Chapter 5 Consolidation subsequent to date of acquisition-upstream intercompany inventory sale- Equity method with noncontrolling interest, AAP, and upstream intercompany inventory sale 31 points Assume that, on January 1, 2007, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $550,000 over the book value of the subsidiary's Stockholders' Equity on the acquisition date. the parent assigned the excess to the following [A] assets: Initial Useful [A] Asset Fair Value Life (years) Patent $300,000 10 Goodwill 250,000 Indefinite $550,000 153 590 80% of the Goodwill is allocated to the parent. Assume that the subsidiary sells inventory to the parent (upstream) 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 2012 and 2013: 2012 2013 Catera Timbitites 4900.000 Transfer price for inventory sale $674,000 $733,000 1,106,893 15790 Cost of goods sold (615,000) (653,000) 124 955 Gross profit $59,000 $80,000 25% 35% % inventory remaining $11, 145,809 51423.123 Gross profit deferred $14,750 $28,000 EOY receivable/payable $93,000 $105,000 Interests he Com The inventory not remaining at the end of the year has been sold outside of the controlled group