Prepare consolidated financial statements (income statement, statement of Retained earnings, and balance sheet), including appropriate tables, consolidation worksheet, and consolidated journal entries. Pre-consolidation financial statements Keller inc. Shryack unlimited Sales 6,000,00 1,000,000 Cost of sales -4,500,000 - 600,000 Gross profit 1,500,000 400,000 Equity income 55,500 Operating expense -900,000 -300,000 Net income 655,500 100,000 On January 1, 2012, Keller inc. acquired an 80% interest in its subsidiary shryack unlimited The total fair value of the controlling and non controlling interests was $900,000 over the book value of the shryack unlimited's stockholders equity on the acquisition date Keller inc. assigned the excess to the following assets: Assets Initial Fair value Useful life Property, Plant, and Equipment (PPE), net 300,000 15 years Patent 200,000 10 years Goodwill 400,000 BOY Retained Earnings 2,000,000 Net income 655,500 Dividends -200,000 Ending retained earnings 2,455,500 600,000 100,000 -80,000 620,000 Cash 50,000 300,000 400,000 Accounts receivable Inventory Equity investment PPE Total assets 500,000 750,000 1,000,000 1,354,000 3,000,000 6,604,000 1,000,000 1,750,000 Accounts payable Long term debt Common stock APIC Retained earnings Total liabilities and SE 648,500 2,000,000 500,000 1,000,000 2,455,500 6,604,000 100,000 500,000 100,000 430,000 620,000 1,750,000 Based on the relative acquisition date fair values of the controlling and non controlling interests, goodwill was allocated to Keller inc. and shryack unlimited in an 80-20 split, respectively. Assume that the Keller inc. sells inventory to shryack unlimited(downstream which includes that inventory in products that it ultimately sells to customers outside of the controlled group. You have compiled the following data as of 2016 and 2017 2016 2017 Transfer price for inventory sale 500,000 400,000 Cost of goods sold -350,000 -300,000 Gross profit % of inventory remaining 0 0 Gross profit deferred 37,500 30,000 EOY receivable/payable 75,000 50,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. The parent uses the equity method of pre-consolidation investment bookkeeping. Keller and shryack report the following pre-consolidation financial statement at December 31, 2017 Prepare consolidated financial statements (income statement, statement of Retained earnings, and balance sheet), including appropriate tables, consolidation worksheet, and consolidated journal entries. Pre-consolidation financial statements Keller inc. Shryack unlimited Sales 6,000,00 1,000,000 Cost of sales -4,500,000 - 600,000 Gross profit 1,500,000 400,000 Equity income 55,500 Operating expense -900,000 -300,000 Net income 655,500 100,000 On January 1, 2012, Keller inc. acquired an 80% interest in its subsidiary shryack unlimited The total fair value of the controlling and non controlling interests was $900,000 over the book value of the shryack unlimited's stockholders equity on the acquisition date Keller inc. assigned the excess to the following assets: Assets Initial Fair value Useful life Property, Plant, and Equipment (PPE), net 300,000 15 years Patent 200,000 10 years Goodwill 400,000 BOY Retained Earnings 2,000,000 Net income 655,500 Dividends -200,000 Ending retained earnings 2,455,500 600,000 100,000 -80,000 620,000 Cash 50,000 300,000 400,000 Accounts receivable Inventory Equity investment PPE Total assets 500,000 750,000 1,000,000 1,354,000 3,000,000 6,604,000 1,000,000 1,750,000 Accounts payable Long term debt Common stock APIC Retained earnings Total liabilities and SE 648,500 2,000,000 500,000 1,000,000 2,455,500 6,604,000 100,000 500,000 100,000 430,000 620,000 1,750,000 Based on the relative acquisition date fair values of the controlling and non controlling interests, goodwill was allocated to Keller inc. and shryack unlimited in an 80-20 split, respectively. Assume that the Keller inc. sells inventory to shryack unlimited(downstream which includes that inventory in products that it ultimately sells to customers outside of the controlled group. You have compiled the following data as of 2016 and 2017 2016 2017 Transfer price for inventory sale 500,000 400,000 Cost of goods sold -350,000 -300,000 Gross profit % of inventory remaining 0 0 Gross profit deferred 37,500 30,000 EOY receivable/payable 75,000 50,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. The parent uses the equity method of pre-consolidation investment bookkeeping. Keller and shryack report the following pre-consolidation financial statement at December 31, 2017
