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Problem 1 ( 25 points) Colton Company acquired 90 percent ownership of Mota Company's voting shares on January 1,2022 for $207,000. The fair value of
Problem 1 ( 25 points) Colton Company acquired 90 percent ownership of Mota Company's voting shares on January 1,2022 for $207,000. The fair value of the noncontrolling interest on that date was equal to $27,000. Mota had C/S of $150,000 and R/E of $50,000 on Jan. 1.2022. All differential was for goodwill, and none was impaired in 2022 nor 2023, During 2022, Colton purchased inventory for $40,000 and sold the full amount to Mota Company for $60,000. On December 31, 2022, Mota's ending inventory included $15,000 of items purchased from Colton; All of the inventory was sold in 2023. Also in 2023, Mota purchased inventory for $80,000 and sold the units to Colton for $100,000. Colton included $30,000 of its purchase from Mota in ending inventory on December 31, 2023. Lastly, in 2023, Colton purchased inventory costing 60.000 and sold it to Mota for $90,000.10% of the inventory remained unsold by year end. In 2023 Colton reported net income (exclusive of the investment income from Mota) of $120,000 and Mota reported net income of $80,000. In 2023 Colton paid $15,000 of dividends, and Mota paid $10,000 of dividends. At the beginning of 2023, Mota still had C/S of $150,000, and its R/E was $60,000. (A) Prepare the All of the Equity Method entries made by Colton during the year 2023 (B) Prepare the Consolidation Entries just related to the inventory transfers. Problem 1 ( 25 points) Colton Company acquired 90 percent ownership of Mota Company's voting shares on January 1,2022 for $207,000. The fair value of the noncontrolling interest on that date was equal to $27,000. Mota had C/S of $150,000 and R/E of $50,000 on Jan. 1.2022. All differential was for goodwill, and none was impaired in 2022 nor 2023, During 2022, Colton purchased inventory for $40,000 and sold the full amount to Mota Company for $60,000. On December 31, 2022, Mota's ending inventory included $15,000 of items purchased from Colton; All of the inventory was sold in 2023. Also in 2023, Mota purchased inventory for $80,000 and sold the units to Colton for $100,000. Colton included $30,000 of its purchase from Mota in ending inventory on December 31, 2023. Lastly, in 2023, Colton purchased inventory costing 60.000 and sold it to Mota for $90,000.10% of the inventory remained unsold by year end. In 2023 Colton reported net income (exclusive of the investment income from Mota) of $120,000 and Mota reported net income of $80,000. In 2023 Colton paid $15,000 of dividends, and Mota paid $10,000 of dividends. At the beginning of 2023, Mota still had C/S of $150,000, and its R/E was $60,000. (A) Prepare the All of the Equity Method entries made by Colton during the year 2023 (B) Prepare the Consolidation Entries just related to the inventory transfers
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