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: $ 742,000 318,000 $ 1,060,000 813,000 247,680 $ Consideration transferred for me interest in Wilson Fair value of the 3ex 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 renaining life) To franchises (10-year remaining life) To goodwill (indefinite life) $ 97,000 (23,880) 73,000 146,280 189,800 $ 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: Intra-Entity Remaining Intra-Entity Inventory- Year Purchases End of Year (at transfer price) 2016 $135,000 $45,080 2017 162,500 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 $274,400, 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 $209,000. Of this merchandise, 45 percent is still held at year-end. $ Wilson Company (802,780) 308,630 273,500 $ Cuddy Company (315,380) 144,000 99,500 $ $ $ $ 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 House Corporation S (1,840,384) 605,000 307,000 (154,896) (28,720) $ (312,000) $ (919,800) (312,880) 109,000 $ (1,131,000) $ 74,634 394,250 910, 196 145,920 489,000 482,000 185,000 $ 2,681,800 $ (730,000) (820,000) (28,720) (250,000) (618,000 (250,000) 96,290 (772,000) 220,080 530,000 (71,888) (193,000) (71,880) 50,000 (214,800) 75,000 156,100 @ $ $ $ $ 145,920 335,000 162,000 309,000 $ 1,702,000 $ (620,000 (310,000) s 200,000 95,500 17,200 543,800 (179,880) (150,000) 5 Prey 7 of 7 Retained earnings, 12/31/18 Total liabilities and equities (1,131,980) $ (2,681,000) (772,000) $ (1,702,00) (214,300) (543,880) $ m3 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 0 HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries House Wilson Accounts Cuddy Debit Corporation Company Company Credit Sales and other revenue (1,040,384) (802.780) (315,300) Cost of goods sold 605,000 308,000 144,000 Operating expenses 307.000 273,500 99,500 Income of Wilson Company (154.896) Income of Cuddy Company (28,720) (28,720) Net income (312.000) (250,000) (71.800) Consolidated net income Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuday) Net income attributable to House Corporation Retained earings, 1/1/18 House Corporation (919.000) Wilson Company (618,000) Cuddy Company (193.000 Net income (312,000) (250,000) (71.800) Dividends declared House Corporation 100,000 Wilson Company 96,000 Cuddy Company 50.000 Retained earnings, 12/31/18 (1.131,000 (772.000) (214,800) Cash and receivables 74634 220.000 75,000 Inventory 394250 530.000 156,100 Investment in Wilson Company 910. 196