Parent company acquired 80% of the stock of Subsidiary company on January 1, 2018, for $250,380. ?On this date, the balances of Subsidiary company's stockholders' equity accounts were:

Common Stock	$156,000
Retained Earnings	$31,200

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On January 1, 2018, the fair value of the non-controlling interest was $61,620.

On January 1, 2018, the book and fair values of the assets were fairly stated but for the following items:

Item	Book Value	Fair Value	Useful Life
Accounts Receivable	$39,000	$33,800	1 year
PPE, net	$65,000	$88,400	6 years
Licenses	$45,500	$100,100	7 years
Notes Payable	$26,000	$18,200	4 years

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Other items of note:

• Each company sells to each other with a markup on sales of 25%.? (Profit equals markup % times carrying value.)? Both firms use FIFO for accounting for inventory.

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• At the end of 2022, Parent had on hand materials purchased from Subsidiary valued at $10,400.?
  • Subsidiary had no inventory purchased from the parent on hand at the end of the 2022.
  • At the end of 2021, Subsidiary had on hand materials purchased from Parent valued at $15,600.?
  • At the end of 2021, Parent had on hand materials purchased from Subsidiary valued at $5,000.?
  • At the end of 2022, Subsidiary owed the parent $5,200 for goods purchased from the Parent during 2022.
  • Total sales between Parent and Subsidiary in 2022 totaled $15,000.?

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• On January 1, 2021, Parent sold equipment to subsidiary for $104,000.? The book value of the equipment sold at the time of the sale was $84,500.? It was estimated that the equipment sold had a remaining useful life of 6 years, no salvage value.

Transcribed Image Text:

Allocate the PP & Allocate Goodwill in the box below AP S 250,380 # of years o entry r entry Less Book Value S (187,200) Add FV of the NCI S 61,620 Excess $ 124,800 Accounts Receivable $ 5,200 1 $5,200 $ 0-1 PPE, net $ (23,400) 6 $ (3,900) $ (7,800) 0-2 Licenses $ (54,600) 7 $ (7,800) $(23,400) 0-3 Notes Payable S (7,800) 4 $ (1,950) $ 0-4 Goodwill S 44,200 Book Value $ 187,200 Fair value of net assets: Accounts Receivable $ (5,200) PPE, net $ 23,400 Licenses $ 54,600 Notes Payable $ 7,800 Total Fair Value $ 267,800 P ownership % P share of Assets $ 80% 214,240 AP $ 250,380 Parent Share of GW Sub Share of GW $ Total GW $ $ 36,140 81.76% 8,060 18.24% 44,200 No work outside of the box will be graded Goodwill impairment Loss in 2020 So in 2022 Consolidation we subtract 10,000 from the calculated goodwill 34,200 Allocate the PP & Allocate Goodwill in the box below AP S 250,380 # of years o entry r entry Less Book Value S (187,200) Add FV of the NCI S 61,620 Excess $ 124,800 Accounts Receivable $ 5,200 1 $5,200 $ 0-1 PPE, net $ (23,400) 6 $ (3,900) $ (7,800) 0-2 Licenses $ (54,600) 7 $ (7,800) $(23,400) 0-3 Notes Payable S (7,800) 4 $ (1,950) $ 0-4 Goodwill S 44,200 Book Value $ 187,200 Fair value of net assets: Accounts Receivable $ (5,200) PPE, net $ 23,400 Licenses $ 54,600 Notes Payable $ 7,800 Total Fair Value $ 267,800 P ownership % P share of Assets $ 80% 214,240 AP $ 250,380 Parent Share of GW Sub Share of GW $ Total GW $ $ 36,140 81.76% 8,060 18.24% 44,200 No work outside of the box will be graded Goodwill impairment Loss in 2020 So in 2022 Consolidation we subtract 10,000 from the calculated goodwill 34,200