House Corporation has been operating profitably since its creation in 1960. At the beginning of 2016, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: $ 791, 000 339,000 $ 1, 130,000 796, 000 $ 334, 000 Consideration transferred for 70% interest in Wilson Fair value of the 30% noncontrolling interest Wilson business fair value Wilson book value Excess fair value over book value Assignments to adjust Wilson's assets to fair value: To buildings (20-year remaining life) To equipment (4-year remaining life) To franchises (10-year remaining life) To goodwill (indefinite life) $ 131,000 (29, 800) 78,500 179, 700 154, 300 $ House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House's purchases during 2016 and 2017 and related ending inventory balances follow: Year 2016 2017 Intra-Entity Purchases $135,000 162, 500 Remaining Intra-Entity Inventory- End of Year (at transfer price) $45,000 65,000 On January 1, 2018, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's outstanding common stock. The total price of these shares was $262,400, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2018, House acquired additional inventory from Wilson at a price of $211,000. Of this merchandise, 45 percent is still held at year-end. Cuddy Company (322, 000) 147,000 $ Wilson Company (877, 760 385, 000 276,000 $ 96, 900 $ $ $ $ $ $ Sales and other revenues Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equities House Corporation (980, 028) 621, 000 235, 000 (151, 732) (31, 240 $ (307,000) $ (872, 000) (307,000) 100,000 $ (1,079, 000) S 20,178 395, 150 1,016, 232 138, 440 431, 000 386, 000 208, 000 $ 2,595, 000 $ (696, 000) (820, 000) (1,079, 000) $ 2,595, 000) $ $ (31, 240) (248, 000) (687, 000) (248, 000) 96, 000 (839, 000) 379,560 326.000 0 138, 440 411, 000 142, 000 363, 000 1, 760,000 (611, 000) (310, 000) (839, 000) (1,760,000 0 0 (78, 100 (178, 000) (78, 100) 60,000 (196, 100) 68, 250 127, 150 0 0 166, 000 93, 800 18,900 474, 100 (128, 000) (150, 000) (196, 100) (474, 100) $ $ $ $ $ Note: Parentheses indicate a credit balance. Using the three companies' following financial records for 2018, prepare a consolidation worksheet. The partial equity method based on separate company incomes has been applied to each investment. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) Noncontrolling Consolidated Interest Balance HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries House Wilson Cuddy Accounts Debit Credit Corporation Company Company Sales and other revenue (980,028) (877,760) (322,000) Cost of goods sold 621,000 385,000 147,000 Operating expenses 235,000 276,000 96,900 Income of Wilson Company (151,732) Income of Cuddy Company (31,240) (31,240) Net income (307,000) (248,000) (78,100) Consolidated net income Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuddy) Net income attributable to House Corporation Retained earnings, 1/1/18: House Corporation (872,000) Wilson Company (687,000) Cuddy Company (178,000) Net income (307,000) (248,000) (78, 100) Dividends declared House Corporation 100,000 Wilson Company 96,000 Cuddy Company 60,000 Retained earnings, 12/31/18 (1,079,000) (839,000) (196,100) Cash and receivables 20,178 379,560 68,250 Inventory 395,150 326,000 127,150 Investment in Wilson Company 1,016,232 Investment in Cuddy Company 138,440 138,440 Buildings 431,000 411,000 166,000 Equipment 386,000 142,000 93,800 Buildings Equipment Land 431,000 386,000 208,000 411,000 142,000 363,000 166,000 93,800 18,900 Goodwill Franchise contracts Total assets 1,760,000 474,100 2,595,000 (696,000) (611,000) (128,000) Liabilities Noncontrolling interest in Cuddy Noncontrolling interest in Wilson Noncontrolling interest in subsidiary companies Common stock Retained earnings (above) Total liabilities and equities (820,000) (1,079,000) (2,595,000) (310,000) (839,000) (1,760,000) (150,000) (196,100) (474,100)