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On January 1, 2014, McIlroy, Inc., acquired a 60 percent interest in the common stock of...

On January 1, 2014, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $372,000. Stinson’s book value on that date consisted of common stock of $100,000 and retained earnings of $220,000. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $248,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company’s accounting records by $70,000 and an unrecorded customer list (15-year remaining life) assessed at a $45,000 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, McIlroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year end, there are no intra-entity payables or receivables.

   Intra-entity inventory sales between the two companies have been made as follows:
Year Cost to McIlroy Transfer Price
to Stinson
Ending Balance
(at transfer price)
  2014 120,000 150,000 50,000
  2015 112,000 160,000 40,000

   The individual financial statements for these two companies as of December 31, 2015, and the year then ended follow:

McIlroy, Inc. Stinson, Inc.
  Sales $ (700,000) $ (335,000)
  Cost of goods sold 460,000    205,000   
  Operating expenses 188,000    70,000   
  Equity earnings in Stinson (28,000) 0   
  
       Net income $ (80,000) $ (60,000)
  
  Retained earnings, 1/1/15 $ (695,000) $ (280,000)
  Net income (above) (80,000) (60,000)
  Dividends declared 45,000    15,000   
  
       Retained earnings, 12/31/15 $ (730,000) $ (325,000)
  
  Cash and receivables $ 248,000    $ 148,000   
  Inventory 233,000    129,000   
  Investment in Stinson 411,000    0   
  Buildings (net) 308,000    202,000   
  Equipment (net) 220,000    86,000   
  Patents (net) 0    20,000   
  
       Total assets $ 1,420,000    $ 585,000   
  
  Liabilities $ (390,000) $ (160,000)
  Common stock (300,000) (100,000)
  Retained earnings, 12/31/15 (730,000) (325,000)
  
       Total liabilities and equities $ (1,420,000) $ (585,000)

1. Show how the the following consolidated balances for 2015 are calculated:

a)Consolidated cost of goods sold

b)Consolidated inventory

c)Consolidated patent

2. What is the consolidated balance for goodwill on January 1,2014?

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