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Question: Protrade Corporation acquired 80 percent of the

Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $612,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft’s identifiable assets and liabilities at a collective net fair value of $765,000, and the fair value of the 20 percent noncontrolling interest was $153,000. No excess fair value over book value amortization accompanied the acquisition. The following selected account balances are from the individual financial records of these two companies as of December 31, 2021:
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $612,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft’s identifiable assets and liabilities at a collective net fair value of $765,000, and the fair value of the 20 percent noncontrolling interest was $153,000. No excess fair value over book value amortization accompanied the acquisition.
The following selected account balances are from the individual financial records of these two companies as of December 31, 2021:
Each of the following problems is an independent situation:
a. Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra- entity transfers were $114,000 in 2020 and $134,000 in 2021. Of this inventory, Seacraft retained and then sold $52,000 of the 2020 transfers in 2021 and held $66,000 of the 2021 transfers until 2022.
Determine balances for the following items that would appear on consolidated financial state- ments for 2021:
Cost of Goods Sold 
Inventory
Net Income Attributable to Noncontrolling Interest
b. Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra- entity transfers were $74,000 in 2020 and $104,000 in 2021. Of this inventory, $45,000 of the 2020 transfers were retained and then sold by Protrade in 2021, whereas $59,000 of the 2021 transfers were held until 2022.
Determine balances for the following items that would appear on consolidated financial state- ments for 2021:
Cost of Goods Sold 
Inventory
Net Income Attributable to Noncontrolling Interest
c. Protrade sells Seacraft a building on January 1, 2020, for $128,000, although its book value was only $74,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value.
Determine balances for the following items that would appear on consolidated financial statements for 2021:
Buildings (net) 
Operating Expenses
Net Income Attributable to Noncontrolling Interest

Each of the following problems is an independent situation: a. Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra- entity transfers were $114,000 in 2020 and $134,000 in 2021. Of this inventory, Seacraft retained and then sold $52,000 of the 2020 transfers in 2021 and held $66,000 of the 2021 transfers until 2022. Determine balances for the following items that would appear on consolidated financial state- ments for 2021: Cost of Goods Sold Inventory Net Income Attributable to Noncontrolling Interest b. Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra- entity transfers were $74,000 in 2020 and $104,000 in 2021. Of this inventory, $45,000 of the 2020 transfers were retained and then sold by Protrade in 2021, whereas $59,000 of the 2021 transfers were held until 2022. Determine balances for the following items that would appear on consolidated financial state- ments for 2021: Cost of Goods Sold Inventory Net Income Attributable to Noncontrolling Interest c. Protrade sells Seacraft a building on January 1, 2020, for $128,000, although its book value was only $74,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value. Determine balances for the following items that would appear on consolidated financial statements for 2021: Buildings (net) Operating Expenses Net Income Attributable to Noncontrolling Interest


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> Several years ago, Brant, Inc., sold $900,000 in bonds to the public. Annual cash interest of 9 percent ($81,000) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent. At the beginning of 2019, Zack Corporation (a wholly o

> Highlight, Inc., owns all outstanding stock of Kiort Corporation. The two companies report the following balances for the year ending December 31, 2020: On January 1, 2020, Highlight acquired on the open market bonds for $108,000 originally issued by Kio

> Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. C

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> On January 1, 2021, Stamford issues 10,000 additional shares of common stock for $25 per share. Neill acquires 8,000 of these shares. How will this transaction affect the parent company’s Additional Paid-In Capital account? a. Has no effect on it b. Incr

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> Angela, Inc., holds a 90 percent interest in Corby Company. During 2020, Corby sold inventory costing $77,000 to Angela for $110,000. Of this inventory, $40,000 worth was not sold to outsiders until 2021. During 2021, Corby sold inventory costing $72,000

> Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago. During 2020, Skybox sold inventory costing $160,000 to Parkette for $200,000. A total of 18 percent of this inventory was not sold to outsiders until 2021. During 2021, S

> What is the total for consolidated cost of goods sold? a. $670,000 b. $690,000 c. $788,000 d. $790,000

> What is the total for consolidated inventory? a. $143,000 b. $173,000 c. $175,000 d. $183,000

> Go to https://independentsector.org/resource/principles/. Click on “Principles Guide for Good Governance and Ethical Practice.” Read through the 33 Principles to be followed. Focus on the explanation for the six principles under the heading of Strong Fin

> What is the total for consolidated sales revenue? a. $800,000 b. $970,000 c. $1,000,000 d. $1,100,000

> Kelly Company acquired 75 percent of Helton Company’s outstanding voting shares on January 1, 2019, in exchange for $285,000 in cash. The subsidiary’s stockholders’ equity accounts totaled $326,000, a

> On January 1, 2020, Panther, Inc., issued securities with a total fair value of $577,000 for 100 per- cent of Stark Corporation’s outstanding ownership shares. Stark has long supplied inventory to Panther. The companies expect to achiev

