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 $1,155,900 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,444,875. Also at the acquisition date, Stanford's book value was $604,800. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Book Value Fair Value $321,000 $463,000 Trade names (indefinite life) Property and equipment (net, 8-year remaining life) Patent (14-year remaining life) 255,200 148,600 276,000 187,800 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 $ (966,400) 534,300 226,400 Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Stanford Net income Stanford $ (803,700) 353,200 31,900 25,200 (310,400) $ (516,100) $ (393,400) Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 $(1,138,300) (516,100) 267,900 $(1,386,500) $ (472,500) (393,400 26,000 $ (839,900) $ $ 385,500 Current assets Investment in Stanford Trade names Property and equipment (net) Patents Total assets 767,700 1,445,500 214,300 919,800 321,000 223,300 123,400 $ 1,053,200 $ 3,347,300 Accounts payable Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities $ (126,900) (267,900) (1,566,000) (1,386,500) $(3,347,300) $ (81,000) (86,000) (46,300) (839,900) $(1,053,200) Noncontrolling Interest Consolidated Totals $ PLAZA CORPORATION AND STANFORD CORPORATION Consolidation Worksheet For Year Ending December 31, 2021 Consolidation Entries Plaza Stanford Debit Credit (966,400) $ (803,700) 534,300 353,200 226,400 31,900 0 25,200 (310,400) 0 (516,100) $ (393,400) $ $ 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 $ $ (1,138,300) $ (472,500) (516,100) (393,400) 267,900 26,000 (1,386,500) $ (839,900) 767,700 $ 385,500 1,445,500 0 214,300 321,000 919,800 223,300 0 123,400 $ 3,347,300 $ 1,053,200 (126,900) (81,000) (267,900) (86,000) (1,566,000) (46,300) (1,386,500) (839,900) (3,347,300) $ (1,053,200) $ $ 0 $
