57. Consolidation subsequent to date of acquisitionEquity method with noncontrolling interest, AAP, and downstream intercompany inventory sale
Question:
57. Consolidation subsequent to date of acquisitionEquity method with noncontrolling interest, AAP, and downstream intercompany inventory sale
Assume, on January 1, 2016, a parent company acquired a 70% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $160,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. The parent assigned the excess to the following
[A] asset:
[A] Asset Initial Fair Value Useful Life
Property, plant & equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $160,000 10 years
This acquisition resulted in no recognized goodwill. Assume the parent sells inventory to the subsidiary (downstream) which includes that inventory in products that it ultimately sells to customers outside of the controlled group. You have compiled the following data as of 2018 and 2019: