House Corporation has been operating profitably since its creation in 1960. At the beginning of 2019, House
Question:
House Corporation has been operating profitably since its creation in 1960. At the beginning of 2019, 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 2019 and 2020 and related ending inventory balances follow:
On January 1, 2021, 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 2021, 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 2021, prepare a consolidation worksheet. The partial equity method based on separate company incomes has been applied to each investment.
Step by Step Answer:
Advanced Accounting
ISBN: 9781260247824
14th Edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik