Plaza, Inc., acquires 80 percent of the outstanding common shares of Stanford Corporation on January 1, 2018,
Question:
Plaza, Inc., acquires 80 percent of the outstanding common shares of Stanford Corporation on January 1, 2018, in exchange for $912,900 in cash. At the acquisition date, the total fair value of Stanford, including the non-controlling interest, was assessed at $1,141,125. Also at the acquisition date, Stanford's book value was $524,500.
Various individual items in Stanford's financial records had fair values that differed from their book values as follows:
Value in books | fair value | ||||||
Trade names (indefinite life) | ps | 286,700 | ps | 350.700 | |||
Property and equipment (net, remaining life of 8 years) | 231,200 | 248,800 | |||||
Patent (14 years remaining life) | 113,300 | 146,900 | |||||
For internal reporting purposes, Plaza, Inc. uses the equity method to account for this investment. The following account balances correspond to the year ended December 31, 2018, of both companies.
Plaza | Stanford | ||||||
Income | ps | (755,900 | ) | ps | (746.500 | ) | |
cost of goods sold | 417,900 | 315,500 | |||||
depreciation expense | 177,100 | 28,900 | |||||
amortization expenses | 22,500 | ||||||
Stanford Revenue Share | (300.000 | ) | 0 | ||||
Net Income | ps | (460,900 | ) | ps | (379,600 | ) | |
Retained earnings, 1/1/18 | ps | (1,016,600 | ) | ps | (422,000 | ) | |
Net Income | (460,900 | ) | (379,600 | ) | |||
declared dividends | 239,200 | 22,000 | |||||
Retained earnings, 12/31/18 | ps | (1,238,300 | ) | ps | (779,600 | ) | |
Current assets | ps | 685,600 | ps | 344,300 | |||
Investment in Stanford | 1,195,300 | 0 | |||||
Tradenames | 191.400 | 286,700 | |||||
Property and equipment (net) | 821,500 | 202,300 | |||||
patents | 0 | 90,800 | |||||
total assets | ps | 2,893,800 | ps | 924,100 | |||
Accounts payable | ps | (113,300 | ) | ps | (42,000 | ) | |
Common actions | (239,200 | ) | (84,000 | ) | |||
Additional payment in principal | (1.303.000 | ) | (18,500 | ) | |||
Retained earnings (above) | (1,238,300 | ) | (779,600 | ) | |||
Total liabilities and equity | ps | (2.893.800 | ) | ps | (924,100 | ) | |
At year-end there are no intra-entity accounts receivable or payable.
Complete the given worksheet to consolidate the financial statements of Plaza, Inc. and its Stanford subsidiary.
PLAZA CORPORATION AND STANFORD CORPORATION | ||||||
Consolidation Worksheet | ||||||
For the year ending December 31, 2018 | ||||||
consolidation entries | not controller | Consolidated | ||||
accounts | Plaza | Stanford | Debit | Credit | Interest | Totals |
Income | $(755,900) | $(746,500) | ||||
cost of goods sold | 417,900 | 315,500 | ||||
depreciation expense | 177,100 | 28,900 | ||||
amortization expenses | 0 | 22,500 | ||||
Stanford Revenue Share | (300.000) | 0 | ||||
Net Income | $(460,900) | $(379,600) | ||||
Consolidated net income | $0 | |||||
NCI participation in CNI | ||||||
CNI quota | $0 | |||||
Retained earnings, 1/1 | $(1,016,600) | $(422,000) | ||||
Net Income | (460,900) | (379,600) | ||||
declared dividends | 239,200 | 22,000 | ||||
Retained earnings, 12/31 | $(1,238,300) | $(779,600) | $0 | |||
Current assets | $ 685,600 | $ 344,300 | ||||
Investment in Stanford | 1,195,300 | 0 | ||||
Tradenames | 191.400 | 286,700 | ||||
Property and equipment (net) | 821,500 | 202,300 | ||||
patents | 0 | 90,800 | ||||
Goodwill | ||||||
total assets | $2,893,800 | $ 924,100 | $0 | |||
Accounts payable | (113,300) | (42,000) | ||||
Common actions | (239,200) | (84,000) | ||||
Additional payment in principal | (1,303,000) | (18,500) | ||||
uncontrolled interest | ||||||
Retained earnings, 12/31 | (1,238,300) | (779,600) | ||||
Total liabilities and equity | $(2,893,800) | $(924,100) | $0 | $0 |
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni