Question
Excess fair value assignments Remaining Life Annual Amortization Patent 400,000 5 80,000 Goodwill 275,000 I ntra-company gross profit deferrals related to the inventory transfers. Year
| Excess fair value assignments | Remaining Life | Annual Amortization | |
| Patent | 400,000 | 5 | 80,000 |
| Goodwill | 275,000 |
Intra-company gross profit deferrals related to the inventory transfers.
| Year | Original cost to Nittle, Inc. | Transfer Price to Jet Corp. | Ending Balance at Transfer Price | Deferred Gross Profit |
| 2020 | $ 189,800 | $ 260,000 | $ 90,000 | $ 24,300 |
| 2021 | $ 238,000 | $ 340,000 | $150,000 | $45,000 |
Financial information for the year ended 12/31/21 kis presented below. The parent company has applied the equity method to record its investment in Nittle.
| Account Name (number) | Jet | Nittle |
| Revenue (40) | (1,940,000) | (907,000) |
| Cost of goods sold (50) | 980,000 | 400,000 |
| Expenses (51) | 393,904 | 221,760 |
| Interest exp.-bonds (60) | 2,096 | |
| Interest rev.-bond invest. (61) | (2,760) | |
| Equity in income of Nittle (62) | (180,000) | |
| Gain on retirement of debt (63) |
| |
| Net income | (744,000) | (288,000) |
| Retained earnings (1/1) | (3,800,000) | (490,000) |
| Net income | (744,000) | (288,000) |
| Dividends paid (34) | 200,000 | 40,000 |
| Retained earnings (12/31) | (4,344,000) | (738,000) |
| Cash (10) | 357,200 | 129,000 |
| Accounts rec. (11) | 975,000 | 315,000 |
| Inventory (12) | 840,000 | 781,000 |
| Investment in Nittle (13) | 2,096,630 | |
| Invest. in Jet bonds (14) | 23,000 | |
| Buildings and Equipment (net) (15) | 2,325,000 | 963,000 |
| Patent (16) | 950,000 | 127,000 |
| Goodwill (17) |
| |
| Total Assets | 7,543,830 | 2,338,000 |
| Accounts pay. (20) | (450,000) | (150,000) |
| Notes pay. (22) | (323,630) | (350,000) |
| Bonds pay. (23) | (25,000) | |
| Prem. on bonds (24) | (1,200) | |
| Common stock (30) | (1,900,000) | (900,000) |
| Additional PIC (31) | (500,000) | (200,000) |
| Retained earnings, 12/31/18 | (4,344,000) | (738,000) |
| Total liabilities and equity | (7,543,830) | (2,338,000) |
Complete the consolidation entries for the year ended December 31, 2021. The account numbers are listed on the financial information above. Use 35 for retained earnings and 39 for Non-Controlling Interest.
Ignore your answers to the previous questions. Assume that Jet acquired 80% of Nittle on January 1, 2019. You will need to calculate the net income attributable to the Non-Controlling Interest in question 12.
The correct consolidation entries are included in the worksheet. Complete the NCI column and calculate consolidated totals. Use parenthesis to indicate a credit balance.
Note: you will need to complete the income statement and statement of retained earnings in problem 10 and the balance sheet in problem 11.
| Consolidation Worksheet | ||||||||
| Consolidation Entries | NCI | Consolidated Balances | ||||||
| Jet | Nittle | Dr. | Cr. | |||||
| Revenues | (1,740,000) | (950,000) | T1 | 300,000 | ||||
| COGS | 820,000 | 500,000 | G | 40,000 | T1 | 300,000 | ||
| *G | 35,000 | |||||||
| Expenses | 342,717 | 221,873 | E | 70,000 | ||||
| Int. Exp.-bonds | 1,283 | B | (1,283) | |||||
| Int. Inc.-bond investment | (1,873) | B | 1,873 | |||||
| Gain on retirement of debt | B | 2,654 | ||||||
| Equity in Income of Nittle | (124,000) | I | 124,000 | |||||
| Net Income | (700,000) | (230,000) | ||||||
| N/I attributable to NCI | ||||||||
| N/I attributable to Jet | ||||||||
| Retained Earnings (1/1) | (2,800,000) | (345,000) | *G | 35,000 | ||||
| S | 310,000 | |||||||
| Net Income | (700,000) | (230,000) | ||||||
| Dividends | 200,000 | 25,000 | D | 20,000 | ||||
| Retained Earnings (12/31) | (3,300,000) | (550,000) | ||||||
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
8th Edition
1088
