Question

The following are several figures reported for Allister and Barone as of December 31, 2021:

	Allister		Barone
Inventory	$	580,000	$	380,000
Sales		1,160,000		960,000
Investment income	not given
Cost of goods sold		580,000		480,000
Operating expenses		270,000		340,000

Allister acquired 90 percent of Barone in January 2020. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $72,000 that was unrecorded on its accounting records and had a six-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2021, Barone sells inventory costing $138,000 to Allister for $196,000. Of this amount, 20 percent remains unsold in Allister's warehouse at year-end.

Determine balances for the following items that would appear on Allister's consolidated financial statements for 2021:

Amounts Inventory Sales Cost of goods sold Operating expenses Net income attributable to noncontrolling interest

Answer 1

fx B с D E 1 2 3 4 Inventory Sales Cost of Goods Sold Operating Expenses Net Income attributable to non controlling interest 948,400 1,924,000 875,600 622,000 5 6 7 5,640 8 9 Working 10 11 12 58000 13 14 Intra Entity Gross Profit (=196000-138000) Inventory unsold Profit in Ending Inventory (58,000*20%) 20% 15 11600 16 17 18 19 Inventory Sales Cost of Goods Sold Operating Expenses Net Income attributable to non controlling interest =580000+380000-11600 =1160000+960000-196000 =580000+480000-196000+11600 = 270000+340000+(72000/6) 20 21 5640 22 23 24 25 26 Net Income ( Barone) Less : Gross Profit in ending inventory Less : Excess fair value adjustment Adjusted Net Income Non controlling interest (%) Non controlling interest 80000 11600 12000 56400 10% 5640 27 28 29 30 31 Less : Excess fair value adjus hent =72000/6 32 33 34 For any doubt please comment. 35 Thank You! Happy Chegging! 36 37