Question
ProForm acquired 60 percent of ClipRite on June 30, 2020, for $840,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $480,000
ProForm acquired 60 percent of ClipRite on June 30, 2020, for $840,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $480,000 was recognized and is being amortized at the rate of $12,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $560,000 at the acquisition date. The 2021 financial statements are as follows:
ProForm | ClipRite | ||||||
Sales | $ | (960,000 | ) | $ | (920,000 | ) | |
Cost of goods sold | 615,000 | 480,000 | |||||
Operating expenses | 260,000 | 180,000 | |||||
Dividend income | (48,000 | ) | 0 | ||||
Net income | $ | (133,000 | ) | $ | (260,000 | ) | |
Retained earnings, 1/1/21 | $ | (2,000,000 | ) | $ | (1,010,000 | ) | |
Net income | (133,000 | ) | (260,000 | ) | |||
Dividends declared | 260,000 | 80,000 | |||||
Retained earnings, 12/31/21 | $ | (1,873,000 | ) | $ | (1,190,000 | ) | |
Cash and receivables | $ | 560,000 | $ | 460,000 | |||
Inventory | 450,000 | 860,000 | |||||
Investment in ClipRite | 840,000 | 0 | |||||
Fixed assets | 1,300,000 | 1,400,000 | |||||
Accumulated depreciation | (200,000 | ) | (350,000 | ) | |||
Totals | $ | 2,950,000 | $ | 2,370,000 | |||
Liabilities | $ | (777,000 | ) | $ | (880,000 | ) | |
Common stock | (300,000 | ) | (300,000 | ) | |||
Retained earnings, 12/31/21 | (1,873,000 | ) | (1,190,000 | ) | |||
Totals | $ | (2,950,000 | ) | $ | (2,370,000 | ) | |
(Note: Parentheses indicate a credit balance.)
ProForm sold ClipRite inventory costing $85,000 during the last six months of 2020 for $250,000. At year-end, 30 percent remained. ProForm sold ClipRite inventory costing $280,000 during 2021 for $410,000. At year-end, 10 percent is left.
Determine the consolidated balances for the following accounts: (Input all amounts as positive values.)
Sales Cost of Goods Sold Operating Expenses Dividend Income Net Income Attributable to Noncontrolling Interest Inventory Noncontrolling Interest in Subsidiary, 12/31/21
Consolidated BalanceSalesCost of goods soldOperating expensesDividend incomeNet income attributable to noncontrolling interestInventoryNoncontrolling interest in subsidiary, 12/31/21
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