Problem 7-25 (LO 7-2) House Corporation has been operating profitably since Its creation in 1960. At the beginning of 2016, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: consideration transferred for 70% interest in wilson Fair value of the 30% noncontrolling interest Wilson business fair value Wilaon book value Excess fair value over book value Assignments to adjust Wilson's assets to fair value: $ 742,000 318.000 1,060,000 813,000 247,000 to buildings (20-year remaining life) To equipment (4-year remaining 1ife) To franchises (10-year remaining life) To goodwill (indefinite life) 97,000 (23,800) 73,000146,200 100,800 House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House's purchases during 2016 and 2017 and related ending inventory balances follow Intra-Entity Renaining Intra-Entity Inventory- Year Purchases End of Year (at transfer price) 2016 $135,000 2017 162,500 $45,000 65,000 On January 1, 2018, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's outstanding common stock The total price of these shares was $274,400, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2018, House acquired additional inventory from Wilson at a price of $209,00o. of this merchandise, 45 percent is still held at year-end. Wilson Company Eouse Corporation (1,040,384) (802,780) Conpany (315,300) Sales and other revenues 144,000 99,500 Cost of goods sold Operating expenses Income of Wileon Company Income of Cuddy Company 605,000 307,000 308,000 273,500 (154,896) (28,720) (28,720) MacBook Air Problem 7-25 (LO 7-2) House Corporation has been operating profitably since Its creation in 1960. At the beginning of 2016, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: consideration transferred for 70% interest in wilson Fair value of the 30% noncontrolling interest Wilson business fair value Wilaon book value Excess fair value over book value Assignments to adjust Wilson's assets to fair value: $ 742,000 318.000 1,060,000 813,000 247,000 to buildings (20-year remaining life) To equipment (4-year remaining 1ife) To franchises (10-year remaining life) To goodwill (indefinite life) 97,000 (23,800) 73,000146,200 100,800 House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House's purchases during 2016 and 2017 and related ending inventory balances follow Intra-Entity Renaining Intra-Entity Inventory- Year Purchases End of Year (at transfer price) 2016 $135,000 2017 162,500 $45,000 65,000 On January 1, 2018, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's outstanding common stock The total price of these shares was $274,400, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2018, House acquired additional inventory from Wilson at a price of $209,00o. of this merchandise, 45 percent is still held at year-end. Wilson Company Eouse Corporation (1,040,384) (802,780) Conpany (315,300) Sales and other revenues 144,000 99,500 Cost of goods sold Operating expenses Income of Wileon Company Income of Cuddy Company 605,000 307,000 308,000 273,500 (154,896) (28,720) (28,720) MacBook Air
