Poplar Outdoor Corporation owns 60 percent of the voting stock of Sugg Australia
ID: 2398204 • Letter: P
Question
Poplar Outdoor Corporation owns 60 percent of the voting stock of Sugg Australia. Date-of-acquisition information is as follows: Acquisition cost: $31.6 million Fair value of the noncontrolling interest: $16.4 million Sugg's book value: $8 million Value of unreported acquired indefinite lived trademarks: $12 million. As of the beginning of the current year, trademarks are impaired by $1.6 million, and goodwill impairment is $4 million. There is no current year impairment for the trademarks, but current year goodwill impairment is $800,000. Sugg reports net income of $1.2 million for the current year, and declares no dividends. Its total equity at the beginning of the year is $15.2 million. Following is information on intercompany transactions between Poplar and Sugg: Sugg sold land to Poplar in the current year at a loss of $400,000. Poplar still owns the land. Intercompany profit in Poplar's beginning inventory, purchased from Sugg, is $160,000. Intercompany profit in Poplar's ending inventory, purchased from Sugg, is $220,000. Total sales from Sugg to Poplar, at the price charged to Poplar, were $4.8 million. Poplar sold administrative facilities with a book value of $6.4 million to Sugg two years ago, at the beginning of the year, for $5.6 million. The facilities had a remaining life of 10 years, straight-line. Sugg still uses the facilities. For all answers below, enter in thousands. For example, $1 million is $1,000. a. Prepare a schedule to compute equity in net income and noncontrolling interest in net income for the current year, assuming Poplar uses the complete equity method. Use negative signs with answers that reduce the total(s). b. Compute the investment balance on Poplar's books at the end of the current year. Use negative signs with answers that reduce the investment balance. c. Prepare the current year eliminating entries (C), (I), (E), (R), (O), and (N), to consolidate the end-of-year trial balances of Poplar and Sugg. Please answer all parts because they are all part of ONE question. Thanks.
Explanation / Answer
Details Popular outdoor Corp 60% of Sugg Australia Mn. $ Acquitision Cost 31.6 Fair Value of Non Controlling interest 16.4 Suggs Book value Unreported lived Trademark 1.6 Goodwill Impairment 4 CY Goodwill Impairment 0.8 Net Income 1.2 Dividend 0 Total Equity - Beginning of year 15.2