Week $04$ HW Ch $07$

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On January $1,2023,$ Gomez Company acquired $90$ percent of Martin Company's outstanding stock for $$805,680.$ The $10$ percent noncontrolling interest had an assessed fair value of $$89,520$ on that date. Martin's acquisition$-$date book value consisted of $$314,000$

$34$ points

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References common stock and $$454,000$ retained earnings. Any acquisition$-$date excess fair value over book value was attributed to an unrecorded licensing agreement owned by Martin with an estimated remaining life of $12$ years. Gomez uses the equity method to account for its investment in Martin.

Also on January $1,2023,$ Martin acquired an $80$ percent interest in Short Company for $$362,200.$ At the acquisition date, the $20$ percent noncontrolling interest fair value was $$90,550.$ Short's acquisition$-$date book value consisted of $$207,000$ common stock and $$187,000$ retained earnings. Any excess fair value was attributed to a fully amortized copyright that had a remaining life of $5$ years. Martin uses the equity method to account for its investment in Short. Reported separate net income $($before inclusion of equity method income$)$ totals for $2023$ follow:

Martin Company $$186,600$

Short Company $131,200$

The following are the $2024$ financial statements for these three companies $($credit balances indicated by parentheses$).$ Short has transferred inventory to Martin since the takeover amounting to $$84,000(2023)$ and $$94,000(2024).$ These transactions include the same markup applicable to Short's outside sales. In each year, Martin carried $20$ percent of this inventory into the succeeding year before disposing of it$.$ An effective tax rate of $21$ percent is applicable to all companies. All dividend declarations are paid in the same period.

$\backslash$table$[[$Accounts$,$Gomez Company,Martin Company,Short Company$],[$Sales$,$$$(1,152,000),$$$(663,000),$$$(640,000)$