Question
Allison Corporation acquired 90 percent of Bretton on January 1, 2019. Of Bretton's total acquisition-date fair value, $60,000 was allocated to undervalued equipment (with a
Allison Corporation acquired 90 percent of Bretton on January 1, 2019. Of Bretton's total acquisition-date fair value, $60,000 was allocated to undervalued equipment (with a 10-year remaining life) and $80,000 was attributed to franchises (to be written off over a 20-year period).
Since the takeover, Bretton has transferred inventory to its parent as follows:
Year | Cost | Transfer Price | Remaining at Year-End |
| |||||
2019 | $ | 45,000 | $ | 90,000 | $ | 30,000 (at transfer price) | |||
2020 |
| 48,000 |
| 80,000 |
| 35,000 (at transfer price) | |||
2021 |
| 69,000 |
| 92,000 |
| 50,000 (at transfer price) | |||
| |||||||||
On January 1, 2020, Allison sold Bretton a building for $50,000 that had originally cost $70,000 but had only a $30,000 book value at the date of transfer. The building is estimated to have a five-year remaining life (straight-line depreciation is used with no salvage value).
Selected figures from the December 31, 2021, trial balances of these two companies are as follows:
| Allison | Bretton | ||
Sales | $ | 700,000 | $ | 400,000 |
Cost of goods sold |
| 440,000 |
| 220,000 |
Operating expenses |
| 120,000 |
| 80,000 |
Investment income | Not given |
| 0 | |
Inventory |
| 210,000 |
| 90,000 |
Equipment (net) |
| 140,000 |
| 110,000 |
Buildings (net) |
| 350,000 |
| 190,000 |
Determine consolidated totals for each of these account balances.
- Sales. 2. Cost of goods sold 3. Operating Expense. 4. Investment Income 5. Inventory 6. Equipment (net) 7. Buildings (net)
Explain and/or Show all work
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