Question

Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $1,155,900 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,444,875. Also at the acquisition date, Stanford's book value was $604,800.

Several individual items on Stanford’s financial records had fair values that differed from their book values as follows:

	Book Value				Fair Value
Tradenames (indefinite life)	$	321,000			$	463,000
Property and equipment (net, 8-year remaining life)		255,200				276,000
Patent (14-year remaining life)		148,600				187,800

For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies.

	Plaza				Stanford
Revenues	$	(966,400	)		$	(803,700	)
Cost of goods sold		534,300				353,200
Depreciation expense		226,400				31,900
Amortization expense						25,200
Equity in income of Stanford		(310,400	)			0
Net income	$	(516,100	)		$	(393,400	)
Retained earnings, 1/1/18	$	(1,138,300	)		$	(472,500	)
Net income		(516,100	)			(393,400	)
Dividends declared		267,900				26,000
Retained earnings, 12/31/18	$	(1,386,500	)		$	(839,900	)
Current assets	$	767,700			$	385,500
Investment in Stanford		1,445,500				0
Tradenames		214,300				321,000
Property and equipment (net)		919,800				223,300
Patents		0				123,400
Total assets	$	3,347,300			$	1,053,200
Accounts payable	$	(126,900	)		$	(81,000	)
Common stock		(267,900	)			(86,000	)
Additional paid-in capital		(1,566,000	)			(46,300	)
Retained earnings (above)		(1,386,500	)			(839,900	)
Total liabilities and equities	$	(3,347,300	)		$	(1,053,200	)

At year-end, there were no intra-entity receivables or payables.

Prepare a worksheet to consolidate the financial statements of Plaza, Inc. and its subsidiary Stanford. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.)

Answer 1

Fair value fo consideration Book value Excess of fair over book Assigned to $ $ $ 1,444,875 604,800 840,075 Amortization Life 142000|Indefinite Tradenames (463000-321000) Property & Equip. (276000-255200) Patent (187800-148600) 20800 8 2600 392001 14 2800 Goodwill $ 638,075 Working (-393400+2600+2800) * 20% (86000+46300+472500)*80% (86000+46300+472500)* 20% (142000+20800+39200+638075)*80% (142000+20800+39200+638075)* 20% 483840+310400+672060 77,600 483,840 120,960 672,060 168,015 1,466,300 $ Entry IS 483,840 (86000+46300+472500)*80% 310,400 672,060 (142000+20800+39200+638075)*80% A

NCI $ PLAZA CORPORATION AND STANFORD CORPORATION Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Plaza Stanford Debit Credit (966,400) $ (803,700) 534,300 $ 353,200 226,400 $ 31,900 $ 2,600 - $ 25,200 $ 2,800 (310,400) $ - $ 310,400 (516,100) $ (393,400) $ $ Consolidated Totals (1,770,100) 887,500 260,900 28,000 $ $ $ $ $ (77,600) $ 472,500 Account Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Stanford Net income Consolidated net income NCI share of CNI Plaza share of CNI Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Current assets Investment in Stanford Tradenames Property and equipment Patents Goodwill Total assets Accounts payable Common stock Additional paid-in capital Noncontrolling interest 20,800 (593,700) 77,600 (516,100) (1,138,300) (516,100) 267,900 (1,386,500) 1,153,200 $ 5,200 $ $ $ $ $ $ $ (1,138,300) $ (516,100) $ 267,900 $ (1,386,500) $ 767,700$ 1,445,500 $ 214,300 $ 919,800 $ - $ $ $ $ 1,466,300 Ş (472,500) $ (393,400) 26,000 (839,900) 385,500 $ 321,000 $ 223,300 $ 123,400 $ $ 1,053,200 (81,000) (86,000) $ (46,300) $ $ 20,800 142,000 20,800 39,200 638,075 $ $ 2,600 2,800 $ $ $ $ 3,347,300 $ (126,900) $ (267,900) $ (1,566,000) $ 677,300 1,161,300 159,800 638,075 3,789,675 (207,900) (267,900) (1,566,000) 86,000 46,300 $ $ s 120,960 168,015 $ Retained earnings, 12/31 Total liabilities and equities $ $ (1,386,500) $ (3,347,300) $ (839,900) (1,053,200)| $ (288,975) $ $ $ (361,375) (1,386,500) (3,789,675) 1,781,475 $ 1,781,475