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5 House Corporation has been operating profitably since its creation in 1960. At the beginning of 2019, House acquired a 70 percent ownership in Wilson

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5 House Corporation has been operating profitably since its creation in 1960. At the beginning of 2019, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: 2.85 points $ 843,500 361,500 $ 1,205,000 821,000 $ 384,000 Consideration transferred for 70% interest in Wilson Fair value of the 30% noncontrolling interest Wilson business fair value Wilson book value Excess fair value over book value Assignments to adjust Wilson's assets to fair value: To buildings (20-year remaining life) To equipment (4-year remaining life) To franchises (10-year remaining life) To goodwill (indefinite life) $ 156,000 (33,000) 49,000 172,000 212,000 $ House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House's purchases during 2019 and 2020 and related ending inventory balances follow: Year 2019 2020 Intra-Entity Purchases $90,000 125,000 Remaining Intra-Entity Inventory- End of Year (at transfer price) $30,000 50,000 On January 1, 2021, 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 $256,800, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2021, House acquired additional inventory from Wilson at a price of $278,000. Of this merchandise, 45 percent is still held at year-end. Following are the financial records for the three companies for 2021. S $ $ Wilson Company (884,500) 384,000 298,500 0 (30,000) (232,000) (669,000) (232,000) 96,000 (805,000) 352,600 $ S $ Sales and other revenues Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities $ House Corporation $ (945, 600) 573,000 287,000 (141, 400) (30,000) $ (257,000) $ (892,000) (257,000 100,000 $ (1,049,000) $ 23,000 425, 300 1,028, 300 134,400 441,000 367,000 261,000 $ 2,680,000 $ (693,000) (820,000) (1,049,000) $ (2,562,000) $ $ Cuddy Company (363, 400) 196,000 92,400 0 0 (75,000 (171,000) (75,000) 60,000 (186,000) 68,250 85,950 0 0 171,000 89, 300 23,500 438,000 (102,000) (150,000) (186,000) (438,000) $ 398,000 0 134,400 382,000 132,000 340,000 $ 1,739,000 $ (624,000) (310,000) (805,000) $ (1,739,000) $ $ $ Note: Parentheses indicate a credit balance. Prepare a consolidation worksheet for 2021. The partial equity method based on separate company incomes has been applied to each investment (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. Input all amounts as positive values.) Noncontrolling Consolidated Accounts Interest Balance HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2021 Consolidation Entries House Wilson Cuddy Corporation Credit Company Debit Company 945,600 884.500 363,400 278,000 573,000 384,000 196,000 25,020 288,000 287,000 298,500 92,400 4,450 141,400 141,400 30,000 30,000 60,000 257,000 232,000 75,000 lololololo 1,915,500 890,020 682,350 0 0 343,130 63,758 X 15,000 (63,758) 15,000 391,888 892,000 Sales and other revenue Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income Consolidated net income Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuddy) Net income attributable to House Corporation Retained earnings, 1/1/21: House Corporation Wilson Company Cuddy Company Net income Dividends declared House Corporation Wilson Company Cuddy Company Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings 13,230 669,000 171,000 669,000 OOO 878,770 0 0 0 171,000 75,000 257,000 232,000 256,871 X 100,000 100,000 96,000 67,200 0 28,800 12,000 48,000 60,000 186,000 805,000 352,600 398,000 68,250 85,950 1,049,000 23,000 425,300 1,028,300 134,400 441,000 25,020 1,095,500 316,800 7,800 1,035,641 443,850 884,230 0 0 0 o 1,126,600 OOOO 67,200 48,000 140,400 134,400 382,000 171,000 8,250 16,500 Equipment Land 367,000 261,000 132,000 340,000 89,300 23,500 Goodwill 140,000 39,200 580,050 624,500 140,000 X 34,300 3,833,530 Franchise contracts 4,900 Total assets 2,680,000 438,000 1,739,000 624,000 Liabilities 693,000 102,000 1,419,000 64,200 345,430 X Noncontrolling interest in Cuddy Noncontrolling interest in Wilson Noncontrolling interest in subsidiary companies Common stock 64,200 345,340 447,498 455,089 820,000 460,000 Retained earnings Total liabilities and equities 820,000 