Question

Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $1,079,300 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,349,125. Also at the acquisition date, Stanford's book value was $565,100.

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)	$	292,900			$	439,200
Property and equipment (net, 8-year remaining life)		241,600				260,000
Patent (14-year remaining life)		140,400				182,400

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	$	(938,600	)		$	(719,900	)
Cost of goods sold		518,900				322,400
Depreciation expense		219,900				30,200
Amortization expense						23,000
Equity in income of Stanford		(271,200	)			0
Net income	$	(471,000	)		$	(344,300	)
Retained earnings, 1/1/18	$	(1,038,800	)		$	(431,100	)
Net income		(471,000	)			(344,300	)
Dividends declared		244,500				23,000
Retained earnings, 12/31/18	$	(1,265,300	)		$	(752,400	)
Current assets	$	700,600			$	351,700
Investment in Stanford		1,332,100				0
Tradenames		195,600				292,900
Property and equipment (net)		839,500				211,400
Patents		0				117,400
Total assets	$	3,067,800			$	973,400
Accounts payable	$	(115,800	)		$	(87,000	)
Common stock		(244,500	)			(88,000	)
Additional paid-in capital		(1,442,200	)			(46,000	)
Retained earnings (above)		(1,265,300	)			(752,400	)
Total liabilities and equities	$	(3,067,800	)		$	(973,400	)

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

PLAZA CORPORATION AND STANFORD CORPORATION Consolidation Worksheet For Year Ending December 31, 2018
Account			Consolidation Entries			consolidated
	Plaza	Stanford	Debit	Credit	NCI	Totals
Revenues	(938600)	(719900)				(1658500)
Cost of goods sold	518900	322400				841300
Depreciation expense	219900	30200	2300			252400
Amortization expense		23000	3000			26000
Equity in income of Stanford	(271200)	0	271200			0
Net income	(471000)	(344300)
Consolidated net income						(538800)
NCI share of CNI					(67800)	67800
Plaza share of CNI						(471000)
Retained earnings, 1/1	(1038800)	(431100)	431100			(1038800)
Net income	(471000)	(344300)				(471000)
Dividends declared	244500	23000		18400	4600	244500
Retained earnings, 12/31	(1265300)	(752400)				(1265300)
Current assets	700600	351700				1052300
Investment in Stanford	1332100		18400	1350500		0
Tradenames	195600	292900	146300			634800
Property and equipment	839500	211400	18400	2300		1067000
Patents	0	117400	42000	3000		156400
Goodwill			577325			577325
Total assets	3067800	973400				3487825
Accounts payable	(115800)	(87000)				(202800)
Common stock	(244500)	(88000)	88000			(244500)
Additional paid-in capital	(1442200)	(46000)	46000			(1442200)
Noncontrolling interest				472625	(472625)
						(535825)
Retained earnings, 12/31	(1265300)	(752400)				(1265300)
Total liabilities and equities	(3067800)	(973400)				(3487825)

Fair value of consideration	1349125
Book value	565100
Excess of fair value over book value	784025
Assigned to		Life	Amortization
Tradenames (439200-292900)	146300		0
Property and equipment (260000-241600)	18400	8	2300
Patent (182400-140400)	42000	14	3000
Goodwill	577325
			$5300