Consolidation subsequent to date of acquisition-Equity method with noncontralling interest, AAP, and upstream intercompany inventory sale...

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Consolidation subsequent to date of acquisition-Equity method with noncontralling interest, AAP, and upstream intercompany inventory sale Assume, on January 1. 2013, a parent company acquired an BO interest in ies bnidiary. The totat tair value of the controling and noncontroling interests was $480,000 over the book value of the sutnidiarys Stcktolders Eouty on the acquisidon date. The parent assigned the excess to the following (AJ assets BAJAwe al F vatu Patent S1a0.000 10 years Goodwi 300.000 ndefne S0.000 80% of the Goodwill is allocated to the parent. Assume the subsidiary ses inventory to the parent tupstream) which includes that inventory in products that it ultimately sells to customers outside of the controled group. You have compiled the folowing data as of 2018 and 2019: 2014 2010 Transfer price for invertory sale 500.000 s600.000 1420.000 4s0.000 Cost of goods ssld Gros profe sa0.000 S150.000 Imventory remaining 35 25% Gross profe deferred $28.000 $37,500 EOY recevablepayable SHO.000 $140,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. The parent uses the equity method of pre consolidation investment bookkeeping. The parent and the subsidiary report the folowing pre-consolidation financial staterments at December 31, 2019 Suboidiary Parent Subsidiary Parent Income statement: Balance sheet $6,700.000 $2,500.000 Cash $500.000 $400.000 Sales Cost of goods sold (4,500,0000 (1.500.000 Accounts receable 700.000 so0.000 2.200.000 1,000,000 entory 900,000 HO0.000 Gross profe Income (lossi from subsidiary 13R000 Eiquity investment 1373.200 CROO.000 Property. plant and equipment reE net 4000.000 1,000,000 $7473200 $200.000 Operating expenses 2.000.0001 $338.000 $200.000 Net income Statement of retained earmings $940,000 Currert labilities 200.000 Longe-term labilities $800.000 1500.000 BOY retained eamings $2035.200 3,000.000 900.000 Net income 338.000 s00.000 1,000.000 2173200 100.000 Dividends (200,000 (40.000 Common stuck 32,173.200 s1,100.000 APIC 200.000 EOY retained earnings etained earning 1,100,000 S7473.200 100.000 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. (Complete for the first four years only.) Unametined Unemontioed Unamortized Unamortied AAP 2016 2014 AAP 2015 2013 Amornication AAP AAP 12/21/2013Amertication 1231/2014 Aortiation ar201sAmortination 100 Patent Goodwill Patent Goodwill 20% Patent Goodwill 0. ole Dewmtan Uesereem Intercompany profit on 1n9 Intercompany proft on 12a19 e Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders equity of the subsidiary Use anegative sign with your answer to indicate a reduction to net income. Fguity investment at 1n/19 BON xbook value of the net assets of subsidiary Add Les Equity investment at 12/31/19 RON x book value of the net assets of subsidiary Add 0. Less d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation. Equity investent Equity Investment at 1/1/19 O Dividends O AAP amortization Net income Equity investment at 12/31/19 e. Independently compute the owners' equity attributable to the noncontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary. Use a negative sign with your answer to indicate a reduction to net income. Noncontrolling interest at 1/19: 204 of book value of the net assets of subsidiary Adt Less Noncontrolling interest at 12/31/19: 20% of book value of the net assets of subsidiary Add Less f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Use a negative sign with your answer to indicate a reduction to net income, Parent's stand-alone net income Subsidiarys stand-alone net income Plus Less Less: 100% AAP amortization Cosolidated net income Parent's stand-alone net income 80% Subsidiary's stand alone net income Plus Less Less 80% AAP amortization Consolidated net income attributable to the controlling interest 20% of subsidary's stand alone net income Plus Less Less: 20% AAP amortization Consolidated net income attributable to the noncontrolling interest g Complete the consolidating entries according to the C-E-A-D-I sequence. Consolidation subsequent to date of acquisition-Equity method with noncontralling interest, AAP, and upstream intercompany inventory sale Assume, on January 1. 