On January 1, 2017, Travers Company acquired 90 percent of Yarrow Company's outstanding stock for $765,000 The 10 percent noncontrolling interest had an assessed fair value of $85,000 on that date Any acquisition date excess fair value over book value was attributed to an unrecorded customer list developed by Yarrow with a remaining life of 15 years On the same date, Yarrow acquired an 80 percent interest in Stookey Company for $384,000 At the acquisition date, the 20 percent noncontrolling interest fair value was $96,000 Any excess fair value was attributed to a fully amortized copyright that had a remaining life of 10 years Although both investments are accounted for using the initial value method, neither Yarrow nor Stookey have distributed dividends since the acquisition date Travers has a policy to declare and pay cash dividends each year equal to 40 percent of its separate company operating earnings Reported income totals for 2017 follow Travers Company $ 350,000 Yarrow Company 185,000 Stookey Company 140,000 Following are the 2018 financial statements for these three companies Stookey has transferred numerous amounts of inventory to Yarrow since the takeover amounting to $90,000 (2017) and $112,500 (2018) These transactions include the same markup applicable to Stookey's outside sales In each year, Yarrow carried 20 percent of this inventory into the succeeding year before disposing of it An effective tax rate of 40 percent is applicable to all companies All dividend declarations are paid in the same period Travers Company Yarrow Company Stookey Company Sales $ (950,000 ) $ (638,500 ) $ (510,000 ) Cost of goods sold 506,500 340,500 306,000 Operating expenses 105,500 85,000 102,000 Net income $ (338,000 ) $ (213,000 ) $ (102,000 ) Retained earnings, 1 1 18 $ (750,000 ) $ (639,000 ) $ (345,000 ) Net income (above) (338,000 ) (213,000 ) (102,000 ) Dividends declared 135,200 0 0 Retained earnings, 12 31 18 $ (952,800 ) $ (852,000 ) $ (447,000 ) Current assets $ 474,500 $ 404,500 $ 336,700 Investment in Yarrow Company 765,000 0 0 Investment in Stookey Company 0 384,000 0 Land, buildings, and equipment (net) 1,008,500 846,000 517,000 Total assets $ 2,248,000 $ 1,634,500 $ 853,700 Liabilities $ (795,200 ) $ (476,500 ) $ (206,700 ) Common stock (500,000 ) (306,000 ) (200,000 ) Retained earnings, 12 31 18 (952,800 ) (852,000 ) (447,000 ) Total liabilities and equities $ (2,248,000 ) $ (1,634,500 ) $ (853,700 ) Note Parentheses indicate a credit balance Prepare the business combination's 2018 consolidation worksheet ignore income tax effects Noncontrolling Consolidated Accounts TRAVERS COMPANY AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Travers Yarrow Stookey Debit Credit Company Company Company (950,000) (638,500) (510,000) 112,500 506,500 340,500 306,000 9,000 105,500 85,000 102,000 13,500 (338,000) (213,000) (102,000) Interest Balance (1,986,000) 1,042,300 (28, 116) X (18,540) (943,700) 28, 116 X 18,540 Sales and other revenue Cost of goods sold Operating expenses Separate company net income Consolidated net income Net income attributable to NCI (Yarrow) Net income attributable to NCI (Stookey) Net income attributable to Travers Company Retained earnings, 1 1 18 Travers Company Yarrow Company Stookey Company Net income (above) Dividends declared Retained earnings, 12 31 18 (897,044) (750,000) 251,316 100,240 (639,000) 739,240 72,000 (345,000) (102,000) (1,001,316) 0 0 (591,044) 135,200 (1,457,160) (213,000) (338,000) 135,200 (952,800) (852,000) (447,000) 404,500 336,700 9,000 474,500 765,000 251,316 100,240 384,000 846,000 1,008,500 517,000 75,600 X 7,500 X 6,000 X 84,000 X Current assets Investment in Yarrow Company Investment in Stookey Company Land, buildings, equipment (net) Copyright Customer list Total assets Liabilities Common stock Retained earnings, 12 31 18 (above) NCI interest in Stookey, 1 1 18 Noncontrolling interest in Yarrow, 1 1 18 Noncontrolling interests in subsidiaries Total liabilities and equities 1,206,700 0 0 2,371,500 60,000 78,000 3,716,200 (1,478,400) (500,000) 1,457,160 1,634,500 2,248,000 (795, 200) (500,000) (952,800) (476,500) (306,000) (852,000) 853,700 (206,700) (200,000) (447,000) 447,000 X 13,500 X 8,400 (121,060) (112,924) (280,640) (2,248,000) (1,634,500) (853,700) 1,828,796 471,556 (521,240)

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On January 1, 2017, Travers Company acquired 90 percent of Yarrow Company's outstanding stock for $765,000. The 10 percent noncontrolling interest had an assessed fair

On January 1, 2017, Travers Company acquired 90 percent of Yarrow Company's outstanding stock for $765,000. The 10 percent noncontrolling interest had an assessed fair value of $85,000 on that date. Any acquisition-date excess fair value over book value was attributed to an unrecorded customer list developed by Yarrow with a remaining life of 15 years.

