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: $ 784,000 336,000 $ 1,120,000 810,000 $ 310,000 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 (28-year remaining life) To equipment (4-year remaining life) To franchises (10-year remaining life) To goodwill indefinite life) $ 131,000 (33,600) 41.500 138,900 171.100 $ 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 590,000 125,000 Remaining Intra.Entity Inventory End of Year (at transfer price) $30,000 50,000 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 $264,000, 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 $235.000. Of this merchandise, 45 percent is still held at year-end $ Wilson Company (864,380) 338,000 317,500 $ Company (322,500) 152,000 97,700 (29.120) (238.000) (633,000) (218 ) $ 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 Bulldings Equipment $ House Corporation 5 (1,031, 664) 570,000 290,000 (146,216) (29,120) $ (347,00) $ (894,000) (4 .00) 100,000 $ (1,141,000) 11,814 405.950 956, 116 141, 120 469.000 431,000 274,000 $ 2.689.00 3 00) (820.00) (1.141.000) (72,500) (10,) (72.00) 50.000 (202 ) 76, 121,400 (725.000) 227,00 490,00 141,120 . 147,000 203, . $ 1.683.000 Total assets Liabilities Common stock Retained earnings, 12/31/18 $ 515,00 (163.000 (150.000) (202 ) Year 2016 2017 Purchases $90,000 125,000 NON- End of Year (at transfer price) $30,000 50,000 On January 1, 2018, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's outstand The total price of these shares was $264,000, 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 $235,000. Of this merchandise, 45 percent is still held at year-end. Cuddy Company Wilson Company (864,380) 338,000 317,500 5 152,000 97,700 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 S (1,031,664) 570,000 290,000 (146,216) (29,120) (347,000) (894,000) (347,000) 100,000 $ (1,141,000) 11,814 405, 950 956.116 141,120 469,000 431,000 274.000 $ 2,689,000 (728,000) (820,000) (1,141,000) $ (2,689,000) (29,120) (238,000) (633,089) (238,000) 96,000 (775,000) 227,880 490,000 (72,809) (180,000) (72,300) Se,000 (202,880) 76, See 121,400 141, 120 356,000 147.009 321,000 $ 1.683,000 $ (598,000) (310.000) (775,000) $ (1,683,000) 203,800 94.609 20,300 515,800 (163.800) (150.000) (282, 800) (515,880) $ $ 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.) HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries Wilson Cuddy Noncontrolling Consolidated on 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.) HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries Debit Credit Noncontrolling Consolidated Interest Balance Accounts House Corporation Wilson Company Sales and other revenue (1.031 884 384 380 Cuddy Company (322.500) 152.000 7.700 338.000 317.500 570.000 290.000 (146.210) 29.120) (347.000) 20.120) 238.000) (72.800) 1804 0001 (033.000) Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income Consolidated net income Net income attributable to noncontrolling interest (Wison) Net income attributable to noncontrolling interest (Cuddy) Net income tributable to House Corporation Retained earnings 1/1/18 House Corporation Wilson Company Cuddy Company Net income Dividends declared House Corporation Wilson Company Cuddy Company Retained eanings 123 Cash and receivables Inventory Investment in Wison Company Investment in Cuddy Company Buildings Equipment Land (180 000) 347.000) 238.000) 72 800 100 000 08.000 50.000 (1.141.000) F2023003 11.814 405 050 775.000) 227 8801 490.000 78.500 121.400 050.110 141.120 141.120 203.000 400.000 431.000 274.000 147.000 32 1.000 04800 20 300 Good Franchise contracts Total assets 2.889 000 1.883 000 515 300 (728.000) (508.000) (163.000) Noncontrolling interest in Cuddy Noncontrolling interest in Wilson Noncontrolling interest in subsidiary companies Common stock Retained earnings (above) Total bites and equides 820 000 (1.141,000) 2.600.000 310.000) (775.000) (1.683.000) (150.000 (202.000) 515.800) 0 