Shelby Corporation purchases 90% of the outstanding stock of Borner Company on January 1, 2012, for $603,000 cash. At that time, Borner has the following stockholders equity balances:

Common Stock = $200,000

Paid-In Capital in Excess of Par = $80,000

Retained Earnings = $300,000

All book values approximate fair values except for the plant assets (undervalued by $50,000 and with an estimated remaining life of 10 years). Any remaining excess is goodwill.

DeNoma Company acquires a 60% interest in Shelby on January 1, 2014, for $750,000. At this time, Shelby has consolidated shareholders equity of:

Common Stock = $500,000

Paid-In Capital in Excess of Par = $150,000

Controlling Retained Earnings = $500,000 (not including amortization of excess price applicable to investment in Borner).

At that time, it is also determined that Shelbys plant assets are undervalued by $50,000 and have a 10-year remaining useful life. Any remaining excess is goodwill.

Intercompany merchandise sales from Borner to Shelby for 2014 are:

Borners goods in Shelbys beginning inventory = $7,500

Sales during 2014 = $125,000

Borners goods in Shelbys ending inventory = $10,000

Gross profit on intercompany sales = 80%

On January 1, 2014, Shelby sells plant assets with a cost of $80,000 and accumulated depreciation of $45,000 to DeNoma for $50,000. Remaining useful life on the date of sale is estimated to be 5 years.

Shelby & DeNoma use the partial equity method to account for their investments. The trial balances on December 31, 2015 are as follows:

		DeNoma Company	Shelby Corporation	Borner Company
Inventory		75,000	60,000	40,000
Other Current Assets		900,000	2,000	390,000
Plant Assets		1,200,000	800,000	600,000
Accumulated Depreciation		(450,000)	(300,000)	(200,000)
Investment in Shelby Corp		894,000
Investment in Borner Comp			828,000
Common Stock		(1,500,000)	(500,000)	(200,000)
Paid-In Capital in Excess of Par			(150,000)	(80,000)
Retained Earnings		(922,000)	(620,000)	(500,000)
Sales		(900,000)	(700,000)	(600,000)
Cost of Goods Sold		570,000	425,000	400,000
Expenses		205,000	200,000	150,000
Subsidiary Income		(72,000)	(45,000)
Totals		0	0	0

SHELBY CORPORATION & BORNER COMPANY

Purchase Price Allocation & Annual Amortization

January 1, 2012

Useful

Annual Excess

Allocation

Life

Amortizations

Consideration Paid By Shelby

603,000

NCI Fair Value

63,000

Acquisition-Date Subsidiary Fair Value

630,000

Book Value of Subsidiary

580,000

FV in excess of BV

50,000

Adjustments to:

Plant Assets

50,000

10

5,000

Goodwill

36,000

Indefinite

3,600

Annual excess amortizations

8,600

DENOMA & SHELBY COMPANY

Purchase Price Allocation & Annual Amortization

January 1, 2014

Useful

Annual Excess

Allocation

Life

Amortizations

Consideration Paid By DeNoma

750,000

NCI Fair Value

280,000

Acquisition-Date Subsidiary Fair Value

700,000

Book Value of Subsidiary

650,000

FV in excess of BV

50,000

Adjustments to:

Plant Assets

50,000

10

5,000

Goodwill

59,000

Indefinite

33,000

Annual excess amortizations

REQUIRED:

Determine income calculations for Borner, Shelby, DeNoma, and the noncontrolling interests share of net income for 2015.

BORNER COMPANY'S ACCRUAL BASED INCOME & NCI
Internally Calculated Operating Income (see consolidated worksheet)
Excess Fair Value Amortization of Plant Assets
Recognition of Previously Deferred Gross Profits
Deferral of Intra-Entity Gross Profits as of 12/31/15
Borner's Accrual Based Net Income
Outside Ownership %	10%
Noncontrolling Interest in Borner's Net Income	0
SHELBY COMPANY'S ACCRUAL BASED INCOME & NCI
Internally Calculated Operating Income (see consolidated worksheet)
Excess Fair Value Amortization of Plant Assets
Gain on Sale of Plant Assets to DeNoma: Realized Through Plant Asset Use By DeNoma	3000
Share of Borner's Accrual Based Net Income
Shelby's Accrual Based Net Income
Outside Ownership %	40%
Noncontrolling Interest in Shelby's Net Income	0
DENOMA COMPANY'S SHARE OF CONSOLIDATED NET INCOME
Internally Calculated Operating Income (see consolidated worksheet)
Share of Shelby's Accrual Based Net Income
Controlling Interest in Consolidated Net Income

38,000