On January 1, 2016, Aspen Company acquired 80 percent of Birch Company's voting stock for $396,000. Birch reported a $420,000 book value and the fair value of the noncontrolling interest was $99,000 on that date. Then, on January 1, 2017, Birch acquired 80 percent of Cedar Company for $188,000 when Cedar had a $181,000 book value and the 20 percent noncontrolling interest was valued at $47,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life. These companies report the following financial information. Investment income figures are not included. 2018 2016 2017 Sales: $ 560, 000 219, 750 Not available $ 790, 000 $ 299, 250 188, 500 Aspen Company Birch Company Cedar Company 847, 500 582, 000 290, 800 Expenses: Aspen Company Birch Company $ 525, 000 162, 000 Not available $ 470, 000 239, 000 177, 000 $ 657, 500 502, 500 241, 000 Cedar Company Dividends declared: Aspen Company Birch Company Cedar Company $ 15, 000 15, 000 Not available 35, 000 $ 18, 000 3, 000 45, 000 18, 000 8, 000 Assume that each of the following questions is independent: a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Aspen's Investment in Birch Company account? b. What is the consolidated net income for this business combination for 2018? c. What is the net income attributable to the noncontrolling interest in 2018? d. Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in d. Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year: Date Amount $19, 600 19, 400 29, 400 12/31/16 12/31/17 12/31/18 What is the accrual-based net income of Birch in 2017 and 2018, respectively? Complete this question by entering your answers in the tabs below. Req A to C Req D a. If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Aspen's Investment in Birch Company account? b. What is the consolidated net income for this business combination for 2018? c. What is the net income attributable to the noncontrolling interest in 2018? Show lessA Investment in Birch a. b. Consolidated net income c. Noncontrolling interests' share of the consolidated net income What is the accrual-based net income of Birch in 2017 and 2018, respectively? Complete this question by entering your answers in the tabs below. Req A to C Req D Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year: Date Amount 12/31/16 12/31/17 $19, 600 19, 400 29, 400 12/31/18 What is the accrual-based net income of Birch in 2017 and 2018, respectively? Show lessA 2017 2018 Realized income Req D >
