House Corporation has been operating profitably since its creation in 1959. At the beginning of 2009, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule:

House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House’s purchases during 2009 and 2010 and related ending inventory balances follow:

On January 1, 2011, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company’s outstanding common stock. The total price of these shares was $240,000, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2011, House acquired additional inventory from Wilson at a price of $200,000. Of this merchandise, 45 percent is still held at year-end.
Using the three companies’ following financial records for 2011, prepare a consolidation worksheet. The partial equity method based on operational earnings has been applied to eachinvestment.

  • CreatedOctober 04, 2014
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