On January 1, 2016, Alpha acquired 80 percent of Delta. Of Delta's total business fair value, $207,000 was allocated to copyrights with a 20-year remaining life. Subsequently, on January 1, 2017, Delta obtained 70 percent of Omega's outstanding voting shares. In this second acquisition, $135,600 of Omega's total business fair value was assigned to copyrights that had a remaining life of 12 years. Delta's book value was $557,500 on January 1, 2016 and Omega reported a book value of $152,500 on January 1, 2017 Delta has made numerous inventory transfers to Alpha since the business combination was formed. Intra-entity gross profits of $20,700 were present in Alpha's inventory as of January 1, 2018. During the year, $247,000 in additional intra-entity sales were made with $27170 in Intra-entity gross profits in inventory remaining at the end of the period. 2 0 Both Alpha and Delta utilized the partial equity method to account for their investment balances. Following are the individual financial statements for the companies for 2018 with consolidated totals Alpha Delta Company Omega Company Consolidated Totals Company (1,103,600)(618,880)(331,600 (1,807,080) Sales Cost of goods sold Operating expenses Income of subsidiary 547,000 383,000 154,400 318,000 158,000 50,120 164,000 96,000 788,470 658,650 $ (328,000 (193,000) (71,600) Separate company net income Consolidated net inco Net income attributable to noncontrolling interest me $ (359,960) (Delta Company) Net income attributable to noncontrolling interest 33,654 (Omega Company) 18,090 $ (308,216) Net income attributable to Alpha Company Retained earnings, 1/1/18 Net income (above) Dividends declared $ (702,500) (467,500) (112,500) (663,052) (328,000) 50,000 (193,000) 40,000 (71,600) 50,000 (308,216) 50,000 $ (980,500) (620,500) (134,100) (921,268) Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Delta Company Investment in Omega Company Property, plant, and equipment Copyrights $ 310,500 307,000 758,000 $-15,790 452,500 $ 27,100 218,000 $ 321,810 950,330 258,790 517,500 1,275,500 288,950 $ 1,795,500 1,213,000$583,100 2,836,590 420,000 338,000 Total assets Liabilities Common stock Retained earnings, 12/31/18 Noncontrolling interest in Delta Company, 12/31/18 Noncontrolling interest in Omega Company, 12/31/18 $ (615,000(472,500)(349,000)(1,436,500) (200,000) (921,268) (174,692) 0(104,130) $ (1,795,500 $(1,213,000) (583,100) (2,836,590) (200,000) (980,500) (120,000) (620,500) (100,000) (134,100) Total liabilities and equities Develop the worksheet entries necessary to derive these reported balances: (If no entry is required for a transaction/event, select "No iournal entry reauired" in the first account field. view transaction list Prepare Entry *G to recognize the intra-entity gross profit in inventory in 2017. 1 2 Prepare Entry *C1 to recognize amortization expense from Dela's acquisition for 2017. Prepare Entry *C2 to To recognize accrual adjustments for excess amortization and inventory deferral. 3 4 Prepare Entry S1 to eliminate the stockholders' equity accounts of Omega against the parent's investment account and to recognize the outside ownership. Prepare Entry S2 to eliminate the stockholders' equity accounts of Delta against the corresponding balance in 5 Prepare Entry A to recognize the January 1, 2018 unamortized copyrights. 6 Prepare Entry I1 to eliminate the intra-entity income accrual found on Alpha's records. 7 Prepare Entry I2 to eliminate the intra-entity income accrual found on Delta's records. 8 Prepare Entry D1 to eliminate the intra entity dividends for Delta. 9 10 Prepare Entry D2 to eliminate the intra entity dividends for Omega 11 Prepare Entry E to recognize the current year amortization on copyrights. 12 Prepare Entry TI to eliminate the intra-entity inventory transfer. 