Question
On January 1, 2020, Father Corporation exchanged $390,000 for 60% of Son Corporation. The consideration transferred by Father provided a reasonable basis for assessing the
On January 1, 2020, Father Corporation exchanged $390,000 for 60% of Son Corporation. The consideration transferred by Father provided a reasonable basis for assessing the total 1/1/20, fair value of Son Corporation. Sons acquisition date balance sheet follows:
|
|
|
|
|
|
|
|
Current assets | $ | 15,400 |
| Liabilities | $ | 233,000 |
|
Property and equipment (net) |
| 269,400 |
| Common stock |
| 100,000 |
|
Patents |
| 208,200 |
| Retained earnings |
| 160,000 |
|
Total Assets | $ | 493,000 |
| Total Liab and SE | $ | 493,000 |
|
On January 1, 2020, Father assessed the carrying amount of Sons equipment (5-year remaining life) to be undervalued by $53,000. Father also determined that Son possessed an unrecorded customer base (10-year remaining life) worth $327,200. Sons acquisition-date fair values for its current assets and liabilities were equal to their carrying amounts. Any remaining excess of Sons acquisition-date fair value over its book value was attributed to goodwill.
The companies financial statements for the year ending December 31, 2021, follow:
| Father |
| Son | ||||
Sales | $ | (617,700 | ) |
| $ | (442,500 | ) |
Cost of goods sold |
| 313,100 |
|
|
| 207,000 |
|
Operating expenses |
| 150,500 |
|
|
| 111,500 |
|
Equity in Son earnings |
| (48,408 | ) |
|
| 0 |
|
Separate company net income | $ | (202,508 | ) |
| $ | (124,000 | ) |
|
|
|
|
|
|
|
|
Retained earnings 1/1 | $ | (821,600 | ) |
| $ | (334,300 | ) |
Net income |
| (202,508 | ) |
|
| (124,000 | ) |
Dividends declared |
| 50,000 |
|
|
| 30,000 |
|
Retained earnings 12/31 | $ | (974,108 | ) |
| $ | (428,300 | ) |
|
|
|
|
|
|
|
|
Current assets | $ | 216,400 |
|
| $ | 95,500 |
|
Investment in Son |
| 498,996 |
|
|
| 0 |
|
Property and equipment (net) |
| 851,000 |
|
|
| 273,000 |
|
Patents |
| 151,800 |
|
|
| 161,500 |
|
Total assets | $ | 1,718,196 |
|
| $ | 530,000 |
|
|
|
|
|
|
|
|
|
Liabilities | $ | (424,088 | ) |
| $ | (1,700 | ) |
Common stockFather |
| (320,000 | ) |
|
| 0 |
|
Common stockSon |
| 0 |
|
|
| (100,000 | ) |
Retained earnings 12/31 |
| (974,108 | ) |
|
| (428,300 | ) |
Total liabilities and owners equity | $ | (1,718,196 | ) |
| $ | (530,000 | ) |
At year-end, there were no intra-entity receivables or payables.
Required
1. Prepare SAIDE worksheet entries to consolidate these two companies as of December 31, 2021.
2. Determine the 12/31/21 Non-Controlling Interest Balance.
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