please help!

Problem 6-29 (LO 5-2, 5-3, 5-4, 5-5) Upstream ProForm acquired 70 percent of ClipRite on June 30, 2017, for $1,050,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $750,000 was recognized and is being amortized at the rate of $13,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $450,000 at the acquisition date. The 2018 financial statements are as follows: ProForm ClipRite Sales $ (970,000 ) $ (940,000 ) Cost of goods sold 620,000 485,000 Operating expenses 270,000 185,000 Dividend income (63,000 ) 0 Net income $ (143,000 ) $ (270,000 ) Retained earnings, 1/1/18 $ (2,200,000 ) $ (1,020,000 ) Net income (143,000 ) (270,000 ) Dividends declared 270,000 90,000 Retained earnings, 12/31/18 $ (2,073,000 ) $ (1,200,000 ) Cash and receivables $ 570,000 $ 470,000 Inventory 460,000 870,000 Investment in ClipRite 1,050,000 0 Fixed assets 1,400,000 1,450,000 Accumulated depreciation (300,000 ) (400,000 ) Totals $ 3,180,000 $ 2,390,000 Liabilities $ (707,000 ) $ (790,000 ) Common stock (400,000 ) (400,000 ) Retained earnings, 12/31/18 (2,073,000 ) (1,200,000 ) Totals $ (3,180,000 ) $ (2,390,000 )

ClipRite sold ProForm inventory costing $86,000 during the last six months of 2017 for $260,000. At year-end, 30 percent remained. ClipRite sells ProForm inventory costing $285,000 during 2018 for $420,000. At year-end, 10 percent is left. With these facts, determine the consolidated balances for the following: Consolidated Balance Sales $1,490,000 Cost of goods sold $646,300 Operating expenses $468,000 Dividend income $0 Net income attributable to noncontrolling interest $88,710 Inventory $1,316,500 Noncontrolling interest in subsidiary, 12/31/18 $695,100

Explanation: Intra-Entity gross profit, 12/31/17: (upstream transfer) Intra-entity gross profit ($260,000 $86,000) $ 174,000 Inventory remaining at year's end 30 % Intra-entity gross profit in inventory, 12/31/17 $ 52,200

Intra-Entity gross profit, 12/31/18: (upstream transfer) Intra-entity gross profit ($420,000 $285,000) $ 135,000 Inventory remaining at year's end 10 % Intra-entity gross profit in inventory, 12/31/18 $ 13,500

Consolidated totals Sales = $1,490,000 (combine amounts and eliminate intra-entity transfer) Cost of goods sold: Proform's COGS book value $ 620,000 ClipRite's COGS book value 485,000 Eliminate intra-entity transfers (420,000 ) Recognized gross profit deferred in 2017 (52,200 ) Deferral of 2018 Intra-entity gross profit in inventory 13,500 Consolidated cost of goods sold $ 646,300

Operating expenses = $468,000 (combine amounts and include intangible amortization for current year) Dividend income = 0 (intra-entity transfer eliminated in consolidation) Net income attributable to noncontrolling interest: (impact of transfers is included because they were upstream) ClipRite reported net income for 2018 $ 270,000 Intangible amortization (13,000 ) 2017 gross profit recognized in 2018 52,200 2018 gross profit deferred (13,500 ) ClipRite adjusted net income for 2018 $ 295,700 Outside ownership 30 % Net income attributable to noncontrolling interest $ 88,710

Inventory = $1,316,500 (combine amounts and defer the $13,500 ending intra-entity gross profit) Noncontrolling interest in subsidiary, 12/31/18 30% beginning book value less $52,200 intra-entity gross profit (30% $1,367,800) $ (410,340 ) Excess intangible allocation (30% $743,500) 223,050 Net income attributable to noncontrolling interest 88,710 Dividends (30% $90,000) (27,000 ) Total noncontrolling interest at 12/31/18 $ 695,100

* $750,000 intangible allocation net of $6,500 ( year) amortization in 2017