Question

Following are several figures reported for Allister and Barone as of December 31, 2018: Allister Barone Inventory $ 520,000 $ 320,000 Sales 1,040,000 840,000 Investment income not given Cost of goods sold 520,000 420,000 Operating expenses 240,000 310,000 Allister acquired 80 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 $60,000 that was unrecorded on its accounting records and had a 6-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2018, Barone sells inventory costing $132,000 to Allister for $184,000. Of this amount, 20 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: Amounts Inventory Sales Cost of goods sold Operating expenses Net income attributable to noncontrolling interest

Answer 1

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Working 1:
Customer List Amortization	60000/6	$       10,000	per Year
Working 2:
Intra-Entity Gross Profit	$       52,000
($184000-$132000)
Inventory remaining at year end	20%
Intra-Entity Gross Profit in ending inventory	$       10,400
Final Answer:
Inventory:
Allister Book Value	$     520,000
Barone Book Value	$     320,000
Intra-Entity Gross Profit in ending inventory	$     -10,400
Consolidated Inventory Value	$     829,600
Sales:
Allister Book Value	$ 1,040,000
Barone Book Value	$     840,000
Intra Entity Transfer	$   -184,000
Consolidated Sales Value	$ 1,696,000
Cost of Goods Sold:
Allister Book Value	$     520,000
Barone Book Value	$     420,000
Intra Entity Transfer	$   -184,000
Intra-Entity Gross Profit in ending inventory	$       10,400
Consolidated Cost of Goods Value	$     766,400
Operating Expenses:
Allister Book Value	$     240,000
Barone Book Value	$     310,000
Customer List Amortization	$     -10,000
Consolidated Cost of Goods Value	$     540,000
Net income attributable to noncontrolling interest:
Borone's Net Income (840000-420000-310000)	$     110,000
Intra-Entity Gross Profit in ending inventory	$     -10,400
Excess Fair Value Amortization	$     -10,000
Adjusted subsidiary Net Income	$       89,600
Non Controlling interest	20%
Net income attributable to noncontrolling interest	$       17,920