In: Accounting
Protrade Corporation acquired 80 percent of the outstanding
voting stock of Seacraft Company on January 1,...
Protrade Corporation acquired 80 percent of the outstanding
voting stock of Seacraft Company on January 1, 2017, for $488,000
in cash and other consideration. At the acquisition date, Protrade
assessed Seacraft's identifiable assets and liabilities at a
collective net fair value of $735,000 and the fair value of the 20
percent noncontrolling interest was $122,000. No excess fair value
over book value amortization accompanied the acquisition.
The following selected account balances are from the individual
financial records of these two companies as of December 31,
2018:
|
Protrade |
Seacraft |
Sales |
$ |
850,000 |
|
$ |
570,000 |
|
Cost of goods sold |
|
395,000 |
|
|
302,000 |
|
Operating expenses |
|
171,000 |
|
|
126,000 |
|
Retained earnings, 1/1/18 |
|
950,000 |
|
|
390,000 |
|
Inventory |
|
367,000 |
|
|
131,000 |
|
Buildings (net) |
|
379,000 |
|
|
178,000 |
|
Investment income |
Not given |
|
0 |
|
|
Each of the following problems is an independent situation:
- Assume that Protrade sells Seacraft inventory at a markup equal
to 40 percent of cost. Intra-entity transfers were $111,000 in 2017
and $131,000 in 2018. Of this inventory, Seacraft retained and then
sold $49,000 of the 2017 transfers in 2018 and held $63,000 of the
2018 transfers until 2019.
Determine balances for the following items that would appear on
consolidated financial statements for 2018:
- Assume that Seacraft sells inventory to Protrade at a markup
equal to 40 percent of cost. Intra-entity transfers were $71,000 in
2017 and $101,000 in 2018. Of this inventory, $42,000 of the 2017
transfers were retained and then sold by Protrade in 2018, whereas
$56,000 of the 2018 transfers were held until 2019.
Determine balances for the following items that would appear on
consolidated financial statements for 2018:
- Protrade sells Seacraft a building on January 1, 2017, for
$122,000, although its book value was only $71,000 on this date.
The building had a five-year remaining life and was to be
depreciated using the straight-line method with no salvage
value.
Determine balances for the following items that would appear on
consolidated financial statements for 2018:
- Determine balances for the following items that would appear on
consolidated financial statements for 2018:
- Determine balances for the following items that would appear on
consolidated financial statements for 2018:
|
|
|
|
|
a. |
Cost of goods sold |
|
|
Inventory |
|
|
Net income attributable to
noncontrolling interest |
|
b. |
Cost of goods sold |
|
|
Inventory |
|
|
Net income attributable to
noncontrolling interest |
|
c. |
Buildings (net) |
|
|
Operating expenses |
|
|
Net income attributable to
noncontrolling interest |
|
|