Question

Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $1,179,200 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,474,000. Also at the acquisition date, Stanford's book value was $631,300.

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)	$	329,900			$	473,300
Property and equipment (net, 8-year remaining life)		259,200				288,800
Patent (14-year remaining life)		155,100				195,700

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	$	(1,007,000	)		$	(823,000	)
Cost of goods sold		556,700				363,100
Depreciation expense		235,900				32,400
Amortization expense						25,900
Equity in income of Stanford		(316,000	)			0
Net income	$	(530,400	)		$	(401,600	)
Retained earnings, 1/1/18	$	(1,169,900	)		$	(485,500	)
Net income		(530,400	)			(401,600	)
Dividends declared		275,300				37,000
Retained earnings, 12/31/18	$	(1,425,000	)		$	(850,100	)
Current assets	$	788,900			$	396,000
Investment in Stanford		1,465,600				0
Tradenames		220,300				329,900
Property and equipment (net)		945,500				226,800
Patents		0				129,200
Total assets	$	3,420,300			$	1,081,900
Accounts payable	$	(130,500	)		$	(86,000	)
Common stock		(275,500	)			(76,000	)
Additional paid-in capital		(1,589,300	)			(69,800	)
Retained earnings (above)		(1,425,000	)			(850,100	)
Total liabilities and equities	$	(3,420,300	)		$	(1,081,900	)

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	(1007000)	(823000)				(1830000)
Cost of goods sold	556700	363100				919800
Depreciation expense	235900	32400	3700			272000
Amortization expense		25900	2900			28800
Equity in income of Stanford	(316000)	0	316000			0
Net income	(530400)	(401600)
Consolidated net income						(609400)
NCI share of CNI					(79000)	79000
Plaza share of CNI						(530400)
Retained earnings, 1/1	(1169900)	(485500)	485500			(1169900)
Net income	(530400)	(401600)				(530400)
Dividends declared	275300	37000		29600	7400	275300
Retained earnings, 12/31	(1425000)	(850100)				(1425000)
Current assets	788900	396000				1184900
Investment in Stanford	1465600		29600	1495200		0
Tradenames	220300	329900	143400			693600
Property and equipment	945500	226800	29600	3700		1198200
Patents	0	129200	40600	2900		166900
Goodwill			629100			629100
Total assets	3420300	1081900				3872700
Accounts payable	(130500)	(86000)				(216500)
Common stock	(275500)	(76000)	76000			(275500)
Additional paid-in capital	(1589300)	(69800)	69800			(1589300)
Noncontrolling interest				294800	(294800)
						(366400)
Retained earnings, 12/31	(1425000)	(850100)				(1425000)
Total liabilities and equities	(3420300)	(1081900)	1826200	1826200		(3872700)

Fair value of consideration	1474000
Book value	631300
Excess of fair value over book value	842700
Assigned to		Life	Amortization
Tradenames (473300-329900)	143400		0
Property and equipment (288800-259200)	29600	8	3700
Patent (195700-155100)	40600	14	2900
Goodwill	629100
			$6600