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: $ 819,000 351,000 $ 1,170,000 793,000 377,000 $ 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) $ 153,000 (23,600) 50,000 179,400 197,600 $ 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 $127,500 156,250 Remaining Intra-Entity Inventory- End of Year (at transfer price) $42,500 62,500 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 $312,000, 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 $225,000. Of this merchandise, 45 percent is still held at year-end. Wilson Company (789, 200) $ $ Cuddy Company (384,900) 210,000 95,400 @ 371,00 $ House Corporation $ (1,054,060) 571,000 299,000 (98,140) (31,800) $ (314,000) $ (871,000) (314,000) 100,000 $ (1,085,000) $ 16,210 401,450 939,540 163,800 439,000 313.000 $ $ 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 $ 278,000 @ (31,800) (172,000) (611,000) (172,000) 96,000 (687,000) 159, 200 418,000 (79,500 (240,000) (79,500) 60,000 (259,500) 75,250 163, 650 $ $ $ $ 163,800 323,000 209...299 169,000 .963ec Equipment Land Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equities 313,000 269,000 $ 2,542,000 $ (637,000) (820,000) (1,085, 000) $ (2,542,000) 209,000 374,000 $ 1,647,000 $ (650,000) (310,000) (687,000) $ (1,647,000) $ $ 96,300 23,300 527,500 (118,000 (150,000) (259,500) (527,500) $ 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 Accounts Interest Balance Sales and other revenue Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries House Wilson Cuddy Debit Credit Corporation Company Company (1,054,060) (789,200) (384,900) 571,000 371.000 210.000 299,000 278,000 95,400 (98,140) (31.800) (31.800) (314,000) (172,000) (79,500) 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 Wilson Company Cuddy Company Net income Dividends declared (871,000) (611,000) (240,000) (79,500) (314,000) (172,000) Hounn Cornarntion 100 nnn 100,000 96,000 60.000 (259,500) (1,085,000) 16,210 Dividends declared House Corporation Wilson Company Cuddy Company Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land (687,000) 159,200 418,000 75,250 163,650 401,450 939,540 163,800 163,800 439,000 169.000 323,000 209,000 313,000 96,300 269,000 374,000 23,300 1,647,000 527,500 2,542,000 (637,000) (650,000) (118,000) Goodwill Franchise contracts Total assets 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) (310,000) (1,085,000) (687,000) (2,542,000) (1.647,000) (150,000) (259,500) (527,500) 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: $ 819,000 351,000 $ 1,170,000 793,000 377,000 $ 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) $ 153,000 (23,600) 50,000 179,400 197,600 $ 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 $127,500 156,250 Remaining Intra-Entity Inventory- End of Year (at transfer price) $42,500 62,500 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 $312,000, 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 $225,000. Of this merchandise, 45 percent is still held at year-end. Wilson Company (789, 200) $ $ Cuddy Company (384,900) 210,000 95,400 @ 371,00 $ House Corporation $ (1,054,060) 571,000 299,000 (98,140) (31,800) $ (314,000) $ (871,000) (314,000) 100,000 $ (1,085,000) $ 16,210 401,450 939,540 163,800 439,000 313.000 $ $ 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 $ 278,000 @ (31,800) (172,000) (611,000) (172,000) 96,000 (687,000) 159, 200 418,000 (79,500 (240,000) (79,500) 60,000 (259,500) 75,250 163, 650 $ $ $ $ 163,800 323,000 209...299 169,000 .963ec Equipment Land Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equities 313,000 269,000 $ 2,542,000 $ (637,000) (820,000) (1,085, 000) $ (2,542,000) 209,000 374,000 $ 1,647,000 $ (650,000) (310,000) (687,000) $ (1,647,000) $ $ 96,300 23,300 527,500 (118,000 (150,000) (259,500) (527,500) $ 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 Accounts Interest Balance Sales and other revenue Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries House Wilson Cuddy Debit Credit Corporation Company Company (1,054,060) (789,200) (384,900) 571,000 371.000 210.000 299,000 278,000 95,400 (98,140) (31.800) (31.800) (314,000) (172,000) (79,500) 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 Wilson Company Cuddy Company Net income Dividends declared (871,000) (611,000) (240,000) (79,500) (314,000) (172,000) Hounn Cornarntion 100 nnn 100,000 96,000 60.000 (259,500) (1,085,000) 16,210 Dividends declared House Corporation Wilson Company Cuddy Company Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land (687,000) 159,200 418,000 75,250 163,650 401,450 939,540 163,800 163,800 439,000 169.000 323,000 209,000 313,000 96,300 269,000 374,000 23,300 1,647,000 527,500 2,542,000 (637,000) (650,000) (118,000) Goodwill Franchise contracts Total assets 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) (310,000) (1,085,000) (687,000) (2,542,000) (1.647,000) (150,000) (259,500) (527,500)