Question

Following are several figures reported for Allister and Barone as of December 31, 2018:

	Allister		Barone
Inventory	$	650,000	$	450,000
Sales		1,300,000		1,100,000
Investment income		not given
Cost of goods sold		650,000		550,000
Operating expenses		305,000		375,000

Allister acquired 90 percent of Barone in January 2017. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $86,000 that was unrecorded on its accounting records and had a 4-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2018, Barone sells inventory costing $145,000 to Allister for $210,000. Of this amount, 10 percent remains unsold in Allister's warehouse at year-end.

Determine balances for the following items that would appear on Allister's consolidated financial statements for 2018:

Inventory, Sales, COGS, Operating Expenses, Net income attributable to noncontrolling interest

Answer 1

Inventory:
Allister	650,000.00
Barone	450,000.00
Total	1,100,000.00
Less: Inra Entity Unrealized Gross Profit - 10% X ($210,000 - $145,000)	(6,500.00)
Consolidated Inventory Total	1,093,500.00
Cost of Goods Sold:
Allister	650,000.00
Barone	550,000.00
Total	1,200,000.00
Less: Inter Entity Sales	(210,000.00)
Consoldated Cost of Goods Sold	990,000.00
Operating Expenses:
Allister	305,000.00
Barone	375,000.00
Total	680,000.00
Add: Amortization of Customer List - $86,000/4 Years	21,500.00
Consolidated Operating Expenses	701,500.00
Net income attributable to noncontrolling Interest:
Barone's Net Income	175,000.00
Intra-entity gross profit deferral	(6,500.00)
Excess fair value amortization	(21,500.00)
Adjusted Subsidiary Net Income	147,000.00
Net income attributable to noncontrolling Interest - 10% X $147,000	14,700.00