On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $340 200. Stinson's book value on that date consisted of common stock of $100.000 and retained earings of $201100. Also, the acquisition date fair value of the 40 percent noncontrolling interest was $226,800. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $76,900 and an unrecorded customer list (15 year remaining life) assessed at a $52,800 fair value. Any remaining excess acquisition date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year end, there are no intra-entity payables or receivables intra-entity Inventory sales between the two companies have been made as follows: Year 2020 2021 Cost tary $126,300 112,500 Transfer Price to Stinson $157,875 150,000 Endine Balance (at transfer price) $52,625 37,500 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: Sales Cost of goods sold Operating expenses Equity in earnings in Stinson Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities Mcllroy. Inc $ (726,000) 477,200 195,760 (33,660) $ (86,704) $ (770,600) (86,704) 47,500 $ (809, 804) 5 276,000 259,200 394,533 334,000 238,500 Stinson, Inc $ (362,000) 221,200 75,400 0 $ (65,400) 5 (282, 200) (65,100) 17,900 $ (329,700) $ 150, 100 130,900 0 204,600 88,400 22,800 $596,800 $ (167,100) (100,000 (329,700) $(596, 800) $ 1,502,233 $(392,429) (300,000) (809, 804) $(1,502,233) (Note: Parentheses indicate a credit balance.) a. Show how Mcllroy determined the $394,533 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2021 Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Required A Required B Show how Mcllroy determined the $394,533 Investment in Stinson account balance. Assume that Mcllroy defers 100 percent of downstream intra-entity profits against its share of Stinson's income. (Amounts to be deducted should be indicated with a minus sign) Required Required B > Required A Required B Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2021. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive valut Show less MCILROY INC. AND STINSON, INC Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Debit Credit NCI Consolidated Totals $ Mcllroy (726,000) 5 477,200 195,700 (33,064) (86.704) Stinson (302.000) 221,200 75 400 0 (65.400) Accounts Saks Cost of goods sold Operating expenses Equity in oamings of Stinson Separate company net income Consolidated not income To noncontrolling interest To Mcllroy, Inc Retained earnings 1/1/21 Not income Olividends declared Rotamned earnings 12/31/21 Cash and receivables (770.600) (86,704) 47 500 (809.804) $ 275.000 5 25000 (282 200) (65,400) 17 900 (329.700) 150 100 1300 $ 5 (86,704) (65.400) Separate company net income Consolidated net income To noncontrolling interest To Mcllroy, Inc Retained earnings 1/1/21 Nel income Dividends declared Retained oamings 12/31/21 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Customer list Goodwill Total assets $ $ (770,600) (86,704) 47,500 (809,804) $ 276,000 $ 259,200 394,533 334,000 238,500 0 (282,200) (65,400) 17,900 (329,700) 150,100 130.900 0 204.600 88,400 22,800 $ 596 800 1,502 233 s (392 429) (300,000) (167 100) (100.000) Liabilities Common stock Noncontrolling interest 1/1/21 Noncontrolling interest 12/31/21 Rotained eamings 12/31/21 Total liabilities and equities (809,804) (502 233) (329,700) (596 600) S $