2013, a parent company acquired an BO interest in ies bnidiary. The totat tair value of the controling and noncontroling interests was $480,000 over the book value of the sutnidiarys Stcktolders Eouty on the acquisidon date. The parent assigned the excess to the following (AJ assets BAJAwe al F vatu Patent S1a0.000 10 years Goodwi 300.000 ndefne S0.000 80% of the Goodwill is allocated to the parent. Assume the subsidiary ses inventory to the parent tupstream) which includes that inventory in products that it ultimately sells to customers outside of the controled group. You have compiled the folowing data as of 2018 and 2019: 2014 2010 Transfer price for invertory sale 500.000 s600.000 1420.000 4s0.000 Cost of goods ssld Gros profe sa0.000 S150.000 Imventory remaining 35 25% Gross profe deferred $28.000 $37,500 EOY recevablepayable SHO.000 $140,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. The parent uses the equity method of pre consolidation investment bookkeeping. The parent and the subsidiary report the folowing pre-consolidation financial staterments at December 31, 2019 Suboidiary Parent Subsidiary Parent Income statement: Balance sheet $6,700.000 $2,500.000 Cash $500.000 $400.000 Sales Cost of goods sold (4,500,0000 (1.500.000 Accounts receable 700.000 so0.000 2.200.000 1,000,000 entory 900,000 HO0.000 Gross profe Income (lossi from subsidiary 13R000 Eiquity investment 1373.200 CROO.000 Property. plant and equipment reE net 4000.000 1,000,000 $7473200 $200.000 Operating expenses 2.000.0001 $338.000 $200.000 Net income Statement of retained earmings $940,000 Currert labilities 200.000 Longe-term labilities $800.000 1500.000 BOY retained eamings $2035.200 3,000.000 900.000 Net income 338.000 s00.000 1,000.000 2173200 100.000 Dividends (200,000 (40.000 Common stuck 32,173.200 s1,100.000 APIC 200.000 EOY retained earnings etained earning 1,100,000 S7473.200 100.000 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. (Complete for the first four years only.) Unametined Unemontioed Unamortized Unamortied AAP 2016 2014 AAP 2015 2013 Amornication AAP AAP 12/21/2013Amertication 1231/2014 Aortiation ar201sAmortination 100 Patent Goodwill Patent Goodwill 20% Patent Goodwill 0. ole Dewmtan Uesereem Intercompany profit on 1n9 Intercompany proft on 12a19 e Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders equity of the subsidiary Use anegative sign with your answer to indicate a reduction to net income. Fguity investment at 1n/19 BON xbook value of the net assets of subsidiary Add Les Equity investment at 12/31/19 RON x book value of the net assets of subsidiary Add 0. Less d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation. Equity investent Equity Investment at 1/1/19 O Dividends O AAP amortization Net income Equity investment at 12/31/19 e. Independently compute the owners' equity attributable to the noncontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary. Use a negative sign with your answer to indicate a reduction to net income. Noncontrolling interest at 1/19: 204 of book value of the net assets of subsidiary Adt Less Noncontrolling interest at 12/31/19: 20% of book value of the net assets of subsidiary Add Less f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Use a negative sign with your answer to indicate a reduction to net income, Parent's stand-alone net income Subsidiarys stand-alone net income Plus Less Less: 100% AAP amortization Cosolidated net income Parent's stand-alone net income 80% Subsidiary's stand alone net income Plus Less Less 80% AAP amortization Consolidated net income attributable to the controlling interest 20% of subsidary's stand alone net income Plus Less Less: 20% AAP amortization Consolidated net income attributable to the noncontrolling interest g Complete the consolidating entries according to the C-E-A-D-I sequence.

Answer rating: 100% (QA)

a Unamortized 2013 Unamortized AAP 2014 Unamortized AAP 2015 Unamorti... View the full answer