> The individual financial statements for Gibson Company and Keller Company for the year ending December 31, 2021, follow. Gibson acquired a 60 percent interest in Keller on January 1, 2020, in exchange for various considerations totaling $570,000. At the

> Assume the same basic information as presented in Problem 34 except that Monica employs the equity method of accounting. Hence, it reports $102,740 investment income for 2021 with an Investment account balance of $826,220. Under these circumstances, prep

> On January 1, 2019, Monica Company acquired 70 percent of Young Company’s outstanding common stock for $665,000. The fair value of the noncontrolling interest at the acquisition date was $285,000. Young reported stockholdersâ&#128

> On January 1, 2019, Plymouth Corporation acquired 80 percent of the outstanding voting stock of Sander Company in exchange for $1,200,000 cash. At that time, although Sander’s book value was $925,000, Plymouth assessed Sanderâ&#12

> On January 1, 2020, McIlroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $372,000. Stinson’s book value on that date consisted of common stock of $100,000 and retained earnings of $220,000. Also, the a

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> Compute the balances in Problem 29 again, assuming that all intra-entity transfers were made from ClipRite to ProForm.

> One of your colleagues has been hired by the Todd, Johnson, and Samuels partnership to guide it through the liquidation process. The partnership currently has cash in a bank account that exceeds the amount it owes creditors, and has other assets consisti

> ProForm acquired 70 percent of ClipRite on June 30, 2020, for $910,000 in cash. Based on Clip- Rite’s acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per yea

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> On January 1, 2021, Sledge had common stock of $120,000 and retained earnings of $260,000. During that year, Sledge reported sales of $130,000, cost of goods sold of $70,000, and operating expenses of $40,000. On January 1, 2019, Percy, Inc., acquired 80

> Allison Corporation acquired 90 percent of Bretton on January 1, 2019. Of Bretton’s total acquisition-date fair value, $60,000 was allocated to undervalued equipment (with a 10-year remaining life) and $80,000 was attributed to franchis

> On January 1, 2021, Ackerman sold equipment to Brannigan (a wholly owned subsidiary) for $200,000 in cash. The equipment had originally cost $180,000 but had a book value of only $110,000 when transferred. On that date, the equipment had a five-year rema

> Padre holds 100 percent of the outstanding shares of Sonora. On January 1, 2019, Padre transferred equipment to Sonora for $95,000. The equipment had cost $130,000 originally but had a $50,000 book value and five-year remaining life at the date of transf

> On January 1, 2020, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $810,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $800,000 and Retained Earnings of $40,000. The acqu

> Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2021, the companies had the following account balances: Intra-entity sales of $320

> On January 1, 2020, Doone Corporation acquired 60 percent of the outstanding voting stock of Rockne Company for $300,000 consideration. At the acquisition date, the fair value of the 40 percent noncontrolling interest was $200,000, and Rockne’s assets an

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> Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2020, when Scenic had a net book value of $400,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per y

> On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $980,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $700,000, retained earnings of $250,0

> The following are several figures reported for Allister and Barone as of December 31, 2021: Allister acquired 90 percent of Barone in January 2020. In allocating the newly acquired sub- sidiary’s fair value at the acquisition date, Alli

> What is the consolidated total for inventory at December 31? a. $240,000 b. $248,000 c. $250,000 d. $260,000

> What is the consolidated total for equipment (net) at December 31? a. $735,000 b. $740,000 c. $760,000 d. $765,000

> What is the consolidated total of noncontrolling interest appearing on the balance sheet? a. $85,500 b. $83,100 c. $87,000 d. $70,500

> What is the total of consolidated expenses? a. $30,000 b. $36,000 c. $37,500 d. $39,000

> What is the total of consolidated cost of goods sold? a. $140,000 b. $152,000 c. $132,000 d. $145,000

> What is the total of consolidated revenues? a. $500,000 b. $460,000 c. $420,000 d. $400,000

> Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2019, Thomson acquired a building with a 10-year life for $460,000. Thomson depreciated the building on the straight-line basis assuming no salvage value.

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> Assuming that Pride, in its internal records, accounts for its investment in Star using the equity method, what amount of retained earnings would Pride report on its January 1, 2021, consolidated balance sheet? a. $250,000 b. $286,000 c. $315,000 d. $360

> What is consolidated net income for 2021? a. $194,000 b. $197,500 c. $203,000 d. $238,000

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> On January 1, 2020, Bretz, Inc., acquired 60 percent of the outstanding shares of Keane Company for $573,000 in cash. The price paid was proportionate to Keane’s total fair value although at the date of acquisition, Keane had a total bo

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> Using the same information from P12-2, assume that Cupcakes-R-Us determines that the likelihood of the expected future cash flows under Estimate 1 is 70% and 30% under Estimate 2 Required a. Compute the carrying value of Cupcakes-R-Usâ€&#153

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2.99

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