review carefully and respond to a, b, c, d to receive full credit On January 1, 3020, Travers Company acquired 90 percent of arrow Company's outstanding sock for $720,000. The 10 noncontrolling interest had an assessed fair value of $30.000 on that date. Any acquisition de ces faire on book val attributed to an recorded customer list developed by Yarrow with a mining life of 15 years acquisition date, the 20 percent On the same date. Yaow acquired an 50 percent interest in Stockey Company for $344,000. cooling interest fair value was $56.300 Any excess fair take was attributed to a fully a life of 10 years. Although both imestments are accounted for using the initial value method, neither Yarrow nor Stooker hand dividends since the acquisition date. Travers has a policy to declare and pay cash dividends each year equal to 40 percent of its se company operating earnings Reported income totals for 2030 foliow Trens Company $300,000 Yarow Company 160.000 Sto Copy 120.000 The following are the 2021 fancial statements for these three componies (credit balances indicated by parentheses. S transferred caners amounts of inventory to Yaow since the takeover amounting to $50.000 (2020) and $100.000 (12) These transactions include the same markup applicable to Stookey's outside sales. In each year. Yarrow carried 20 percent of this investo into the succeeding year before disposing of it. An effective tax rate of 21 percent is applicable to all companies All dride declarations are paid in the same period T Sale Comp 50000) C $3000 330000 300.000 0000 1000000 $(20000) 140000 $100,000 Ret/1 Netw Dividend dec Rec12:21 $700,000 (320.000) 12,000 5392000 $ 0000) (200000 00000 $ (10000) C $444,000 $ 100.000 Ist in Cope 720000 Itest in Stockey Cope 90000 144,000 1,000 $20,000 $ 150.000 $300 L (2000) $(460000) (200,000) Cook Readings 2/3/2 (0000 T $(10000) Prepare the business combination's 2021 consolidation worksheet, ignore income tax effects Determine the amount of income tax for Trasers and Yarrow on a consolidated tax return for 2021 Determine the amount of Stookey's income tax on a separate tax return for 2021 Based on the answers to requirements (b) and (e), what journal entry does this combination make to record 2021 income ta I On January 1, 2020, Travers Company acquired 90 percent of Yarrow Company's outstanding stock for $720,000. The 10 percent noncontrolling interest had an assessed fair value of $80,000 on that date. Any acquisition-date excess fair value over book value was attributed to an unrecorded customer list developed by Yarrow with a remaining life of 15 years. On the same date, Yarrow acquired an 80 percent interest in Stookey Company for $344,000. At the acquisition date, the 20 percent noncontrolling interest fair value was $86.000. Any excess fair value was attributed to a fully amortized copyright that had a remaining life of 10 years. Although both investments are accounted for using the initial value method, neither Yarrow nor Stookey has distributed dividends since the acquisition date. Travers has a policy to declare and pay cash dividends each year equal to 40 percent of its separate company operating earnings. Reported income totals for 2020 follow Travers Company $300.000 Yarrow Company 160,000 Stookey Company 120,000 The following are the 2021 financial statements for these three companies (credit balances indicated by parentheses). Stookey has transferred numerous amounts of inventory to Yarrow since the takeover amounting to $80.000 (2020) and $100.000 (2021). These transactions include the same markup applicable to Stookey's outside sales. In each year, Yarrow carried 20 percent of this inventory into the succeeding year before disposing of it. An effective tax rate of 21 percent is applicable to all companies. All dividend declarations are paid in the same period. Retained earnings 1/1/21 Net income (above) Dividends declared Retained earnings 12/31/21 Sales Cost of goods sold Operating expenses Net incone Travers Company $ (900.000) 480.000 Copy $ (600,000) Stocky Company $ (500,000) 260.000 140,000 $100,000) $ (300.000) (100,000) -0 320.000 100.000 80,000 $ (320.000) $ (200,000) $ (700.000) (320000) 128.000 $92.000 $ (600,000) (200,000) -0- $ 300.000 $1400.000) Current as Investment in Yarrow Compa $ 444.000 $ 380,000 $ 250,000 720.000 + Ivestment in Stookey Company Land, buildings and equipment) th 344,000 Total 949.000 $2111000 $36.000 + $20.000 $140.000 $ 300.000 Lab Common stock $(721000) (500.000) $ (460000) $(200,000) (300.000) (200,000) Retained earnings 12/31/2 (300.000) (400.000) $(2111000) $1.560.000) 00.000) a Prepare the business combination's 2021 consolidation worksheet: igore income tax effects & Determine the amount of income tax for Travers and Yarrow on a consolidated tax return for 2021. c Determine the amount of Stookey's income tax on a separate tax return for 2021. Based on the answers to requirements (b) and (e), what journal entry does this combination make to record 2021 income tax? On Jan. 1, 2020 Travers Company acquired 90 percent of Yarrow Companys outstanding stock for $720,000. The 10% noncontrolling interest had an assessed fair value of $80,000 on that date. Any acquisition date excess fair value over book value was attributed to an unrecorded customer list developed by Yarrow with a remaining life of 15 years. On the same date Yarrow acquired an 80% interest in Stookey Company for $344,000. At the acquisition date, the 20% noncontrolling interest fair value was $86,000. Any access fair value was attributed to a fully amortized copyright that had a remaining life of 10 years. Although both investments are accounted for using the initial value method, neither Yarrow nor Stookey has distributed dividends since the acquisition date. Travers has a policy to declare and pay cash dividends each year equal to 40% of its separate company operating earnings. reported income totals for 2020 follow: Travers Company $300,000, Yarrow Company $160,000, Stookey Company $120,000 The following are the 2021 financial statements for these 3 companies(credit balances indicated by parentheses). Stookey has transferred numerous amounts of inventory to Yarrow since the takeover amounting $80,000(20) and $100,000('21). These transactions include the same markup applicable to Stockeys outside sales. In each year, Yarrow carried 20% of this inventory into the suceeding year before disposing of it. An Although both investments are accounted for using the initial value method, neither Yarrow nor Stookey has distributed dividends since the acquisition date. Travers has a policy to declare and pay cash dividends each year equal to 40% of its separate company operating earnings. reported income totals for 2020 follow: Travers Company $300,000, Yarrow Company $160,000, Stookey Company $120,000 The following are the 2021 financial statements for these 3 companies(credit balances indicated by parentheses). Stookey has transferred numerous amounts of inventory to Yarrow since the takeover amounting $80,000(20) and $100,000('21). These transactions include the same markup applicable to Stockeys outside sales. In each year, Yarrow carried 20% of this inventory into the suceeding year before disposing of it. An effective tax rate of 21% is applicable to all companies. All dividend declarations are paid in the same period. A) prepare the business combinations 2021 consolidated worksheet, ignore income tax effects. b) determine the amount of income tax for travers and yarrow on a consolidated tax return for 2021. c) determine the amount stookeys income tax on a separate tax return for 2021. d) based on the answers to requirements (b) & (c) what journal entry does the combination make to record 2021 income tax? Sales Cost of goods sold Operating expenses Travers Company $ (900,000) 480,000 100,000 Yarrow Company $ (600,000) 320.000 80,000 Stookey Company $ (500,000) 260.000 140,000 Net income $ (320,000) $ (200,000) $ (100,000) Retained earnings. 1/1/21 Net income (above) $ (700,000) (320,000) $ (600,000) $ (300.000) Dividends declared 128.000 (200,000) -0- (100,000) -0- Retained earnings. 12/31/21 $ (892,000) $ (800,000) $ (400.000) Current assets $ 444,000 $ 720,000 380,000 -0- $ 280,000 -0- Investment in Yarrow Company Investment in Stookey Company Land, buildings, and equipment (net) Total assets Liabilities Common stock Retained earnings. 12/31/21 Total liabilities and equities -0- 344,000 4 949.000 836.000 $ 2.113.000 $ 1,560,000 $20,000 $ 800,000 $ (200,000) $ (721,000) (500,000) (892.000) $ (460,000) (300,000) (800.000) $ (2.113,000) $ (1.560.000) (200,000) (400,000) $ (800.000) Check for Updates