On the same date, Yarrow acquired an 80 percent interest in Stookey Company for $384,000. At the acquisition date, the 20 percent noncontrolling interest fair value was $96,000. Any excess fair value was attributed to a fully amortized copyright that had a remaining life of 10 years. Although both investments are accounted for using the initial value method, neither Yarrow nor Stookey have distributed dividends since the acquisition date. Travers has a policy to declare and pay cash dividends each year equal to 40 percent of its separate company operating earnings. Reported income totals for 2017 follow:


Travers Company	$	350,000
Yarrow Company		185,000
Stookey Company		140,000

Following are the 2018 financial statements for these three companies. Stookey has transferred numerous amounts of inventory to Yarrow since the takeover amounting to $90,000 (2017) and $112,500 (2018). These transactions include the same markup applicable to Stookey's outside sales. In each year, Yarrow carried 20 percent of this inventory into the succeeding year before disposing of it. An effective tax rate of 40 percent is applicable to all companies. All dividend declarations are paid in the same period.

	Travers Company			Yarrow Company			Stookey Company
Sales	$	(950,000	)	$	(638,500	)	$	(510,000	)
Cost of goods sold		506,500			340,500			306,000
Operating expenses		105,500			85,000			102,000
Net income	$	(338,000	)	$	(213,000	)	$	(102,000	)
Retained earnings, 1/1/18	$	(750,000	)	$	(639,000	)	$	(345,000	)
Net income (above)		(338,000	)		(213,000	)		(102,000	)
Dividends declared		135,200			0			0
Retained earnings, 12/31/18	$	(952,800	)	$	(852,000	)	$	(447,000	)
Current assets	$	474,500		$	404,500		$	336,700
Investment in Yarrow Company		765,000			0			0
Investment in Stookey Company		0			384,000			0
Land, buildings, and equipment (net)		1,008,500			846,000			517,000
Total assets	$	2,248,000		$	1,634,500		$	853,700
Liabilities	$	(795,200	)	$	(476,500	)	$	(206,700	)
Common stock		(500,000	)		(306,000	)		(200,000	)
Retained earnings, 12/31/18		(952,800	)		(852,000	)		(447,000	)
Total liabilities and equities	$	(2,248,000	)	$	(1,634,500	)	$	(853,700	)

Note: Parentheses indicate a credit balance.

Prepare the business combination's 2018 consolidation worksheet; ignore income tax effects.

Noncontrolling Consolidated Accounts TRAVERS COMPANY AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Travers Yarrow Stookey Debit Credit Company Company Company (950,000) (638,500) (510,000) 112,500 506,500 340,500 306,000 9,000 105,500 85,000 102,000 13,500 (338,000) (213,000) (102,000) Interest Balance (1,986,000) 1,042,300 (28, 116) X (18,540) (943,700) 28, 116 X 18,540 Sales and other revenue Cost of goods sold Operating expenses Separate company net income Consolidated net income Net income attributable to NCI (Yarrow) Net income attributable to NCI (Stookey) Net income attributable to Travers Company Retained earnings, 1/1/18: Travers Company Yarrow Company Stookey Company Net income (above) Dividends declared Retained earnings, 12/31/18 (897,044) (750,000) 251,316 100,240 (639,000) 739,240 72,000 (345,000) (102,000) (1,001,316) 0 0 (591,044) 135,200 (1,457,160) (213,000) (338,000) 135,200 (952,800) (852,000) (447,000) 404,500 336,700 9,000 474,500 765,000 251,316 100,240 384,000 846,000 1,008,500 517,000 75,600 X 7,500 X 6,000 X 84,000 X Current assets Investment in Yarrow Company Investment in Stookey Company Land, buildings, & equipment (net) Copyright Customer list Total assets Liabilities Common stock Retained earnings, 12/31/18 (above) NCI interest in Stookey, 1/1/18 Noncontrolling interest in Yarrow, 1/1/18 Noncontrolling interests in subsidiaries Total liabilities and equities 1,206,700 0 0 2,371,500 60,000 78,000 3,716,200 (1,478,400) (500,000) 1,457,160 1,634,500 2,248,000 (795, 200) (500,000) (952,800) (476,500) (306,000) (852,000) 853,700 (206,700) (200,000) (447,000) 447,000 X 13,500 X 8,400 (121,060) (112,924) (280,640) (2,248,000) (1,634,500) (853,700) 1,828,796 471,556 (521,240)