Protrade Corporation acquired 70 percent of the outstanding voting stock of Seac
ID: 2569615 • Letter: P
Question
Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $430,500 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $745,000 and the fair value of the 30 percent noncontrolling interest was $184,500. 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:
Each of the following problems is an independent situation:
A))Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $112,000 in 2017 and $132,000 in 2018. Of this inventory, Seacraft retained and then sold $50,000 of the 2017 transfers in 2018 and held $64,000 of the 2018 transfers until 2019.
Determine balances for the following items that would appear on consolidated financial statements for 2018:
B))Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra-entity transfers were $72,000 in 2017 and $102,000 in 2018. Of this inventory, $43,000 of the 2017 transfers were retained and then sold by Protrade in 2018, whereas $57,000 of the 2018 transfers were held until 2019.
etermine balances for the following items that would appear on consolidated financial statements for 2018:
D)) Protrade sells Seacraft a building on January 1, 2017, for $124,000, although its book value was only $72,000 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:
Protrade Seacraft Sales $ 860,000 $ 580,000 Cost of goods sold 400,000 307,000 Operating expenses 172,000 127,000 Retained earnings, 1/1/18 960,000 400,000 Inventory 368,000 132,000 Buildings (net) 380,000 179,000 Investment income Not given 0Explanation / Answer
Acquisition % 70% Eliminating entries December 31, 2013 Penguin Snow Dr Cr Consolidation Sales 860,000 580,000 132,000 1,308,000 Cost of goods sold 400,000 307,000 24,000 150,750 580,250 Operating expenses 172,000 127,000 299,000 Retained earnings, 1/1/13 960,000 400,000 18,750 1,378,750 Inventory 368,000 132,000 24,000 476,000 Buildings (net) 380,000 179,000 Investment income Not given - Penguin Sells to Snow inventory: 100 Cost Mark-up of cost 60% 160 Sales Mark-up of sales 37.5% 60 Profit 37.5% Intercompany transfers 2012 Transfer 112,000 2013 Transfer 132,000 Inventory 2012 50,000 2013 64,000 Books of Penguin At the end of 2012 Sales 112,000 Purchaes 112,000 Ending Inv - IS (COGS) 18,750 Inventory - BS 18,750 Beginning of 2013 Beginning R/E 18,750 Beginning Inventory - Inc St (COGS) 18,750 At the end of 2013 Sales 132,000 Purchaes 132,000 Ending Inv - IS (COGS) 24,000 Inventory - BS 24,000 Consolidated Balances Sales 1,308,000 Inventory 476,000 NCI in Snow NI 43,800 Snow net income Sales 580,000 Cost of goods sold 307,000 Operating expenses 127,000 Net Income 146,000 NCI (%) 30% NCI ($) 43,800
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.