Problem 4-29 (Algo) (LO 4-1, 4-5, 4-6) Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2021, in exchange for $1,121,800 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,402,250. Also at the acquisition date, Stanford's book value was $606,600. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Book Value $318,800 Fair Value $442,600 Trade names (indefinite life) Property and equipment (net, 8-year remaining life) Patent (14-year remaining life) 254,400 143,400 277,600 175,600 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, 2021, for both companies. Plaza $ (903,700) 499,600 211,800 Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Stanford Net income Stanford $ (812,600) 350,800 31,800 24,800 (320,000) $ (512,300) $ (405,200) Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 $(1,129,900) (512,300) 265,800 $(1,376,400) (469,400) (405, 200) 29,000 $ (845,600) 382,800 Current assets Investment in Stanford Trade names Property and equipment (net) Patents $ 762,300 1,418,600 212,800 913,300 0 $ 3,307,000 318,800 222,600 118,600 $ 1,042,800 Total assets Accounts payable Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities $ (125,900) (265,900) (1,538,800) (1,376,400) $(3,307,000) $ (60,000) (98,000) (39,200) (845,600) $(1,042, 800) Consolidated Noncontrolling Interest Totals $ PLAZA CORPORATION AND STANFORD CORPORATION Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Plaza Stanford Debit Credit (903,700) $ (812,600) 499,600 350,800 211,800 31,800 0 24,800 (320,000) (512,300) $ (405,200) $ 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, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 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 $ $ (1,129,900) $ (469,400) (512,300) (405,200) 265,800 29,000 (1,376,400) $ (845,600) 762,300 $ 382,800 1,418,600 0 212,800 318,800 913,300 222,600 0 118,600 $ 3,307,000 $ 1,042,800 (125,900) (60,000) (265,900) (98,000) (1,538,800) (39,200) (1,376,400) (845,600) (3,307,000) $ (1,042,800) $ $ 0 $ 0
