Problems/Exercises Saved Help Save & Exit Submit 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 2 Consideration tansferred for 78% interest in Wilson Fair value of the 30% noncontrolling interest ilson business fair value kilson book value Excess fair value over book velue Assignments to adjust Wilson's assets to fair value: $777,000 333,000 1,110,00 865,00e $ 245,000 100 points To buildings (20-year remaining life) To equipnent (4-year remaining life) To franchises (10-year remaining life) To goodwill (indefinite life) $ 61,0e (23,80) 56,020 93,200 952e $ 151,800 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: Year 2016 2017 Intra-Entity Purchases $191,250 134, 375 Remaining Intra Entity Inventory- End of Yeer (at transfer price) $33,750 53,750 On January 1, 2018, Hcuse and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's cutstanding common stock. The total price of these shares was $292,800, 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 $234,000. Of this merchandise, 45 percent is still held at year-end. Cuddy Company House Wilson Corporation Company Sales and other revenues $ (949,47) 565,000 287,000 (124,768) 30,760 $(820,740) $ (324,200) 366,000 276,500 30,760 $ (253,0 $(209,000) 155,000 92,300 Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income $(822,000) (253,000) 100,000 $ (76,900) $ (216,000) (76,900) Retained earnings, 1/1/18 Net income (above) Dividends declared $(670,000) (209,000) 96,000 60,000 $(975,0 (783,000) $ (232,900) Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land 19,272 405,500 915,068 153,160 414,000 313,000 238,000 $ 2,458,000 $374,840 83,250 193, 350 373,000 153,160 344,000 149,000 340,000 $ 1,734,000 162,000 89,400 16,900 $544,900 Total assets Liabilities Common stock Retained earnings, 12/31/18 $ (663,0 (641,000) (310,000) 783,000 $ (2,458,000) $ (1,734,000) $(162,000) (820,000) 975,000 (150,000) 232,900 Total liabilities and equities $ (544,900) Note: Parentheses indicate a credit balance Using the three companies' following financial records for 2018, prepare a consolidation worksheet. The partial equity method based on separate company incomes has been applied to each investment. (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.) HOUSE CORPORATION AND CON SOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries Noncontrolling Consolidate Wilson House Co Cuddy Accounts Debit Credit Interest Balance Sales and other revenue Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company ration Company Company (949,472) (820,740) (324,200) 366.000 276,500 565,000 287,000 (124,768) 155,000 92.300 (30,760(30,760) (253,000) (209,000)(76,900) Net income Consolidated net income Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuddy) Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuddy) Net income attributable to House Corporation Retained earnings, 1/1/18 House Corporation Wilson Company Cuddy Company (822,000) (670,000) (216,000) Net income (253,000 (209,000)(76,900) Dividends declared House Corporation 100,000 Wilson Company 96,000 Cuddy Company Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Goodwill Franchise contracts 60.000 (975,000) (783,000)(232,900) 83,250 193,350 9,272374,840 405,500 915,068 153,160 414,000 313,000 238,000 373,000 153,160 344,000 149,000 340,000 162,000 89.400 16,900 83,250 193,350 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Goodwill Franchise contracts Total assets Liabilities Noncontrolling interest in Cuddy Noncontrolling interest in Wilson Noncontrolling interest in subsidiary companies Common stock Retained earnings (above) Total liabilities and equities 19,272 405,500 915,068 153,160 414,000 313,000 238,000 374,840 373,000 153,160 344,000 149,000 340,000 162,000 89,400 16,900 2,458,000 1734,000 544,900 (663,000) (641,000)(162,000) (820,000) (310,000) 150,000) (975,000) (783,000) 232,900) (2,458,000)1,734,000)(544,900) Problems/Exercises Saved Help Save & Exit Submit 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 2 Consideration tansferred for 78% interest in Wilson Fair value of the 30% noncontrolling interest ilson business fair value kilson book value Excess fair value over book velue Assignments to adjust Wilson's assets to fair value: $777,000 333,000 1,110,00 865,00e $ 245,000 100 points To buildings (20-year remaining life) To equipnent (4-year remaining life) To franchises (10-year remaining life) To goodwill (indefinite life) $ 61,0e (23,80) 56,020 93,200 952e $ 151,800 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: Year 2016 2017 Intra-Entity Purchases $191,250 134, 375 Remaining Intra Entity Inventory- End of Yeer (at transfer price) $33,750 53,750 On January 1, 2018, Hcuse and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's cutstanding common stock. The total price of these shares was $292,800, 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 $234,000. Of this merchandise, 45 percent is still held at year-end. Cuddy Company House Wilson Corporation Company Sales and other revenues $ (949,47) 565,000 287,000 (124,768) 30,760 $(820,740) $ (324,200) 366,000 276,500 30,760 $ (253,0 $(209,000) 155,000 92,300 Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income $(822,000) (253,000) 100,000 $ (76,900) $ (216,000) (76,900) Retained earnings, 1/1/18 Net income (above) Dividends declared $(670,000) (209,000) 96,000 60,000 $(975,0 (783,000) $ (232,900) Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land 19,272 405,500 915,068 153,160 414,000 313,000 238,000 $ 2,458,000 $374,840 83,250 193, 350 373,000 153,160 344,000 149,000 340,000 $ 1,734,000 162,000 89,400 16,900 $544,900 Total assets Liabilities Common stock Retained earnings, 12/31/18 $ (663,0 (641,000) (310,000) 783,000 $ (2,458,000) $ (1,734,000) $(162,000) (820,000) 975,000 (150,000) 232,900 Total liabilities and equities $ (544,900) Note: Parentheses indicate a credit balance Using the three companies' following financial records for 2018, prepare a consolidation worksheet. The partial equity method based on separate company incomes has been applied to each investment. (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.) HOUSE CORPORATION AND CON SOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries Noncontrolling Consolidate Wilson House Co Cuddy Accounts Debit Credit Interest Balance Sales and other revenue Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company ration Company Company (949,472) (820,740) (324,200) 366.000 276,500 565,000 287,000 (124,768) 155,000 92.300 (30,760(30,760) (253,000) (209,000)(76,900) Net income Consolidated net income Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuddy) Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuddy) Net income attributable to House Corporation Retained earnings, 1/1/18 House Corporation Wilson Company Cuddy Company (822,000) (670,000) (216,000) Net income (253,000 (209,000)(76,900) Dividends declared House Corporation 100,000 Wilson Company 96,000 Cuddy Company Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Goodwill Franchise contracts 60.000 (975,000) (783,000)(232,900) 83,250 193,350 9,272374,840 405,500 915,068 153,160 414,000 313,000 238,000 373,000 153,160 344,000 149,000 340,000 162,000 89.400 16,900 83,250 193,350 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Goodwill Franchise contracts Total assets Liabilities Noncontrolling interest in Cuddy Noncontrolling interest in Wilson Noncontrolling interest in subsidiary companies Common stock Retained earnings (above) Total liabilities and equities 19,272 405,500 915,068 153,160 414,000 313,000 238,000 374,840 373,000 153,160 344,000 149,000 340,000 162,000 89,400 16,900 2,458,000 1734,000 544,900 (663,000) (641,000)(162,000) (820,000) (310,000) 150,000) (975,000) (783,000) 232,900) (2,458,000)1,734,000)(544,900)