Following are several figures reported for Allister and Barone as of December 31
ID: 2343307 • Letter: F
Question
Following are several figures reported for Allister and Barone as of December 31, 2018: Allister Barone Inventory $ 520,000 $ 320,000 Sales 1,040,000 840,000 Investment income not given Cost of goods sold 520,000 420,000 Operating expenses 240,000 310,000 Allister acquired 80 percent of Barone in January 2017. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $60,000 that was unrecorded on its accounting records and had a 6-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2018, Barone sells inventory costing $132,000 to Allister for $184,000. Of this amount, 20 percent remains unsold in Allister's warehouse at year-end. Determine balances for the following items that would appear on Allister's consolidated financial statements for 2018: Amounts Inventory Sales Cost of goods sold Operating expenses Net income attributable to noncontrolling interest
Explanation / Answer
Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Working 1: Customer List Amortization 60000/6 $ 10,000 per Year Working 2: Intra-Entity Gross Profit $ 52,000 ($184000-$132000) Inventory remaining at year end 20% Intra-Entity Gross Profit in ending inventory $ 10,400 Final Answer: Inventory: Allister Book Value $ 520,000 Barone Book Value $ 320,000 Intra-Entity Gross Profit in ending inventory $ -10,400 Consolidated Inventory Value $ 829,600 Sales: Allister Book Value $ 1,040,000 Barone Book Value $ 840,000 Intra Entity Transfer $ -184,000 Consolidated Sales Value $ 1,696,000 Cost of Goods Sold: Allister Book Value $ 520,000 Barone Book Value $ 420,000 Intra Entity Transfer $ -184,000 Intra-Entity Gross Profit in ending inventory $ 10,400 Consolidated Cost of Goods Value $ 766,400 Operating Expenses: Allister Book Value $ 240,000 Barone Book Value $ 310,000 Customer List Amortization $ -10,000 Consolidated Cost of Goods Value $ 540,000 Net income attributable to noncontrolling interest: Borone's Net Income (840000-420000-310000) $ 110,000 Intra-Entity Gross Profit in ending inventory $ -10,400 Excess Fair Value Amortization $ -10,000 Adjusted subsidiary Net Income $ 89,600 Non Controlling interest 20% Net income attributable to noncontrolling interest $ 17,920