Question

In: Accounting

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

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

Solutions

Expert Solution

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

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