Poplar Outdoor Corporation owns 60 percent of the voting stock of Sugg Australia. Date-of-acquisition information is as follows: Acquisition cost: $59.25 million Fair value of the noncontrolling interest: $30.75 million Sugg's book value: $15 million Value of unreported acquired indefinite lived trademarks: $22.5 million. As of the beginning of the current year, trademarks are impaired by $3 million, and goodwill

Poplar Outdoor Corporation owns 60 percent of the voting stock of Sugg Australia. Date-of-acquisition information is as follows:

• Acquisition cost: $59.25 million
• Fair value of the noncontrolling interest: $30.75 million
• Sugg's book value: $15 million
• Value of unreported acquired indefinite lived trademarks: $22.5 million.

As of the beginning of the current year, trademarks are impaired by $3 million, and goodwill impairment is $7.5 million. There is no current year impairment for the trademarks, but current year goodwill impairment is $1.5 million. Sugg reports net income of $2.25 million for the current year, and declares no dividends. Its total equity at the beginning of the year is $28.5 million.

Following is information on intercompany transactions between Poplar and Sugg:

• Sugg sold land to Poplar in the current year at a loss of $750,000. Poplar still owns the land.
• Intercompany profit in Poplar's beginning inventory, purchased from Sugg, is $300,000.
• Intercompany profit in Poplar's ending inventory, purchased from Sugg, is $435,000.
• Total sales from Sugg to Poplar, at the price charged to Poplar, were $9 million.
• Poplar sold administrative facilities with a book value of $12 million to Sugg two years ago, at the beginning of the year, for $10.5 million. The facilities had a remaining life of 10 years, straight-line. Sugg still uses the facilities.

 

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c. Prepare the current year eliminating entries (C), (1), (E), (R), (O), and (N), to consolidate the end-of-year trial balances of Poplar and Sugg. Enter answers in thousands. For example, $900,000 is $900 in thousands and $15 million is $15,000 in thousands. Consolidation Journal Ref. Description Debit Credit (C) (1-1) To eliminate unconfirmed intercomany loss on sale of land. (1-2) To eliminate unconfirmed intercompany profit in beg. inventory. (1-3) To eliminate unconfirmed intercompany profit in end. inventory. (1-4) To eliminate intercompany sales and purchases. (I-5) To eliminate the beg. of year unconfirmed loss on facilities sale. (1-6) To recognize excess depreciation based on original book value. (E) Investment in Sugg (R) Trademarks Investment in Sugg (0) (N)

Expert Answer

c). Consolidation Journal Amount ( $, 000) Ref Description Debit Credit I-1 Land 750 Loss on sale o View the full answer