Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2011, in exchange for $342,000...
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Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2011, in exchange for $342,000 in cash. The subsidiary's stockholders' equity accounts totaled $326,000 and thenoncontrolling interest had a fair value of $38,000 on that day. However, a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $18,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (six-year remaining life). Brey reported net income from its own operations of $64,000 in 2011 and $80,000 in 2012. Brey paid dividends of $19,000 in 2011 and $23,000 in 2012. Brey sells inventory to Pitino as follows: Year Cost to Brey Transfer Price to pitinollnventory Remaining at Year-End(at transfer price) 2011 $69,000 $115,000 $25,000 2012 81,000 135,000 37,500 2013 92,800 160,000 50,000 At December 31, 2013, Pitino owes Brey $16,000 for inventory acquired during the period. The following separate account balances are for these two companies for December 31, 2013, and the year then ended. Credits are indicated by parentheses. Pitino Brey Sales revenues S(862,000)S(366,000) Cost of goods sold 515,000 209,000 Expenses 185,400 67,000 Investment income-bery (68,400) Net income S(230,000) S(90,000) Retained earings,1/1/13 S(488,000)S(278,000) Net income (above) (230,000) (90,000) Dividends paid 136,000 27,000 Retained earings,12/31/13 S(582,000) S(341,000) Cash and receivables $146,000 $98,000 Inventory 255,000 136,000 Investment in Brey 450,000 -0- Land,buildings, and equipment(net) 964,000 328,000 Total assets 1,815,000 $562,000 Liabilities S(718,000) S(71,000) Common stock (515,000) (150,000) Retained earings,12/31/13 (582,000) (341,000) Total liabilities and equities S(1,815,000)S(562,000) Answer each of the following questions: a. What was the annual amortization resulting from the acquisition-date fair-value allocations? b. Were the intra-entity transfers upstream or downstream? c. What unrealized gross profit existed as of January 1,2013? d. What un realized gross profit existed as of December 31,2013? e. What amounts make up the S68,400 Investment Income-Brey account balance for 2013? f. What was the noncontrolling interest's share of the subsidiary's net income for 2013? g. What amounts make up the $450,000 Investment in Brey account balance as of December 31, 2013? h. Prepare the 2013 worksheet entry to eliminate the subsidiary's beginning owners' equity balances. i. Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies. Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2011, in exchange for $342,000 in cash. The subsidiary's stockholders' equity accounts totaled $326,000 and thenoncontrolling interest had a fair value of $38,000 on that day. However, a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $18,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (six-year remaining life). Brey reported net income from its own operations of $64,000 in 2011 and $80,000 in 2012. Brey paid dividends of $19,000 in 2011 and $23,000 in 2012. Brey sells inventory to Pitino as follows: Year Cost to Brey Transfer Price to pitinollnventory Remaining at Year-End(at transfer price) 2011 $69,000 $115,000 $25,000 2012 81,000 135,000 37,500 2013 92,800 160,000 50,000 At December 31, 2013, Pitino owes Brey $16,000 for inventory acquired during the period. The following separate account balances are for these two companies for December 31, 2013, and the year then ended. Credits are indicated by parentheses. Pitino Brey Sales revenues S(862,000)S(366,000) Cost of goods sold 515,000 209,000 Expenses 185,400 67,000 Investment income-bery (68,400) Net income S(230,000) S(90,000) Retained earings,1/1/13 S(488,000)S(278,000) Net income (above) (230,000) (90,000) Dividends paid 136,000 27,000 Retained earings,12/31/13 S(582,000) S(341,000) Cash and receivables $146,000 $98,000 Inventory 255,000 136,000 Investment in Brey 450,000 -0- Land,buildings, and equipment(net) 964,000 328,000 Total assets 1,815,000 $562,000 Liabilities S(718,000) S(71,000) Common stock (515,000) (150,000) Retained earings,12/31/13 (582,000) (341,000) Total liabilities and equities S(1,815,000)S(562,000) Answer each of the following questions: a. What was the annual amortization resulting from the acquisition-date fair-value allocations? b. Were the intra-entity transfers upstream or downstream? c. What unrealized gross profit existed as of January 1,2013? d. What un realized gross profit existed as of December 31,2013? e. What amounts make up the S68,400 Investment Income-Brey account balance for 2013? f. What was the noncontrolling interest's share of the subsidiary's net income for 2013? g. What amounts make up the $450,000 Investment in Brey account balance as of December 31, 2013? h. Prepare the 2013 worksheet entry to eliminate the subsidiary's beginning owners' equity balances. i. Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.
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step 1 of 26 On 1 st January 2011 Company P acquired 90 of Company B by paying 342000 in cash At the time of acquisition the subsidiarys ... View the full answer
Related Book For
Fundamentals of Advanced Accounting
ISBN: 978-0077667061
5th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
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