Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2016. Adams paid a tolal of $603,000 in cash for these shares. The 10 percent noncontrolling interest shares traded on a daily basis at fair value of $67,000 both before and after Adams's acquisition. On December 31, 2016, Barstow had the following account balances: Book Value Fair Value $ 160, 000 150, 000 200, 000 200, 000 S 160, 000 Current assets Land 120, 000 Buildings (10-year remaining life) Equipment (5-year remaining life) Patents (10-year remaining life) Notes payable (due in 5 years) 220, 000 160, 000 50, 000 (200, 000) (180, 000) (180, 000) Common stock Retained earnings, 12/31/16 (280, 000) December 31, 2018, adjusted trial balances for the two companies follow: Barstow Adams Corporation Inc Debits Current assets 610, 000 380, 000 490, 000 250, 000 Land 150, 000 Buildings Equipment Investment in Barstow, Inc 250, 000 150, 000 873, 000 702, 000 0 90, 000 Cost of goods sold 480, 000 Depreciation expense 100, 000 55, 000 Interest expense 40, 000 15,000 Dividends declared 110, 000 70, 000 $ 1, 030, 000 Total debits 3,785,000 Credits 230, 000 180, 000 860, 000 510,000 1,367, 000 Notes payable Common stock Retained earnings, 1/1/18 340, 000 940, 000 108,000 280, 000 Revenues Investment income 0 $ 1, 030, 000 $3,785, 000 Total credits At year-end, there were no intra-entity receivables or payables. ADAMS CORPORATION AND BARSTOW, INC. Consolidation Worksheet-Acquisition Method For Year Ending December 31, 2018 Adams Barstow Noncontrolling Interest Consolidated Totals Debit Credit Corp. Inc. $ (940,000) 0 Revenues (280,000) (1,220,000) 480,000 90,000 Cost of goods sold 570,000 Depreciation expense 100,000 55,000 6,000 161,000 Amortization expense 5,000 5,000 Interest expense 40,000 15,000 4,000 59,000 0 Investment income (108,000) 108,000 (428,000) (120,000) Separate company net income Consolidated net income (425,000) NI to noncontrolling interest (10,500) 10,500 NI to Adams Corporation (414,500) 0 Retained earnings, 1/1 (340,000) (1,367,000) 13,500 0 Net income (120,000) (414,500) (428,000) Dividends declared 110,000 70,000 63,000 7,000 110,000 (390,000) (1,685,000) (304,500) Retained earnings, 12/31 0 Current assets 610,000 250,000 860,000 0 702,000 63,000 Investment in Barstow 0 150,000 30,000 Land 380,000 560,000 0 724,000 Buildings 490,000 250,000 2,000 18,000 873,000 150,000 8,000 0 1,047,000 Equipment 32,000 0 45,000 Patents 5,000 40,000 90,000 Goodwill 0 90,000 800,000 3,055,000 3,321,000 Total assets Notes payable 16,000 (860,000) (230,000) 4,000 (1,078,000) 0 Common stock (510,000) (180,000) 180,000 (510,000) 0 Retained earnings, 12/31 (1,685,000) (1,658,000) (390,000) (71,500) 0 Noncontrolling interest 19,500 (75,000) (75,000) Total liabilities and $(800,000) $(3,055,000) (3,321,000) $ 594,500 117,500 stockholders'equity Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2016. Adams paid a tolal of $603,000 in cash for these shares. The 10 percent noncontrolling interest shares traded on a daily basis at fair value of $67,000 both before and after Adams's acquisition. On December 31, 2016, Barstow had the following account balances: Book Value Fair Value $ 160, 000 150, 000 200, 000 200, 000 S 160, 000 Current assets Land 120, 000 Buildings (10-year remaining life) Equipment (5-year remaining life) Patents (10-year remaining life) Notes payable (due in 5 years) 220, 000 160, 000 50, 000 (200, 000) (180, 000) (180, 000) Common stock Retained earnings, 12/31/16 (280, 000) December 31, 2018, adjusted trial balances for the two companies follow: Barstow Adams Corporation Inc Debits Current assets 610, 000 380, 000 490, 000 250, 000 Land 150, 000 Buildings Equipment Investment in Barstow, Inc 250, 000 150, 000 873, 000 702, 000 0 90, 000 Cost of goods sold 480, 000 Depreciation expense 100, 000 55, 000 Interest expense 40, 000 15,000 Dividends declared 110, 000 70, 000 $ 1, 030, 000 Total debits 3,785,000 Credits 230, 000 180, 000 860, 000 510,000 1,367, 000 Notes payable Common stock Retained earnings, 1/1/18 340, 000 940, 000 108,000 280, 000 Revenues Investment income 0 $ 1, 030, 000 $3,785, 000 Total credits At year-end, there were no intra-entity receivables or payables. ADAMS CORPORATION AND BARSTOW, INC. Consolidation Worksheet-Acquisition Method For Year Ending December 31, 2018 Adams Barstow Noncontrolling Interest Consolidated Totals Debit Credit Corp. Inc. $ (940,000) 0 Revenues (280,000) (1,220,000) 480,000 90,000 Cost of goods sold 570,000 Depreciation expense 100,000 55,000 6,000 161,000 Amortization expense 5,000 5,000 Interest expense 40,000 15,000 4,000 59,000 0 Investment income (108,000) 108,000 (428,000) (120,000) Separate company net income Consolidated net income (425,000) NI to noncontrolling interest (10,500) 10,500 NI to Adams Corporation (414,500) 0 Retained earnings, 1/1 (340,000) (1,367,000) 13,500 0 Net income (120,000) (414,500) (428,000) Dividends declared 110,000 70,000 63,000 7,000 110,000 (390,000) (1,685,000) (304,500) Retained earnings, 12/31 0 Current assets 610,000 250,000 860,000 0 702,000 63,000 Investment in Barstow 0 150,000 30,000 Land 380,000 560,000 0 724,000 Buildings 490,000 250,000 2,000 18,000 873,000 150,000 8,000 0 1,047,000 Equipment 32,000 0 45,000 Patents 5,000 40,000 90,000 Goodwill 0 90,000 800,000 3,055,000 3,321,000 Total assets Notes payable 16,000 (860,000) (230,000) 4,000 (1,078,000) 0 Common stock (510,000) (180,000) 180,000 (510,000) 0 Retained earnings, 12/31 (1,685,000) (1,658,000) (390,000) (71,500) 0 Noncontrolling interest 19,500 (75,000) (75,000) Total liabilities and $(800,000) $(3,055,000) (3,321,000) $ 594,500 117,500 stockholders'equity