P6-29 Intercompany Transfer of Inventory LO 6-3, 6-4 Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $119,000. At that date, the noncontrolling interest had a fair value of $51,000 and Soda reported $70,000 of common stock outstanding and retained earnings of $33,000. The differential is assigned to buildings and equipment, which had a fair value $29,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $38,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows: Pop Corporatiorn Debit Soda Compan Credit Debit 24, 600 38,000 43,000 263,000 Credit Item Cash & Accounts Receivable Inventory Land Buildings & Equipment Investment in Soda Company Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Bond Premium Common Stock Retained Earnings Sales Other Income Income from Soda Company $ 18,400 168,000 83,000 370,000 117,235 189,000 20,000 19,000 33,000 82,800 15,000 8,200 18,000 $ 143, 000 95,400 240,790 $ 75,000 38,000 110,000 1, 600 70, 000 63,000 135,000 123,000 130,900 263,000 12, 600 8,945 $1,017, 635 $1,017,635 $492,600 $492, 600 On December 31, 20X2, Soda purchased inventory for $31,200 and sold it to Pop for $48,000. Pop resold $30,000 of the inventory (i.e., $30,000 of the $48,000 acquired from Soda) during 20X3 and had the remaining balance in P6-29 Intercompany Transfer of Inventory LO 6-3, 6-4 Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $119,000. At that date, the noncontrolling interest had a fair value of $51,000 and Soda reported $70,000 of common stock outstanding and retained earnings of $33,000. The differential is assigned to buildings and equipment, which had a fair value $29,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $38,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows: Pop Corporatiorn Debit Soda Compan Credit Debit 24, 600 38,000 43,000 263,000 Credit Item Cash & Accounts Receivable Inventory Land Buildings & Equipment Investment in Soda Company Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Bond Premium Common Stock Retained Earnings Sales Other Income Income from Soda Company $ 18,400 168,000 83,000 370,000 117,235 189,000 20,000 19,000 33,000 82,800 15,000 8,200 18,000 $ 143, 000 95,400 240,790 $ 75,000 38,000 110,000 1, 600 70, 000 63,000 135,000 123,000 130,900 263,000 12, 600 8,945 $1,017, 635 $1,017,635 $492,600 $492, 600 On December 31, 20X2, Soda purchased inventory for $31,200 and sold it to Pop for $48,000. Pop resold $30,000 of the inventory (i.e., $30,000 of the $48,000 acquired from Soda) during 20X3 and had the remaining balance in
