Prepare any equity method adjustments

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Question - Utes acquires 90% of Bruins on January 1st 20X1 for $810K. At the time of the acquisition Bruin's Retained Earnings was $550K and Common Stock was $350K.  During the year, Ute sold $270K of inventory to Bruins. The inventory originally cost Ute $220K.   At the end of the year, Bruins had $100K of that inventory on hand. The remainder had been sold to an outside party for $290K.  Including the sale of the intercompany inventory to an outside party, Bruins had net income of $400K and no dividends were paid during the year. At the date of acquisition Ute's accumulated depreciation was $95K and Bruin's was $55K.

Ute accounts for Bruins under the fully adjusted equity method. Prepare any equity method adjustments that will be necessary for the full year ending December 31, 20X1.

Reference no: EM132907033

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