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Calbear Co. acquired 100% of Stanford Co. on January 1, 2020. Stanford uses the equity method for accounting for its investment in Stanford. The individual
- Calbear Co. acquired 100% of Stanford Co. on January 1, 2020.
- Stanford uses the equity method for accounting for its investment in Stanford.
- The individual company information for Calbear Co. and Stanford Co. is presented in the two columns on the left side of what will be your consolidation Worksheet.
- Calbear Co. paid $558,000 for its 100% interest in Stanford Co.
- The book value of Stanford Co. on January 1, 2020 was $320,000.
- Stanford Co. had a patent with a fair market value $94,000 greater than its book value. The patent had a four-year remaining life. The remainder of the price paid over book value was considered goodwill.
- Stanfords books and records show net income of $100,000 in both 2020 and 2021.
- Stanford declared no dividend in 2020. Stanford Co. declared an $80,000 dividend in 2021.
- At December 31, 2021, Stanford Co. owed Calbear Co. $100,000.
- During 2021 Stanford Co. sold inventory to Calbear at a sales price of $100,000.
- At December 31, 2020, Stanford Co. had sold inventory to Calbear Co. which remained in Calbears inventory. That inventory had a profit margin of $4500. At December 31, 2021, Stanford Co. had sold inventory to Calbear Co. which remained in Calbears inventory. That inventory had a profit margin of $6000
Task:
Please prepare the consolidated adjusting entries and complete the consolidation workpapers. Both are attached.
- Calbear Co. acquired 100% of Stanford Co. on January 1, 2020.
- Stanford uses the equity method for accounting for its investment in Stanford.
- The individual company information for Calbear Co. and Stanford Co. is presented in the two columns on the left side of what will be your consolidation Worksheet.
- Calbear Co. paid $558,000 for its 100% interest in Stanford Co.
- The book value of Stanford Co. on January 1, 2020 was $320,000.
- Stanford Co. had a patent with a fair market value $94,000 greater than its book value. The patent had a four-year remaining life. The remainder of the price paid over book value was considered goodwill.
- Stanfords books and records show net income of $100,000 in both 2020 and 2021.
- Stanford declared no dividend in 2020. Stanford Co. declared an $80,000 dividend in 2021.
- At December 31, 2021, Stanford Co. owed Calbear Co. $100,000.
- During 2021 Stanford Co. sold inventory to Calbear at a sales price of $100,000.
- At December 31, 2020, Stanford Co. had sold inventory to Calbear Co. which remained in Calbears inventory. That inventory had a profit margin of $4500. At December 31, 2021, Stanford Co. had sold inventory to Calbear Co. which remained in Calbears inventory. That inventory had a profit margin of $6000
Task:
Please prepare the consolidated adjusting entries
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