The individual financial statements for Abbey Company and Bellstar Company for the year ending December 31,...
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The individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $840,000. At the acquisition date, the fair value of the noncontrolling interest was $560,000 and Bellstar's book value was $1,120,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $280,000. This intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its investment in Bellstar. Abbey sold Bellstar land with a book value of $90,000 on January 2, 2023, for $190,000. Bellstar still holds this land at the end of the current year. Bellstar regularly transfers inventory to Abbey. In 2023, it shipped inventory costing $198,000 to Abbey at a price of $330,000. During 2024, intra-entity shipments totaled $380,000, although the original cost to Bellstar was only $266,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $50,000 at the end of 2024. Items Sales Cost of goods sold Operating expenses Equity in earnings of Bellstar Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Cash Accounts receivable Inventory Investment in Bellstar Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/24 Total liabilities and equities Note: Parentheses indicate a credit balance. Abbey Company $ (980,000) 680,000 170,000 (93,000) $ (223,000) $ (1,296,000) (223,000) 115,000 $ (1,404,000) $ 187,000 392,000 570,000 1,011,000 150,000 514,000 $ 2,824,000 $ (650,000) (770,000) Bellstar Company $ (680,000) 480,000 45,000 0 $ (155,000) $ (710,000) (155,000) 60,000 $ (805,000) $ 90,000 590,000 500,000 0 570,000 480,000 $ 2,230,000 $ (825,000) (500,000) (100,000) (805,000) $ (2,824,000) $ (2,230,000) (1,404,000) Required: a. Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar. b. How would the consolidation entries in requirement (a) have differed if Abbey had sold a building on January 2, 2023, with a $150,000 book value (cost of $320,000) to Bellstar for $280,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. The individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $840,000. At the acquisition date, the fair value of the noncontrolling interest was $560,000 and Bellstar's book value was $1,120,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $280,000. This intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its investment in Bellstar. Abbey sold Bellstar land with a book value of $90,000 on January 2, 2023, for $190,000. Bellstar still holds this land at the end of the current year. Bellstar regularly transfers inventory to Abbey. In 2023, it shipped inventory costing $198,000 to Abbey at a price of $330,000. During 2024, intra-entity shipments totaled $380,000, although the original cost to Bellstar was only $266,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $50,000 at the end of 2024. Items Sales Cost of goods sold Operating expenses Equity in earnings of Bellstar Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Cash Accounts receivable Inventory Investment in Bellstar Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/24 Total liabilities and equities Note: Parentheses indicate a credit balance. Abbey Company $ (980,000) 680,000 170,000 (93,000) $ (223,000) $ (1,296,000) (223,000) 115,000 $ (1,404,000) $ 187,000 392,000 570,000 1,011,000 150,000 514,000 $ 2,824,000 $ (650,000) (770,000) Bellstar Company $ (680,000) 480,000 45,000 0 $ (155,000) $ (710,000) (155,000) 60,000 $ (805,000) $ 90,000 590,000 500,000 0 570,000 480,000 $ 2,230,000 $ (825,000) (500,000) (100,000) (805,000) $ (2,824,000) $ (2,230,000) (1,404,000) Required: a. Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar. b. How would the consolidation entries in requirement (a) have differed if Abbey had sold a building on January 2, 2023, with a $150,000 book value (cost of $320,000) to Bellstar for $280,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer.
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a Consolidation Worksheet for Abbey and Bellstar 2024 Working Papers Abbey Bellstar Elimination Consolidated Sales 980000 680000 1660000 Cost of Goods Sold 680000 222000 458000 Inventory Beg of Year 1... View the full answer
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Fundamentals Of Advanced Accounting
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9th International Edition
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