1,049,000 2,562,000 310,000 805,000 1,739,000 150,000 186,000 438,000 2,265,150 2,279,350 2,694,089 5 House Corporation has been operating profitably since its creation in 1960. At the beginning of 2019, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: 2.85 points $ 843,500 361,500 $ 1,205,000 821,000 $ 384,000 Consideration transferred for 70% interest in Wilson Fair value of the 30% noncontrolling interest Wilson business fair value Wilson book value Excess fair value over book value Assignments to adjust Wilson's assets to fair value: To buildings (20-year remaining life) To equipment (4-year remaining life) To franchises (10-year remaining life) To goodwill (indefinite life) $ 156,000 (33,000) 49,000 172,000 212,000 $ House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House's purchases during 2019 and 2020 and related ending inventory balances follow: Year 2019 2020 Intra-Entity Purchases $90,000 125,000 Remaining Intra-Entity Inventory- End of Year (at transfer price) $30,000 50,000 On January 1, 2021, 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 $256,800, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2021, House acquired additional inventory from Wilson at a price of $278,000. Of this merchandise, 45 percent is still held at year-end. Following are the financial records for the three companies for 2021. S $ $ Wilson Company (884,500) 384,000 298,500 0 (30,000) (232,000) (669,000) (232,000) 96,000 (805,000) 352,600 $ S $ Sales and other revenues Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities $ House Corporation $ (945, 600) 573,000 287,000 (141, 400) (30,000) $ (257,000) $ (892,000) (257,000 100,000 $ (1,049,000) $ 23,000 425, 300 1,028, 300 134,400 441,000 367,000 261,000 $ 2,680,000 $ (693,000) (820,000) (1,049,000) $ (2,562,000) $ $ Cuddy Company (363, 400) 196,000 92,400 0 0 (75,000 (171,000) (75,000) 60,000 (186,000) 68,250 85,950 0 0 171,000 89, 300 23,500 438,000 (102,000) (150,000) (186,000) (438,000) $ 398,000 0 134,400 382,000 132,000 340,000 $ 1,739,000 $ (624,000) (310,000) (805,000) $ (1,739,000) $ $ $ Note: Parentheses indicate a credit balance. Prepare a consolidation worksheet for 2021. The partial equity method based on separate company incomes has been applied to each investment (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. Input all amounts as positive values.) Noncontrolling Consolidated Accounts Interest Balance HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2021 Consolidation Entries House Wilson Cuddy Corporation Credit Company Debit Company 945,600 884.500 363,400 278,000 573,000 384,000 196,000 25,020 288,000 287,000 298,500 92,400 4,450 141,400 141,400 30,000 30,000 60,000 257,000 232,000 75,000 lololololo 1,915,500 890,020 682,350 0 0 343,130 63,758 X 15,000 (63,758) 15,000 391,888 892,000 Sales and other revenue Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income Consolidated net income Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuddy) Net income attributable to House Corporation Retained earnings, 1/1/21: House Corporation Wilson Company Cuddy Company Net income Dividends declared House Corporation Wilson Company Cuddy Company Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings 13,230 669,000 171,000 669,000 OOO 878,770 0 0 0 171,000 75,000 257,000 232,000 256,871 X 100,000 100,000 96,000 67,200 0 28,800 12,000 48,000 60,000 186,000 805,000 352,600 398,000 68,250 85,950 1,049,000 23,000 425,300 1,028,300 134,400 441,000 25,020 1,095,500 316,800 7,800 1,035,641 443,850 884,230 0 0 0 o 1,126,600 OOOO 67,200 48,000 140,400 134,400 382,000 171,000 8,250 16,500 Equipment Land 367,000 261,000 132,000 340,000 89,300 23,500 Goodwill 140,000 39,200 580,050 624,500 140,000 X 34,300 3,833,530 Franchise contracts 4,900 Total assets 2,680,000 438,000 1,739,000 624,000 Liabilities 693,000 102,000 1,419,000 64,200 345,430 X Noncontrolling interest in Cuddy Noncontrolling interest in Wilson Noncontrolling interest in subsidiary companies Common stock 64,200 345,340 447,498 455,089 820,000 460,000 Retained earnings Total liabilities and equities 820,000 1,049,000 2,562,000 310,000 805,000 1,739,000 150,000 186,000 438,000 2,265,150 2,279,350 2,694,089

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