Given Data P06-49: 100% 560,000 180 Percentage of Skyler Corporation outstanding stock acquired by Paisley, Inc. Amount Paisley paid for Skyler stock Price per share paid for Skyler's $100 par value preferred stock Price per share paid for Skyler's $20 par value common stock Amortization of excess fair value of intangible assets in years Amount of inventory Skyler sold to Paisley during the year Cost of inventory Skyler sold to Paisley Amount (at transfer price) not resold to outsiders by year end Year-end amount Paisley owes Skyler for the last shipment of inventory Price of equipment Paisley sold to Skyler Book value of equipment Paisley sold to Skyler Original cost of equipment Paisley sold to Skyler Remaining life of equipment in years Salvage value of equipment 10 90,000 60,000 18,000 28,000 20,000 12,000 30,000 Financial Statements For the Year Ending December 31 $ Sales Cost of goods sold Expenses Gain on sale of equipment Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash Accounts receivable Inventory Paisley, Skyler Inc. Corporation (800,000) $ (400,000) 528,000 260,000 180,000 130,000 (8,000) (100,000) $ (10,000) (400,000) $ (150,000) (100,000) (10,000) 60,000 (440,000) $ (160,000) 30,000 $ 40,000 300,000 100,000 260,000 180,000 180,000 Inventory Investment in Skyler Corporation Land, buildings, and equipment Accumulated depreciation Total assets Accounts payable Long-term liabilities Preferred stock Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and equity 260,000 560,000 680,000 (180,000) 1,650,000 $ (140,000) $ (240,000) $ 500,000 (90,000) 730,000 (90,000) (180,000) (100,000) (200,000) (620,000) (210,000) (440,000) $ (1,650,000) $ (160,000) (730,000) Problem 06-49 Calculation of consolidated totals: Consideration transferred for common and preferred stock Skyler's book value Excess fair value assigned to intangible assets (10-year life) Annual amortization Ending Intra-entity Gross Profit Ending inventory (at transfer price) Markup Deferred gross profit in ending inventory Effect of Intra-Entity Equipment Transfer: Transfer price Recorded value Depreciation expense Accumulated depreciation Gain on sale Historical cost: Recorded value Depreciation expense Accumulated depreciation Paisley, Inc. and Skyler Corp. Consolidated Worksheet Year Ending December 31 Paisley, Inc. and Skyler Corp. Consolidated Worksheet Year Ending December 31 Paisley, Inc. Skyler Corp. Consolidation Entries Debit Credit Consolidated Totals Accounts Sales Cost of goods sold Expenses Gain on sale of equipment Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Cash Accounts receivable Inventory Investment in Skyler Corp. Land, buildings, and equipment Accumulated depreciation Intangible assets Total assets Accounts payable Long-term liabilities Preferred stock Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and stockholders' equity Retained earnings, 12/31 Total liabilities and stockholders' equity a. Consolidation entries Preferred Stock (Skyler) Common Stock (Skyler) Retained Earnings, 1/1 Investment in Skyler Corp. (To eliminate subsidiary stockholder's equity accounts) Intangible Asset Investment in Skyler Corp. (To recognize excess fair value attributed to intangible asset) Amortization Expense Intangible Asset (To record current year's amortization of intangible asset) Accounts Payable Accounts Receivable (To eliminate intra-entity receivable and payable) Equipment Gain on Sale of Equipment Accumulated Depreciation (To eliminate effects as of 171 created by intra-entity transfer of equipment) Sales Cost of Goods Sold (To eliminate intra-entity inventory transfers for the current year) Cost of Goods Sold Inventory (To defer intra-antity gain in inventory remaining at the end of the current year) 100 101 02 103 104 Accumulated Depreciation Depreciation Expense (To eliminate excess depreciation resulting from intra-antity gain of 8,000 on transfer of equipment (see Entry TAD Equipment is being depreciated over a remaining life of four years) 105
