Question
On December 31, 2018, Panorama Incorporated purchased 60% of Sky Manufacturing for $300,000. The book value and fair value of Sky's assets and liabilities were
On December 31, 2018, Panorama Incorporated purchased 60% of Sky Manufacturing for $300,000. The book value and fair value of Sky's assets and liabilities were equal with the exception of plant assets which were undervalued by $60,000 and had a remaining life of 10 years, and a patent which was undervalued by $40,000 and had a remaining life of 5 years. At December 31, 2020, the companies showed the following balances on their respective adjusted trial balances:
Panorama Sky Sky
Book Value Book Value Fair Value
Assets (includes
Investment in Sky) $950,000 $300,000 $320,000
Plant assets - net 590,000 150,000 150,000
Patent 310,000 200,000 280,000
Expenses 800,000 300,000
Liabilities $480,000 $120,000 $120,000
Common Stock 300,000 100,000
Retained Earnings 890,000 330,000
Revenue 980,000 400,000
Required:
- Calculate the balance in the Plant assets - net and the Patent accounts on the consolidated balance sheet as of December 31, 2020.
- Calculate the balance of the noncontrolling interest in Sky to be reported on the consolidated balance sheet at December 31, 2020.
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