On January 1, 2017, Travers Company acquired 90 percent of Yarrow Company's outstanding stock for $918,000. The 10 percent noncontrolling interest had an assessed fair value of $102,000 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 $520,000. At the acquisition date, the 20 percent noncontrolling interest fair value was $130,000. 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	$	520,000
Yarrow Company		270,000
Stookey Company		208,000

Following are the 2018 financial statements for these three companies. Stookey has transferred numerous amounts of inventory to Yarrow since the takeover amounting to $124,000 (2017) and $155,000 (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

$

(1,120,000

)

$

(769,400

)

$

(544,000

)

Cost of goods sold

596,600

410,200

326,400

Operating expenses

124,200

102,000

108,800

Net income

$

(399,200

)

$

(257,200

)

$

(108,800

)

Retained earnings, 1/1/18

$

(920,000

)

$

(771,600

)

$

(498,000

)

Net income (above)

(399,200

)

(257,200

)

(108,800

)

Dividends declared

159,680

0

0

Retained earnings, 12/31/18

$

(1,159,520

)

$

(1,028,800

)

$

(606,800

)

Current assets

$

578,200

$

487,800

$

388,700

Investment in Yarrow Company

918,000

0

0

Investment in Stookey Company

0

520,000

0

Land, buildings, and equipment (net)

1,210,800

880,000

506,800

Total assets

$

2,707,000

$

1,887,800

$

895,500

Liabilities

$

(1,047,480

)

$

(532,600

)

$

(88,700

)

Common stock

(500,000

)

(326,400

)

(200,000

)

Retained earnings, 12/31/18

(1,159,520

)

(1,028,800

)

(606,800

)

Total liabilities and equities

$

(2,707,000

)

$

(1,887,800

)

$

(895,500

)

Note: Parentheses indicate a credit balance.

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

TRAVERS COMPANY AND CONSOLIDATED SUBSIDIARIES
Consolidation Worksheet
For Year Ending December 31, 2018
				Consolidation Entries		Noncontrolling	Consolidated
Accounts	Travers Company	Yarrow Company	Stookey Company	Debit	Credit	Interest	Balance
Sales and other revenue	(1,120,000)	(769,400)	(544,000)
Cost of goods sold	596,600	410,200	326,400
Operating expenses	124,200	102,000	108,800
Separate company net income	(399,200)	(257,200)	(108,800)
Consolidated net income							0
Net income attributable to NCI (Yarrow)
Net income attributable to NCI (Stookey)
Net income attributable to Travers Company							0
Retained earnings, 1/1/18:
Travers Company	(920,000)
Yarrow Company		(771,600)
Stookey Company			(498,000)
Net income (above)	(399,200)	(257,200)	(108,800)
Dividends declared	159,680
Retained earnings, 12/31/18	(1,159,520)	(1,028,800)	(606,800)				0
Current assets	578,200	487,800	388,700
Investment in Yarrow Company	918,000
Investment in Stookey Company		520,000
Land, buildings, & equipment (net)	1,210,800	880,000	506,800
Copyright
Customer list
Total assets	2,707,000	1,887,800	895,500				0
Liabilities	(1,047,480)	(532,600)	(88,700)
Common stock	(500,000)	(326,400)	(200,000)
Retained earnings, 12/31/18 (above)	(1,159,520)	(1,028,800)	(606,800)
NCI interest in Stookey, 1/1/18
Noncontrolling interest in Yarrow, 1/1/18
Noncontrolling interests in subsidiaries						0
Total liabilities and equities	(2,707,000)	(1,887,800)	(895,500)	0	0		0