 (32,654) (84,544) +73,600 10,350 0 150,400 (63,600) Sales Cost of goods sold Operating expenses Equity in earnings of Stinson Separate company net Income Consolidated net income To noncontrolling interest To Mcllroy, Inc. Retained earings, 1/1 Net Income Dividends declared $ 1,729,520 1,729,520 (754,700) (84,544) 46,500 (281,300) (63,600) 16,500 1990 AAN AN le
