Following are several figures reported for Allister and Barone as of December 31
ID: 2398020 • Letter: F
Question
Following are several figures reported for Allister and Barone as of December 31, 2018:
Allister
Barone
Inventory
$
650,000
$
450,000
Sales
1,300,000
1,100,000
Investment income
not given
Cost of goods sold
650,000
550,000
Operating expenses
305,000
375,000
Allister acquired 90 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 $86,000 that was unrecorded on its accounting records and had a 4-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2018, Barone sells inventory costing $145,000 to Allister for $210,000. Of this amount, 10 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:
Inventory, Sales, COGS, Operating Expenses, Net income attributable to noncontrolling interest
Allister
Barone
Inventory
$
650,000
$
450,000
Sales
1,300,000
1,100,000
Investment income
not given
Cost of goods sold
650,000
550,000
Operating expenses
305,000
375,000
Explanation / Answer
Inventory: Allister 650,000.00 Barone 450,000.00 Total 1,100,000.00 Less: Inra Entity Unrealized Gross Profit - 10% X ($210,000 - $145,000) (6,500.00) Consolidated Inventory Total 1,093,500.00 Cost of Goods Sold: Allister 650,000.00 Barone 550,000.00 Total 1,200,000.00 Less: Inter Entity Sales (210,000.00) Consoldated Cost of Goods Sold 990,000.00 Operating Expenses: Allister 305,000.00 Barone 375,000.00 Total 680,000.00 Add: Amortization of Customer List - $86,000/4 Years 21,500.00 Consolidated Operating Expenses 701,500.00 Net income attributable to noncontrolling Interest: Barone's Net Income 175,000.00 Intra-entity gross profit deferral (6,500.00) Excess fair value amortization (21,500.00) Adjusted Subsidiary Net Income 147,000.00 Net income attributable to noncontrolling Interest - 10% X $147,000 14,700.00