Question:
On January 1, 2016, Alpha acquired 80 percent of Delta. Of Delta's total business fair value, $125,000 was allocated to copyrights with a 20-year remaining life. Subsequently, on January 1, 2017, Delta obtained 70 percent of Omega's outstanding voting shares. In this second acquisition, $120,000 of Omega's total business fair value was assigned to copyrights that had a remaining life of 12 years. Delta's book value was $490,000 on January 1, 2016, and Omega reported a book value of $140,000 on January 1, 2017. Delta has made numerous inventory transfers to Alpha since the business combination was formed. Intra-entity gross profits of $15,000 were present in Alpha's inventory as of January 1, 2018. During the year, $200,000 in additional intra-entity sales were made with $22,000 in Intraentity gross profits in inventory remaining at the end of the period.
Both Alpha and Delta utilized the partial equity method to account for their investment balances. Following are the individual
financial statements for the companies for 2018 with consolidated totals. Develop the worksheet entries necessary to derive these reported balances:
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Alpha Company Delta Company Omega Consolidated Company Totals Sales Cost of goods sold Operating expenses Income of subsidiary $ (900,000) (500,000) $(200,000) $(1,400,000) 627,000 489,250 500,000 294,000 144 240,000 129,000 80,000 50,000 Separate company net Income $ (250,0 $ (180 $ (283,750) 31,950 18,000 Consolidated net Income Net Income attributable to noncontrolling Interest (Delta Company) Net Income attributable to noncontrolling Interest (Omega Company) Net Income attributable to Alpha Company $ (233,8 $(600,000) Retalned earnings, 1/1/18 Net Income (above Dividends declared (250,000) (180,000) (70,000 50,000 (400,000) $(100,000) (572,400) (233,800) 50,000 50,000 40,000 $ (800,000) $ (540,000) (120 $ (756,2 Retalned earnings, 12/31/18 Cash and recelvables Inventory Investment In Delta Company $ 262,000 $ 206,000 70,000 160,000 538,000 738,000 290,000 628,000 310,000 Investment In Omega Company Property, plant, and equipment Copyrights 1,006,000 206,250 $1,600,000 $1,070,000 500,000 2,488,250 238,000 316,000 420,000 270,000 Total assets Llabilities Common stock Retalned earnings, 12/31/18 Noncontrolling Interest $(600,000) $ (410,000) $(280,000) $(1,290,000) (200,000) (756,200) (200,000) (120,000) (100,000 (800,000) (540,000) (120,000 In Delta Company, 12/31/18 (146,050) Noncontrolling Interest In Omega Company, 12/31/18 Total Ilablities and equities $(1,600,0 1,070 $(2,488,25