Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $567,000 in cash. The subsidiary's stockholders' equity accounts totaled $551,000 and the noncontrolling interest had a fair value of $63,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $38,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (five-year remaining life).
Brey reported net income from its own operations of $89,000 in 2016 and $105,000 in 2017. Brey declared dividends of $31,500 in 2016 and $35,500 in 2017.
Year | Cost to Brey | Transfer Price to Pitino | Inventory Remaining at Year-End (at transfer price) | ||||||
2016 | $ | 94,000 | $ | 240,000 | $ | 50,000 | |||
2017 | 143,000 | 260,000 | 62,000 | ||||||
2018 | 171,000 | 285,000 | 65,000 | ||||||
At December 31, 2018, Pitino owes Brey $41,000 for inventory acquired during the period.
The following separate account balances are for these two companies for December 31, 2018, and the year then ended.
Note: Parentheses indicate a credit balance.
Pitino | Brey | ||||||
Sales revenues | $ | (912,000 | ) | $ | (491,000 | ) | |
Cost of goods sold | 540,000 | 234,000 | |||||
Expenses | 187,900 | 108,000 | |||||
Equity in earnings of Brey | (125,010 | ) | 0 | ||||
Net income | $ | (309,110 | ) | $ | (149,000 | ) | |
Retained earnings, 1/1/18 | $ | (538,000 | ) | $ | (328,000 | ) | |
Net income (above) | (309,110 | ) | (149,000 | ) | |||
Dividends declared | 154,000 | 61,000 | |||||
Retained earnings, 12/31/18 | $ | (693,110 | ) | $ | (416,000 | ) | |
Cash and receivables | $ | 171,000 | $ | 123,000 | |||
Inventory | 380,000 | 310,000 | |||||
Investment in Brey | 704,700 | 0 | |||||
Land, buildings, and equipment (net) | 989,000 | 353,000 | |||||
Total assets | $ | 2,244,700 | $ | 786,000 | |||
Liabilities | $ | (911,590 | ) | $ | (20,000 | ) | |
Common stock | (640,000 | ) | (350,000 | ) | |||
Retained earnings, 12/31/18 | (693,110 | ) | (416,000 | ) | |||
Total liabilities and equity | $ | (2,244,700 | ) | $ | (786,000 | ) | |
h. Prepare the 2018 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances
Consolidation Worksheet Entries
Note: Enter debits before credits.
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1. Retained Earnings Opening balance of Company Brey = Opening Balance - Unrealized Gross profit
Retained Earnings Opening balance of Company Brey = 328000 - 62000 * (260000 - 143000) / 260000
Retained Earnings Opening balance of Company Brey = 328000 - 27900
Retained Earnings Opening balance of Company Brey = $300100
2. Controlling Interest = (Common Stock in B + Retained Earnings) * 90%
Controlling Interest = (350000 + 300100) * 90%
Controlling Interest = $585090
Non Controlling interest = (350000 + 300100) * 10%
Non Controlling interest = $65010
Entry
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $567,000...
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $423,000 in cash. The subsidiary's stockholders' equity accounts totaled $407,000 and the noncontrolling interest had a fair value of $47,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $31,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four-year remaining life). Brey reported net income from its own...
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $423,000 in cash. The subsidiary's stockholders' equity accounts totaled $407,000 and the noncontrolling interest had a fair value of $47,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $31,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four-year remaining life). Brey reported net income from its own...
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $396,000 in cash. The subsidiary's stockholders' equity accounts totaled $380,000 and the noncontrolling interest had a fair value of $44,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $25,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four-year remaining life). Brey reported net income from its own...
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $423,000 in cash. The subsidiary's stockholders' equity accounts totaled $407,000 and the noncontrolling interest had a fair value of $47,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $31,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four-year remaining life). Brey reported net income from its own...
Pitino acquired 80 percent of Brey's outstanding shares on January 1, 2016, in exchange for $369,000 in cash. The subsidiary's stockholders' equity accounts totaled $353,000 and the noncontrolling interest had a fair value of $92,250 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $19,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (five-year remaining life). Brey reported net income from its own...
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $567,000 in cash. The subsidiary's stockholders' equity accounts totaled $551,000 and the noncontrolling interest had a fair value of $63,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $38,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (five-year remaining life). Brey reported net income from its own operations...
please answer all Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $405,000 in cash. The subsidiarys stockholders' equity accounts totaled $389,000 and the noncontrolling interest had a fair value of $45,000 on that day. However a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $27,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four year remaining life) Brey reported net...
first four parts done, need rest please. Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $405,000 in cash. The subsidiarys stockholders' equity accounts totaled $389,000 and the noncontrolling interest had a fair value of $45,000 on that day. However a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $27,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four year remaining...
Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies. Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $423,000 in cash. The subsidiary's stockholders' equity accounts totaled $407,000 and the noncontrolling interest had a fair value of $47,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $31,000. Pitino assigned the rest of the excess fair value over book...
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