On January 1, 2016, Alpha acquired 80 percent of Delta. Of Delta's total business fair value, $160,000 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, $160,200 of Omega's total business fair value was assigned to copyrights that had a remaining life of 12 years. Delta's book value was $667,500 on January 1, 2016 and Omega reported a book value of $141,000 on January 1, 2017. Delta has made numerous inventory transfers to Alpha since the business combination was formed. Intra-entity gross profits of $17,300 were present in Alpha's inventory as of January 1, 2018. During the year, $200,000 in additional intra-entity sales were made with $22,000 in Intra-entity gross profits in inventory remaining at the end of the period. 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 Company (975, 200) 515, 000 338,000 (208, 800) (331, 000) Delta Company (678, 450) 315,000 156, 000 (53, 550) (261, 000) Omega Company (304, 000) 155,000 72,500 Consolidated Totals $ (1,757, 650) 789, 700 587, 850 0 $ $ $ (76,500) $ Sales Cost of goods sold Operating expenses Income of subsidiary Separate company net income Consolidated net income Net income attributable to noncontrolling interest (Delta Company) Net income attributable to noncontrolling interest (Omega Company) Net income attributable to Alpha Company Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Delta Company $ $ $ $ $ (622,500) (331, 000) 50,000 (903, 500) 244, 200 358, 000 862. 800 (101, 000) (76,500) 60,000 (117,500) 27,500 196, 000 $ (380, 100) 47, 791 18, 945 (313, 364) (588. 384) (313, 364) 50,000 (851, 748) 608, 310 902, 000 (577, 500) (261, 000) 40,000 (798,500) 336, 610 370,000 $ $ $ $ $ $ Following are the individual financial statements for the companies for 2018 with consolidated totals. $ $ $ Alpha Company (975, 200) 515,000 338,000 (208, 800 (331, 000) Delta Company (678, 450) 315, 000 156, 000 (53, 550) (261, 000) Omega Company (304, 000) 155,000 72,500 Consolidated Totals $ (1, 757, 650) 789, 700 587, 850 0 0 $ $ $ (76,500) $ $ $ $ $ $ Sales Cost of goods sold Operating expenses Income of subsidiary Separate company net income Consolidated net income Net income attributable to noncontrolling interest (Delta Company) Net income attributable to noncontrolling interest (Omega Company) Net income attributable to Alpha Company Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Delta Company Investment in Omega Company Property, plant, and equipment Copyrights 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 Total liabilities and equities (577,500) (261, 000) 40,000 (798,500) 336, 610 370,000 (380, 100) 47, 791 18, 945 (313, 364) (588, 384) (313, 364) 50,000 (851, 748) 608, 310 902, 000 $ (101, 000) (76, 500) 60, 000 (117,500) 27,500 196,000 $ $ 0 0 0 $ (622, 500) (331, 000) 50,000 $ (903, 500) 244, 200 358,000 862, 800 0 466, 000 0 $ 1,931, 000 $ (827, 500) (200,000 (903, 500) 264, 390 380,000 0 $ 1,351, 000 $ (432, 500) (120,000) (798,500) $ $ 0 280,000 0 503, 500 (286, 000) (100,000 (117,500 1, 126,000 269,500 $ 2,905, 810 $ (1,546, 000) (200, 000) (851, 748) (202, 762) (105, 300 $ (2, 905, 810) 0 $ (1,931, 000) $ (1, 351, 000) $ (503, 500) Consolidation Worksheet Entries 2 3 4 5 6 7 8 ..... 13 > Prepare Entry *G to recognize the intra-entity gross profit in inventory in 2017. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 3 4 5 6 7 8 ..... 13 > Prepare Entry *C1 to recognize amortization expense from Dela's acquisition for 2017. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry S1 to eliminate the stockholders' equity accounts of Omega against the parent's investment account and to recognize the outside ownership. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry 52 to eliminate the stockholders' equity accounts of Delta against the corresponding balance in the investment account and to recognize the outside ownership. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry A to recognize the January 1, 2018 unamortized copyrights. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry 11 to eliminate the intra-entity income accrual found on Alpha's records. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry 12 to eliminate the intra-entity income accrual found on Delta's records. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry TI to eliminate the intra-entity inventory transfer. Note: Enter debits before credits. Transaction Accounts Debit Credit 12 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry *G to recognize the intra-entity gross profit in inventory in 2017. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries 3 4 5 6 7 8 ..... 13 > Prepare Entry *C1 to recognize amortization expense from Dela's acquisition for 2017. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry S1 to eliminate the stockholders' equity accounts of Omega against the parent's investment account and to recognize the outside ownership. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry 52 to eliminate the stockholders' equity accounts of Delta against the corresponding balance in the investment account and to recognize the outside ownership. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry A to recognize the January 1, 2018 unamortized copyrights. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry 11 to eliminate the intra-entity income accrual found on Alpha's records. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry 12 to eliminate the intra-entity income accrual found on Delta's records. Note: Enter debits before credits. Transaction Accounts Debit Credit Record entry Clear entry view consolidation entries Consolidation Worksheet Entries Prepare Entry TI to eliminate the intra-entity inventory transfer. Note: Enter debits before credits. Transaction Accounts Debit Credit 12 Record entry Clear entry view consolidation entries Consolidation Worksheet Entries
