1. The Investor acquired 75% of Investee on January 1, 2019 for $103,500. At acquisition the...

  

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1. The Investor acquired 75% of Investee on January 1, 2019 for $103,500. At acquisition the fair value of the noncontrolling interest was $34,500. Trial Balances for the two entities at December 31, 2019 are: Investor Investee Debit Credit Debit Credit Cash 68,500 32,000 Accounts Receivable 85,000 14,000 Inventory 97,000 24,000 Land 42,875 25,000 350,000 150,000 Buildings & Equipment Investment in Subsidary Cost of Goods Sold 114,000 145,000 114,000 Wage Expense 35,000 20,000 25,000 10,000 Depreciation Expense Interest Expense 12,000 4,000 Other Expense 23,000 16,000 Dividends Declared 30,000 20,000 Accumulated Depreciation 170,000 50,000 Accounts Payable 51,000 15,000 14,000 6,000 Wages Payable Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 126,875 48,000 Sales 290,000 200,000 Income from Subsidary 25,500 Total 1,027,375 1,027,375 429,000 429,000 The book value of the Investee's assets are equal to the fair value except for Building & Equipment which are worth $20,000 more. Building and Equipment have 10 years of remaining life at time of acquisition. Required: 1. Allocation of Acquisition Value 2. Equity entries for 2019. 3. Worksheet entries for the 2019 year end consolidation. 1. The Investor acquired 75% of Investee on January 1, 2019 for $103,500. At acquisition the fair value of the noncontrolling interest was $34,500. Trial Balances for the two entities at December 31, 2019 are: Investor Investee Debit Credit Debit Credit Cash 68,500 32,000 Accounts Receivable 85,000 14,000 Inventory 97,000 24,000 Land 42,875 25,000 350,000 150,000 Buildings & Equipment Investment in Subsidary Cost of Goods Sold 114,000 145,000 114,000 Wage Expense 35,000 20,000 25,000 10,000 Depreciation Expense Interest Expense 12,000 4,000 Other Expense 23,000 16,000 Dividends Declared 30,000 20,000 Accumulated Depreciation 170,000 50,000 Accounts Payable 51,000 15,000 14,000 6,000 Wages Payable Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 126,875 48,000 Sales 290,000 200,000 Income from Subsidary 25,500 Total 1,027,375 1,027,375 429,000 429,000 The book value of the Investee's assets are equal to the fair value except for Building & Equipment which are worth $20,000 more. Building and Equipment have 10 years of remaining life at time of acquisition. Required: 1. Allocation of Acquisition Value 2. Equity entries for 2019. 3. Worksheet entries for the 2019 year end consolidation.

Answer rating: 100% (QA)

23 Common Stock Dr 60000 Retained Earnings Dr 48000 Building and equipment account D... View the full answer