Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ProForm acquired 70 percent of ClipRite on June 30, 2017, for $1,050,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $750,000

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
ProForm acquired 70 percent of ClipRite on June 30, 2017, for $1,050,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $750,000 was recognized and is being amortized at the rate of $13,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $450,000 at the acquisition date. The 2018 financial statements are as follows: Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/18 Net income Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in clipRite Fixed assets Accumulated depreciation Totals Liabilities Common stock Retained earnings, 12/31/18 Totals ProForm $ (970,000) 620,000 270,000 (63,000) $ (143,000) $12,200,000) (143,000) 270,000 $(2,073, 000) $ 570,000 460,000 1,050,000 1,400,000 (300,000) $ 3,180,000 $ (707,000) (400,000) (2,073,000) $(3,180,000) clipRite $ (940,000) 485,000 185,000 0 $ (270,000) $(1,020,000) 270,000) 90,000 $(1,200,000) $ 470,000 870,000 0 1,450,000 (400,000) $ 2,390,000 $ (790,000) (400,000) (1,200,000) $(2,390,000) LOMBOYO AFAR Totals $(3,180,000) www $12,390,000) ProForm sold ClipRite inventory costing $86,000 during the last six months of 2017 for $260,000. At year-end, 30 percent remained. ProForm sells ClipRite inventory costing $285,000 during 2018 for $420,000. At year-end, 10 percent is left. Determine the consolidated balances for the following accounts: Sales Cost of goods sold Operating expenses Dividend income Net income attributable to noncontrolling interest Inventory Noncontrolling interest in subsidiary, 12/31/18 Consolidated Balance $ 1,490,000 $ 646,300 $ 468,000 $ 0 $ 77,100 $ 1,316,500 Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $378,000 in cash. The subsidiary's stockholders' equity accounts totaled $362,000 and the noncontrolling interest had a fair value of $42,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $21,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (five-year remaining life). Brey reported net income from its own operations of $68,000 in 2016 and $84,000 in 2017. Brey declared dividends of $21,000 in 2016 and $25,000 in 2017. Year 2016 2017 2018 Cost to Brey $ 73,000 93,000 108,000 Inventory Remaining at Transfer Price Year-End (at to Pitino transfer price) $ 135,000 $ 29,000 155,000 41,500 180,000 55,000 At December 31, 2018, Pitino owes Brey $20,000 for inventory acquired during the period. The following separate account balances are for these two companies for December 31, 2018, and the year then ended. Note: Parentheses indicate a credit balance. Sales revenues Piting Brey (870,000) $(386,000) 45 At December 31, 2018, Pitino owes Brey $20,000 for inventory acquired during the period. The following separate account balances are for these two companies for December 31, 2018, and the year then ended. Note: Parentheses indicate a credit balance. s Sales revenues Cost of goods sold Expenses Equity in earnings of Brey Net income Retained earnings, 1/1/18 Net Income (above) Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Brey Land, buildings, and equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equity Pitino Brey $(870,000) $(386,000) 519,000 213,000 185,800 66,000 (B2,890) 0 (248,090) $(107,000) $ (496,000) $(286,000) (248,090) (107,000) 133,000 23,000 $ (611,090) $(376,000) 150,000 $ 102,000 275,000 156,000 503,550 0 968,000 332,000 $ 1,896,550 $ 590,000 $ (750, 460) $ (38,000) (535,000) (182,000) (611,090) (370,000) $(1,896,550) $(590,000) $ without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies. Consolidated Balance $ 1,076,000 $ 557,400 $ 261,300 $ 0 $ 9,210 S 248,090 $ 196,000 $ 133,000 $ 611,090 Sales revenues Cost of goods sold Expenses Equity in earnings of Brey Noncontrolling interest in consolidated net income Consolidated net income to parent Retained earnings, 1/1 Dividends declared Retained earnings, 12/31 Cash and receivables Inventory Investment in Brey Land, buildings, and equipment Patented technology Total Assets Liabilities Noncontrolling interest in Brey, 12/31 PAR CARL $ 409,000 0 $ $ $ $ $ $ 9210 248,090 496,000 133.000 611,090 $ 409,000 Equity in earnings of Brey Noncontrolling interest in consolidated net income Consolidated net income to parent Retained earnings, 1/1 Dividends declared Retained earnings, 12/31 Cash and receivables Inventory Investment in Brey Land, buildings, and equipment Patented technology Total Assets Liabilities Noncontrolling interest in Brey, 12/31 Common Stock Retained earnings, 12/31 Total liabilities and stockholders' equity

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

More Books

Students also viewed these Accounting questions