Poplar Outdoor Corporation owns 60 percent of the voting stock of Sugg Australia. Date-of-acquisition information is as follows:

• Acquisition cost: $59.25 million
• Fair value of the noncontrolling interest: $30.75 million
• Sugg's book value: $15 million
• Value of unreported acquired indefinite lived trademarks: $22.5 million.

As of the beginning of the current year, trademarks are impaired by $3 million, and goodwill impairment is $7.5 million. There is no current year impairment for the trademarks, but current year goodwill impairment is $1.5 million. Sugg reports net income of $2.25 million for the current year, and declares no dividends. Its total equity at the beginning of the year is $28.5 million.

Following is information on intercompany transactions between Poplar and Sugg:

• Sugg sold land to Poplar in the current year at a loss of $750,000. Poplar still owns the land.
• Intercompany profit in Poplar's beginning inventory, purchased from Sugg, is $300,000.
• Intercompany profit in Poplar's ending inventory, purchased from Sugg, is $435,000.
• Total sales from Sugg to Poplar, at the price charged to Poplar, were $9 million.
• Poplar sold administrative facilities with a book value of $12 million to Sugg two years ago, at the beginning of the year, for $10.5 million. The facilities had a remaining life of 10 years, straight-line. Sugg still uses the facilities.

 

Transcribed Image Text:

c. Prepare the current year eliminating entries (C), (1), (E), (R), (O), and (N), to consolidate the end-of-year trial balances of Poplar and Sugg. Enter answers in thousands. For example, $900,000 is $900 in thousands and $15 million is $15,000 in thousands. Consolidation Journal Ref. Description Debit Credit (C) (1-1) To eliminate unconfirmed intercomany loss on sale of land. (1-2) To eliminate unconfirmed intercompany profit in beg. inventory. (1-3) To eliminate unconfirmed intercompany profit in end. inventory. (1-4) To eliminate intercompany sales and purchases. (I-5) To eliminate the beg. of year unconfirmed loss on facilities sale. (1-6) To recognize excess depreciation based on original book value. (E) Investment in Sugg (R) Trademarks Investment in Sugg (0) (N) c. Prepare the current year eliminating entries (C), (1), (E), (R), (O), and (N), to consolidate the end-of-year trial balances of Poplar and Sugg. Enter answers in thousands. For example, $900,000 is $900 in thousands and $15 million is $15,000 in thousands. Consolidation Journal Ref. Description Debit Credit (C) (1-1) To eliminate unconfirmed intercomany loss on sale of land. (1-2) To eliminate unconfirmed intercompany profit in beg. inventory. (1-3) To eliminate unconfirmed intercompany profit in end. inventory. (1-4) To eliminate intercompany sales and purchases. (I-5) To eliminate the beg. of year unconfirmed loss on facilities sale. (1-6) To recognize excess depreciation based on original book value. (E) Investment in Sugg (R) Trademarks Investment in Sugg (0) (N)

Answer rating: 100% (QA)

c Consolidation Journal Amount 000 Ref Description Debit Credit I1 Land 750 Loss on sale of lan... View the full answer