Question

​On April 1, 2015, Benton Corporation purchased 80% of the outstanding stock of Crandel Company for $425,000. A condensed balance sheet of Crandel Company at the purchase date is shown below.

Problem 4-2 (LO2) 80%, cost, beginning and ending inventory. On April 1, 2015. Benton Corporation purchased 80% of the outstanding stock of for $425,000. A condensed balance sheet of Cra del Company at the purchase date is shown below Company Assets Liabilities and Eq $180,000 Liabilities.. Current assets Long-lived assets (net) ....-.$100,000 200,000 Paid-in capital in excess of par 100,000 Retained earnings.. 100,000 Total liabilities and equity $500,000 Total assets. $500,000 All book values approximated fair values on the purchase date. Any excess cost was attribu- ted to goodwill. The following information was gathered pertaining to the first two years of operation since Benton's purchase of Crandel Company stock: a. Intercompany merchandise sales were summarized as follows: Remaining in Purchaser's Transaction Benton to Crandel Crandel to Benton Benton to Crandel Crandel to Benton Sales Gross Profit Ending Inventory $40,000 20,000 32,000 30,000 Date $9,000 4,000 6,000 3,000 April 1, 2015 to March 31, 2016 April 1, 2016 to 20% 25 20 25 March 31, 2017 b. On March 31, 2017, Benton owed Crandel $10,000, and Crandel owed Benton $5,000 as a result of the intercompany sales.

Answer 1

Answer:
	Working Sheet for Consolidated Financial Statement
1	Share of Holding Pattern:
	Total outstanding stock purchased by Benton Corporation = 80%.
	The Minority Interest = (100-80)% = 20%.
2	Analysis of Profit and Loss:
	Particulars		Pre Acqusition	Post Acquisition	Total
	Paid in capital excess of par		1,00,000.00	-	1,00,000.00
	Retained Earnings		1,00,000.00	40,000.00	1,40,000.00
			2,00,000.00	40,000.00	2,40,000.00
	Less: Unrealised Profit			-1,000.00	-1,000.00
	(4000*25%)
	Less: Unrealised Profit			-750.00	-750.00
	(3000*25%)
			2,00,000.00	38,250.00	2,38,250.00
	Share of Benton		1,60,000.00	30,600.00
	Share of Minority		40,000.00	7,650.00
3	Cost of Control:
	Particulars		Amount($)
	Investment		4,25,000.00
	Less: Face value of common stock		1,60,000.00
	Less: Preacqusistion Profit		1,60,000.00
		Goodwill	1,05,000.00
4	Minority Interest
	Particulars		Amount($)
	Face Value of common stock		40,000.00
	Add: Preacquisition Profit		40,000.00
	Add: Post Acquisition Profit		7,650.00
			87,650.00
5	Combine Profit and Loss account:
	Particulars		Amount($)
	Retained Earnings		11,05,000.00
	Less: Unrealised Profit on March 2016		18,000.00
	(9000*20%)
	Less: Unrealised Profit on March 2017		12,000.00
	(6000*20%)
			10,75,000.00