Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ProForm acquired 70 percent of ClipRite on June 30, 2017, for $1,400,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $450,000

ProForm acquired 70 percent of ClipRite on June 30, 2017, for $1,400,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $450,000 was recognized and is being amortized at the rate of $16,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $600,000 at the acquisition date. The 2018 financial statements are as follows:

ProForm ClipRite
Sales $ (910,000 ) $ (820,000 )
Cost of goods sold 590,000 455,000
Operating expenses 210,000 155,000
Dividend income (63,000 ) 0
Net income $ (173,000 ) $ (210,000 )
Retained earnings, 1/1/18 $ (2,000,000 ) $ (960,000 )
Net income (173,000 ) (210,000 )
Dividends declared 210,000 90,000
Retained earnings, 12/31/18 $ (1,963,000 ) $ (1,080,000 )
Cash and receivables $ 510,000 $ 410,000
Inventory 400,000 810,000
Investment in ClipRite 1,400,000 0
Fixed assets 1,000,000 1,150,000
Accumulated depreciation (200,000 ) (300,000 )
Totals $ 3,110,000 $ 2,070,000
Liabilities $ (647,000 ) $ (490,000 )
Common stock (500,000 ) (500,000 )
Retained earnings, 12/31/18 (1,963,000 ) (1,080,000 )
Totals $ (3,110,000 ) $ (2,070,000 )

ClipRite sold ProForm inventory costing $80,000 during the last six months of 2017 for $200,000. At year-end, 30 percent remained. ClipRite sells ProForm inventory costing $255,000 during 2018 for $360,000. At year-end, 10 percent is left. With these facts, determine the consolidated balances for the following:

Consolidated Balance
Sales
Cost of goods sold
Operating expenses
Dividend income
Net income attributable to noncontrolling interest
Inventory
Noncontrolling interest in subsidiary, 12/31/18

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Theory

Authors: William R Scott

5th Edition

0132072866, 978-0132072861

More Books

Students also viewed these Accounting questions