How do you come to $112,320 for Investment in Subsidiary?
How do you come to $72,00 for PPE 100% BOY?
How do you come to $127,500 for Patent 100% BOY?
Please see highlighted below. Thanks.
Topic: Consolidation Subsequent to Date of Acquisition - Upstream Intercompany Inventory Sale - Cost Method LO: 2,4 On January 1, 2016, Fuller Company acquired a 80% interest in Wilson Company for a purchase price that was $240,000 over the book value of the Wilson's Stockholders' Equity on the acquisition date. Fuller uses the cost method to account for its investment in Wilson. On the date of acquisition Wilson's retained earnings balance was $218,500. Fuller assigned the acquisition-date AAP as follows AAP Items PPE, net Patent Useful Life (years) 150,000 90,000 $240,000 15 Wilson sells inventory to Fuller (upstream) which includes that inventory in products that it, ultimately, sells to customers outside of the controlled group. You have compiled the following data for the years ending 2018 and 2019 Transfer price for inventory sale Cost of goods sold Gross profit % inventory remaining Gross profit deferred 2018 $70,000 (45,000 $25,000 2019 $94,500 (64.500) $30,000 $ 5,000 $ 9,000 EOY Receivable/Payable $29,500 $32,000 The inventory not remaining at the end of the year has been sold outside of the controlled group The parent and the subsidiary report the following financial statements at December 31, 2019 The parent and the subsidiary report the following financial statements at December 31, 2019 Income Statement Fuller Wilson $401,600 (232.700 168,900 Sales Cost of goods sold Gross Profit Income (loss) from subsidiary Operating expenses Net income $4,160,000 1,061,900 7,120 (89.900 Statement of Retained Earnings Fuller $2,583,800 357,820 Wilson $404,400 79,000 BOY Retained Earnings Net income Dividends EOY Retained Earnings 90 Balance Sheet Fuller Wilson Assets Cash Accounts receivable Inventory Investment in subsidiary PPE, net S 309,420 433,600 641,900 620,000 4.063.200 S 84,700 113,200 142,100 800,500 Liabilities and Stockholders' Equity: Current Liabilities Long-term Liabilities Common Stock APIC Retained Earnings S 505,900 703,500 402,000 1,589,600 2,867 120 S 99,500 250,000 75,300 241,200 Required: a. Compute the EOY noncontrolling interest equity balance b. Prepare the consolidation journal entries Answer: a. Beg. Bal Noncontrolling interests equity: Stockholders' equity Deferred gain BOY Unamortized 20% AAP $ 144,180 (1,000) 39,900 12.300 (1.780) $193,600 ($404,400 + $75.300 + $241,200) x 20% ($5,000 x 20%) ($240,000-3 x $13,500) x 20% NCI Income, net of amort. of AAP Dividends EOY Noncontrolling Interests ($75.000-$13.500) x 20% $8,900 x 20% [ADJ] Investment in subsidiary 112,320 Retained earnings 112,320 To restate the investment in subsidiary account from cost to "as-if equity method b. continued 75,300 241,200 404,400 E] Common stock (S) - @BOY APIC (S) @BOY Retained earnings (S) @BOY Investment in subsidiary - @BOY Noncontrolling interest (@BoY) 576,720 144,180 Eliminates the beginning balance in SE(S) by eliminating the BV portion of the beginning investment account. 72,000 127,500 [A] PPE, net-@BOY (100% AAP) Patent, net @BOY (100% AAP) 159,600 39,900 Allocates beginning-of-year 100% AAP to the controlling and noncontrolling interests by Investment in subsidiary- @BoY (AAP) Noncontrolling interest eliminating the remaining investment account and establishing the BOY AAP for DC96
