Reference no: EM133097896
Question: Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January '1, 2020, for $460,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $575,000, and the fair value of the 20 percent noncontrolling interest was $115,000. No excess fair value over book value amortization accompanied the acquisition.
The following selected account balances are from the individual financial records of these two companies as of December 31, 2021:
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Protrade
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Seacraft
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Sales
Cost of goods sold Operating expenses Retained earnings, Inventory
Buildings (net)
Investment income
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1/1/21
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$ 690,000
315,000
155,000
790,000
351,000
363,000
Not given
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$ 410,000
222,000
110,000
230,000
115,000
162,000
0
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Each of the following problems is an independent situation:
a. Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $95,000 in 2020 and $115,000 in 2021. Of this inventory, Seacraft retained and then sold $33,000 of the 2020 transfers in 2021 and held $47,000 of the 2021 transfers until 2022.
Determine balances for the following items that would appear on consolidated financial statements for 2021: Cost of Goods Sold
Inventory
Net Income Attributable to Noncontrolling Interest
b. Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra-entity transfers were $55,000 in 2020 and $85,000 in 2021. Of this inventory, $26,000 of the 2020 transfers were retained and then sold by Protrade in 2021, whereas $40,000 of the 2021 transfers were held until 2022.
Determine balances for the following items that would appear on consolidated financial statements for 2021: Cost of Goods Sold
Inventory
Net Income Attributable to Noncontrolling Interest
c. Protrade sells Seacraft a building on January 1, 2020, for $90,000, although its book value was only $55,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value. Determine balances for the following items that would appear on consolidated financial statements for 2021: Buildings (net)
Operating Expenses
Net Income Attributable to Noncontrolling Interest