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: $ 784,000 336,000 $ 1,120,000 810,000 $ 310,000 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 (28-year remaining life) To equipment (4-year remaining life) To franchises (10-year remaining life) To goodwill indefinite life) $ 131,000 (33,600) 41.500 138,900 171.100 $ 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 590,000 125,000 Remaining Intra.Entity Inventory End of Year (at transfer price) $30,000 50,000 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 $264,000, 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 $235.000. Of this merchandise, 45 percent is still held at year-end $ Wilson Company (864,380) 338,000 317,500 $ Company (322,500) 152,000 97,700 (29.120) (238.000) (633,000) (218 ) $ 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 Bulldings Equipment $ House Corporation 5 (1,031, 664) 570,000 290,000 (146,216) (29,120) $ (347,00) $ (894,000) (4 .00) 100,000 $ (1,141,000) 11,814 405.950 956, 116 141, 120 469.000 431,000 274,000 $ 2.689.00 3 00) (820.00) (1.141.000) (72,500) (10,) (72.00) 50.000 (202 ) 76, 121,400 (725.000) 227,00 490,00 141,120 . 147,000 203, . $ 1.683.000 Total assets Liabilities Common stock Retained earnings, 12/31/18 $ 515,00 (163.000 (150.000) (202 ) Year 2016 2017 Purchases $90,000 125,000 NON- End of Year (at transfer price) $30,000 50,000 On January 1, 2018, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's outstand The total price of these shares was $264,000, 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 $235,000. Of this merchandise, 45 percent is still held at year-end. Cuddy Company Wilson Company (864,380) 338,000 317,500 5 152,000 97,700 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 S (1,031,664) 570,000 290,000 (146,216) (29,120) (347,000) (894,000) (347,000) 100,000 $ (1,141,000) 11,814 405, 950 956.116 141,120 469,000 431,000 274.000 $ 2,689,000 (728,000) (820,000) (1,141,000) $ (2,689,000) (29,120) (238,000) (633,089) (238,000) 96,000 (775,000) 227,880 490,000 (72,809) (180,000) (72,300) Se,000 (202,880) 76, See 121,400 141, 120 356,000 147.009 321,000 $ 1.683,000 $ (598,000) (310.000) (775,000) $ (1,683,000) 203,800 94.609 20,300 515,800 (163.800) (150.000) (282, 800) (515,880) $ $ 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.) HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries Wilson Cuddy Noncontrolling Consolidated on 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.) HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries Debit Credit Noncontrolling Consolidated Interest Balance Accounts House Corporation Wilson Company Sales and other revenue (1.031 884 384 380 Cuddy Company (322.500) 152.000 7.700 338.000 317.500 570.000 290.000 (146.210) 29.120) (347.000) 20.120) 238.000) (72.800) 1804 0001 (033.000) Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income Consolidated net income Net income attributable to noncontrolling interest (Wison) Net income attributable to noncontrolling interest (Cuddy) Net income tributable to House Corporation Retained earnings 1/1/18 House Corporation Wilson Company Cuddy Company Net income Dividends declared House Corporation Wilson Company Cuddy Company Retained eanings 123 Cash and receivables Inventory Investment in Wison Company Investment in Cuddy Company Buildings Equipment Land (180 000) 347.000) 238.000) 72 800 100 000 08.000 50.000 (1.141.000) F2023003 11.814 405 050 775.000) 227 8801 490.000 78.500 121.400 050.110 141.120 141.120 203.000 400.000 431.000 274.000 147.000 32 1.000 04800 20 300 Good Franchise contracts Total assets 2.889 000 1.883 000 515 300 (728.000) (508.000) (163.000) Noncontrolling interest in Cuddy Noncontrolling interest in Wilson Noncontrolling interest in subsidiary companies Common stock Retained earnings (above) Total bites and equides 820 000 (1.141,000) 2.600.000 310.000) (775.000) (1.683.000) (150.000 (202.000) 515.800) 0