TRAVERS COMPANY AND CONSOLIDATED SUBSIDURIES Consolidation Worksheet December 31,2018 TRAVERS COMPANY AND CONSOLIDATED SUBSIDURIES Accuisition -Date Allocation and Amortization Noncontrolling Interest in Stookev's Net Income 2018 Reported net income Customer list amortization Realization of 2017 deferred gross profit Deferral of 2018 intra-entity gross profit Accrual-based net income 2018 Outside ownership Noncontrolling interest in Stookey's net income Noncontrolling Interest in Net Income of Yarrow 2018 Reported net income Copyright amortization Accrual of Stookey's income Realized income - 2018 Outside ownership Noncontrolling interest in Yarrow's net income YCommon stock (Yartow) Retained earnings, 1/1/18 (Yarrow) Irvestment in Yarrow Noncontrolling interest in Yarrow (To eliminate atockholders' equity accounts of subsidiary Yarrow against carresponding balance in imestment account and to recopnize noncontrolling interest ownership) Customer List Imvestment in Stookey Noncontrolling Interest in Stookey (To recognize January 1,2018 unamortized portion of acquisition price assigned to Stookey's customer list) Copynght Imvestment in Yarrow Noncontrolling Interest in Yarow (To recognize January 1, 2018 unamortized portion of acquisition price essigned lo copyright) Yoperating Expense Customer list Copyright (To recognize amortization expense for 2018 - \$5, 000 in connecton with Tavers' isvestment and $3,000 in connection wien Yerrows investmenk) Sales Cost of Goods Sold (To eliminate intra-enety imsentory tranisfera mode during 2016) Cost of Goods Sold imventory (To defer intra-enticy anoss pondit on ending inventory) Noncontrolling interest in Stooker's Net income 2018 Reported net income Customer list amortication Resalizition of 2017 deferred oross protit Oeterrat of 2010 intra-entity gross proen Ncorual based net income 2018 Outside ownership Outside ownershy toncentrofling interest in stookers net income d. Based on parts (b) and (c), what journal entry would be made by this combination to record 2007 income taxes? 2018 Intra-entity gross profit taxed in 2018 2017 intra-entity gross profit taxed previously in 2017 increase in taxable income Taxtate Deterred income tax asset Income tax expense: Travers and Yarrow-payable Stookey-nayable Total taxes to be paid-2018 Prepayment Income tax expense 2018 Account Debit Credit b. Determine income taxes to be poid tiy Traveis and Yarrow on a consolidated tax refurn for the year 2018. Travers Company purchased ownership in Yarrow Company Acquistion cost paid by Travers Assessed fair value of noncontrolling interest Excess purchase price attributed to customer list to be amortized over years Yarrow Company purchased ownership in Stookey Company Acquistion cost paid by Yarrow Assessed fair value of noncontrolling interest Excess purchase price attributed to copyright with a remaining life of: Portion of operational earnings Travers pays as cash dividends $$90%720,00080,000 Reported income totals for 2017 Travers Company Yarrow Company Stookey Company inventory transferred to Yarrow since takeover: 20172018 15 years Portion of inventory carried into succeeding year Effective tax rate for all companies Sales Cost of goods sold Operating expenses Net income Retained earnings, 1/1/18 Net income Dividends declared Retained earnings, 12/31/18 Current assets investment in Yarrow Company investment in Stookey Company Land, buldings, and equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilies and equities \begin{tabular}{ccc} \begin{tabular}{c} Travers \\ Company \end{tabular} & \begin{tabular}{c} Yarrow \\ Company \end{tabular} & \begin{tabular}{c} Stookey \\ Company \end{tabular} \\ 12/31/2018 & 12/31/2018 & 12/31/2018 \\ \hline$(900,000) & $(600,000) & $(500,000) \\ 480,000 & 320,000 & 260,000 \\ 100,000 & 80,000 & 140,000 \\ \hline$(320,000) & S(200,000) & $(100,000) \\ \hline \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline s & \begin{tabular}{l} (700,000) \\ (320,000) \end{tabular} & \begin{tabular}{r} (600,000) \\ (200,000) \end{tabular} & 5 & \begin{tabular}{l} (300,000) \\ (100,000) \end{tabular} \\ \hline & 128,000 & - & & \\ \hlines & (892,000) & S(800,000) & 3 & (400,000) \\ \hline \end{tabular} \begin{tabular}{rrrrr} $444,000 & $ & 380,000 & $ & 280,000 \\ 720,000 & & - & & - \\ & 344,000 & & - \\ 949,000 & 836,000 & & 520,000 \\ \hline$2,113,000 & $1,560,000 & $ & 800,000 \\ \hline \end{tabular} \begin{tabular}{cccc} $(721,000) & $(460,000) & s & (200,000) \\ (500,000) & (300,000) & (200,000) \\ (892,000) & (800,000) & (400,000) \\ \hline$(2,113,000) & $(1,560,000) & $(800,000) \\ \hline \end{tabular} TRAVERS