Problem 4-28 (LO 4-1, 4-5, 4-6)

Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $1,052,900 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,316,125. Also at the acquisition date, Stanford's book value was $543,900.

Several individual items on Stanford's financial records had fair values that differed from their book values as follows:

BV FV

Book ValueFair Value Tradenames (indefinite life) $284,600$422,200

Property and equipment (net, 8-year remaining life) 233,600251,200

Patent (14-year remaining life) 134,900165,700

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.

P S

PlazaStanford Revenues $(852,700)$(714,100)

Cost of goods sold 471,400 313,200

Depreciation expense 199,800 29,200

Amortization expense 22,300

Equity in income of Stanford(276,000) 0

Net income$ (457,500) (349,400)

Retained earnings, 1/1/18$ (1,009,100)$(418,900)

Net income (457,500)(349,400)

Dividends declared 237,400 22,000

Retained earnings, 12/31/18 (1,229,200)$(746,300)

Current assets $680,500$341,700

Investment in Stanford 1,311,300 0

Tradenames 190,000284,600

Property and equipment (net)815,500204,400

Patents 0112,600

Total assets $2,997,300$943,300

Accounts payable $(112,500)$(72,000)

Common stock (237,500)(80,000)

Additional paid-in capital (1,418,100)(45,000)

Retained earnings (above) (1,229,200)(746,300)

Total liabilities and equities$(2,997,300)$(943,300)

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 accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.)