Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $955,900 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,194,875. Also at the acquisition date, Stanford's book value was $524,400. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Book Value $ 292,200 Fair Value $ 374,600 Tradenames (indefinite life) Property and equipment (net, 8-year remaining life) Patent (14-year remaining life) 236,800 120,400 254,400 161,000 For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies. $ Plaza (828,400) 458,000 194,100 Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Stanford Net income Stanford $ (746,400) 321,700 29,600 23,000 (293,600) (469,900) $ $ (372,100) Retained earnings, 1/1/18 Net income Dividends declared Retained earnings, 12/31/18 $(1,036,500) (469,900) 243,900 $(1,262,500) $ (430,000) (372,100) 22,000 $ (780,100) $ $ 350,700 Current assets Investment in Stanford Tradenames Property and equipment (net) Patents Total assets 698,900 1,231,900 195,200 837,800 292,200 207,200 97,400 947,500 $ 2,963,800 $ Accounts payable Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities $ (115,600) (244,000) (1,341,700) (1,262,500) $(2,963,800) $ (73,000) (74,000) (20,400) (780, 100) $ (947,500) At year-end, there were no intra-entity receivables or payables. Prepare a worksheet to consolidate the financial statements of Plaza, Inc. and its subsidiary Stanford. (For accou consolidation entries are required, combine all debit entries into one amount and enter this amount in the de worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontr Consolidated Totals columns should be entered with a minus sign.) Consolidated Totals PLAZA CORPORATION AND STANFORD CORPORATION Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Noncontrolling Plaza Stanford Debit Credit Interest $ (828,400) $ (746,400) 458,000 321,700 194,100 29,600 23,000 (293,600) $ (469,900) $ (372,100) Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Stanford Net income Consolidated net income NCI share of CNI Plaza share of CNI Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 (1,036,500) $ (430,000) (469,900) (372,100) 243,900 22,000 (1.262 500) $ (780, 100) $ $ 350,700 698,900 1,231,900 195,200 837,800 0 292,200 207,200 97,400 Current assets Investment in Stanford Tradenames Property and equipment (net) Patents Goodwill Total assets Accounts payable Common stock Additional paid-in capital Noncontrolling interest Retained earnings, 12/31 Total liabilities and equities $ $ 2,963,800 (115,600) (244,000) (1,341,700) 947,500 (73,000) (74,000) (20,400) (1,262,500) (780,100) (2,963,800) $ (947,500)