COMPANY AND CONSOLIDATED SUBSIDURIES Consolidation Worksheet December 31,2018 TRAVERS COMPANY AND CONSOLIDATED SUBSIDURIES Accuisition -Date Allocation and Amortization Noncontrolling Interest in Stookev's Net Income 2018 Reported net income Customer list amortization Realization of 2017 deferred gross profit Deferral of 2018 intra-entity gross profit Accrual-based net income 2018 Outside ownership Noncontrolling interest in Stookey's net income Noncontrolling Interest in Net Income of Yarrow 2018 Reported net income Copyright amortization Accrual of Stookey's income Realized income - 2018 Outside ownership Noncontrolling interest in Yarrow's net income YCommon stock (Yartow) Retained earnings, 1/1/18 (Yarrow) Irvestment in Yarrow Noncontrolling interest in Yarrow (To eliminate atockholders' equity accounts of subsidiary Yarrow against carresponding balance in imestment account and to recopnize noncontrolling interest ownership) Customer List Imvestment in Stookey Noncontrolling Interest in Stookey (To recognize January 1,2018 unamortized portion of acquisition price assigned to Stookey's customer list) Copynght Imvestment in Yarrow Noncontrolling Interest in Yarow (To recognize January 1, 2018 unamortized portion of acquisition price essigned lo copyright) Yoperating Expense Customer list Copyright (To recognize amortization expense for 2018 - \$5, 000 in connecton with Tavers' isvestment and $3,000 in connection wien Yerrows investmenk) Sales Cost of Goods Sold (To eliminate intra-enety imsentory tranisfera mode during 2016) Cost of Goods Sold imventory (To defer intra-enticy anoss pondit on ending inventory) Noncontrolling interest in Stooker's Net income 2018 Reported net income Customer list amortication Resalizition of 2017 deferred oross protit Oeterrat of 2010 intra-entity gross proen Ncorual based net income 2018 Outside ownership Outside ownershy toncentrofling interest in stookers net income d. Based on parts (b) and (c), what journal entry would be made by this combination to record 2007 income taxes? 2018 Intra-entity gross profit taxed in 2018 2017 intra-entity gross profit taxed previously in 2017 increase in taxable income Taxtate Deterred income tax asset Income tax expense: Travers and Yarrow-payable Stookey-nayable Total taxes to be paid-2018 Prepayment Income tax expense 2018 Account Debit Credit b. Determine income taxes to be poid tiy Traveis and Yarrow on a consolidated tax refurn for the year 2018. Travers Company purchased ownership in Yarrow Company Acquistion cost paid by Travers Assessed fair value of noncontrolling interest Excess purchase price attributed to customer list to be amortized over years Yarrow Company purchased ownership in Stookey Company Acquistion cost paid by Yarrow Assessed fair value of noncontrolling interest Excess purchase price attributed to copyright with a remaining life of: Portion of operational earnings Travers pays as cash dividends $$90%720,00080,000 Reported income totals for 2017 Travers Company Yarrow Company Stookey Company inventory transferred to Yarrow since takeover: 20172018 15 years Portion of inventory carried into succeeding year Effective tax rate for all companies Sales Cost of goods sold Operating expenses Net income Retained earnings, 1/1/18 Net income Dividends declared Retained earnings, 12/31/18 Current assets investment in Yarrow Company investment in Stookey Company Land, buldings, and equipment (net) Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilies and equities \begin{tabular}{ccc} \begin{tabular}{c} Travers \\ Company \end{tabular} & \begin{tabular}{c} Yarrow \\ Company \end{tabular} & \begin{tabular}{c} Stookey \\ Company \end{tabular} \\ 12/31/2018 & 12/31/2018 & 12/31/2018 \\ \hline$(900,000) & $(600,000) & $(500,000) \\ 480,000 & 320,000 & 260,000 \\ 100,000 & 80,000 & 140,000 \\ \hline$(320,000) & S(200,000) & $(100,000) \\ \hline \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline s & \begin{tabular}{l} (700,000) \\ (320,000) \end{tabular} & \begin{tabular}{r} (600,000) \\ (200,000) \end{tabular} & 5 & \begin{tabular}{l} (300,000) \\ (100,000) \end{tabular} \\ \hline & 128,000 & - & & \\ \hlines & (892,000) & S(800,000) & 3 & (400,000) \\ \hline \end{tabular} \begin{tabular}{rrrrr} $444,000 & $ & 380,000 & $ & 280,000 \\ 720,000 & & - & & - \\ & 344,000 & & - \\ 949,000 & 836,000 & & 520,000 \\ \hline$2,113,000 & $1,560,000 & $ & 800,000 \\ \hline \end{tabular} \begin{tabular}{cccc} $(721,000) & $(460,000) & s & (200,000) \\ (500,000) & (300,000) & (200,000) \\ (892,000) & (800,000) & (400,000) \\ \hline$(2,113,000) & $(1,560,000) & $(800,000) \\ \hline \end{tabular}