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Question: House Corporation has been operating profitably


House Corporation has been operating profitably since its creation in 1960. At the beginning of 2019, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule:



House Corporation has been operating profitably since its creation in 1960. -1

House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House’s purchases during 2019 and 2020 and related ending inventory balances follow:



House Corporation has been operating profitably since its creation in 1960. -2

On January 1, 2021, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company’s outstanding common stock. The total price of these shares was $240,000, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2021, House acquired additional inventory from Wilson at a price of $200,000. Of this merchandise, 45 percent is still held at year-end.
Using the three companies’ following financial records for 2021, prepare a consolidation work- sheet. The partial equity method based on separate company incomes has been applied to each investment.



House Corporation has been operating profitably since its creation in 1960. -3


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