13 Prepare Entry G to defer the ending intra-entity gross profit on the intra-entity transfers On January 1, 2016, Alpha acquired 80 percent of Delta. Of Delta's total business fair value, $207,000 was allocated to copyrights with a 20-year remaining life. Subsequently, on January 1, 2017, Delta obtained 70 percent of Omega's outstanding voting shares. In this second acquisition, $135,600 of Omega's total business fair value was assigned to copyrights that had a remaining life of 12 years. Delta's book value was $557,500 on January 1, 2016 and Omega reported a book value of $152,500 on January 1, 2017 Delta has made numerous inventory transfers to Alpha since the business combination was formed. Intra-entity gross profits of $20,700 were present in Alpha's inventory as of January 1, 2018. During the year, $247,000 in additional intra-entity sales were made with $27170 in Intra-entity gross profits in inventory remaining at the end of the period. 2 0 Both Alpha and Delta utilized the partial equity method to account for their investment balances. Following are the individual financial statements for the companies for 2018 with consolidated totals Alpha Delta Company Omega Company Consolidated Totals Company (1,103,600)(618,880)(331,600 (1,807,080) Sales Cost of goods sold Operating expenses Income of subsidiary 547,000 383,000 154,400 318,000 158,000 50,120 164,000 96,000 788,470 658,650 $ (328,000 (193,000) (71,600) Separate company net income Consolidated net inco Net income attributable to noncontrolling interest me $ (359,960) (Delta Company) Net income attributable to noncontrolling interest 33,654 (Omega Company) 18,090 $ (308,216) Net income attributable to Alpha Company Retained earnings, 1/1/18 Net income (above) Dividends declared $ (702,500) (467,500) (112,500) (663,052) (328,000) 50,000 (193,000) 40,000 (71,600) 50,000 (308,216) 50,000 $ (980,500) (620,500) (134,100) (921,268) Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Delta Company Investment in Omega Company Property, plant, and equipment Copyrights $ 310,500 307,000 758,000 $-15,790 452,500 $ 27,100 218,000 $ 321,810 950,330 258,790 517,500 1,275,500 288,950 $ 1,795,500 1,213,000$583,100 2,836,590 420,000 338,000 Total assets Liabilities Common stock Retained earnings, 12/31/18 Noncontrolling interest in Delta Company, 12/31/18 Noncontrolling interest in Omega Company, 12/31/18 $ (615,000(472,500)(349,000)(1,436,500) (200,000) (921,268) (174,692) 0(104,130) $ (1,795,500 $(1,213,000) (583,100) (2,836,590) (200,000) (980,500) (120,000) (620,500) (100,000) (134,100) Total liabilities and equities Develop the worksheet entries necessary to derive these reported balances: (If no entry is required for a transaction/event, select "No iournal entry reauired" in the first account field. view transaction list Prepare Entry *G to recognize the intra-entity gross profit in inventory in 2017. 1 2 Prepare Entry *C1 to recognize amortization expense from Dela's acquisition for 2017. Prepare Entry *C2 to To recognize accrual adjustments for excess amortization and inventory deferral. 3 4 Prepare Entry S1 to eliminate the stockholders' equity accounts of Omega against the parent's investment account and to recognize the outside ownership. Prepare Entry S2 to eliminate the stockholders' equity accounts of Delta against the corresponding balance in 5 Prepare Entry A to recognize the January 1, 2018 unamortized copyrights. 6 Prepare Entry I1 to eliminate the intra-entity income accrual found on Alpha's records. 7 Prepare Entry I2 to eliminate the intra-entity income accrual found on Delta's records. 8 Prepare Entry D1 to eliminate the intra entity dividends for Delta. 9 10 Prepare Entry D2 to eliminate the intra entity dividends for Omega 11 Prepare Entry E to recognize the current year amortization on copyrights. 12 Prepare Entry TI to eliminate the intra-entity inventory transfer. 13 Prepare Entry G to defer the ending intra-entity gross profit on the intra-entity transfers
