Investment in Skyline Trademarks 450000 450000 0 50000 0 50000 Land, Buildings and Equipment Patented Technology 637000 283000 920000 0 130000 130000 Goodwill 0 Total Assets 1502000 725000 2227000 Liabilities and Equities Accounts Payable -463000 -215000 -678000 Non-Controlling Interest 0 0 0 -530000 Common Stock -410000 -120000 -321000 Additional Paid-in-Capital -291000 -30000 -698000 Retained Earnings 12/31/21 -338000 -360000 Total Liabilities and Equities -1502000 -725000 0 0 -2227000 Required: 1. Complete the consolidation worksheet. On January 1, 2020 Parkway Inc. issued securities with a total fair value of $450,000 for 90 percent of Skyline Corporation. At the time the remaining 10% interest was valued at $40,000. Although Skyline's book value at the acquisition date was $200,000, the Company's trademarks were undervalued by $30,000. Additionally, Skyline's patented technology was undervalued by $100,000. The trademarks were considered to have indefinite lives while the patented technology was expected to have an estimated life of 10 years. In 2020, Skyline sold Parkway inventory costing $30,000 for $50,000. As of 12/31/20, Parkway had resold only 28% of the inventory (72% of the gross profits associated with Skyline's sale remained in inventory). In 2021, Parkway purchased $80,000 of inventory from Skyline, with Skyline's cost for this inventory equaling $40,000. At the end of 2021, Parkway held $28,000 of the Skyline 2021 purchases in its inventory and none of the 2020 purchases. Skyline still owes Parkway $6,000 related to its 2021 inventory purchases. Separate financial statements for the two companies follow: Income Statement Revenues Parkway Skyline -627000 -358000 Consolidation Entries DR+ CR- Totals -985000 Cost of goods Sold 289000 195000 484000 Operating Expenses Dividend Income -Skyline 170000 75000 -18000 245000 -18000 Net Income -186000 -88000 Minority Interest in Skyline's Earnings Parkways Interest in Skyline's Earnings -274000 Statement of Retained Earnings Retained Earnings 1/1/21 -222000 -292000 -514000 Net Income Dividends Paid Retained Earnings 12/31/21 -186000 70000 -338000 -88000 -274000 20000 -360000 90000 -698000 Balance Sheet Cash & Receivables Inventory 134000 150000 284000 281000 112000 393000

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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I need help with this practice intitial value method problem

Investment in Skyline
Trademarks
450000
450000
0
50000
0
50000
Land, Buildings and Equipment
Patented Technology
637000
283000
920000
0
130000
130000
Goodwill
0
Total Assets
1502000
725000
2227000
Liabilities and Equities
Accounts Payable
-463000
-215000
-678000
Non-Controlling Interest
0
0
0
-530000
Common Stock
-410000 -120000
-321000
Additional Paid-in-Capital
-291000 -30000
-698000
Retained Earnings 12/31/21
-338000 -360000
Total Liabilities and Equities
-1502000
-725000
0
0
-2227000
Required:
1. Complete the consolidation worksheet.
Transcribed Image Text:Investment in Skyline Trademarks 450000 450000 0 50000 0 50000 Land, Buildings and Equipment Patented Technology 637000 283000 920000 0 130000 130000 Goodwill 0 Total Assets 1502000 725000 2227000 Liabilities and Equities Accounts Payable -463000 -215000 -678000 Non-Controlling Interest 0 0 0 -530000 Common Stock -410000 -120000 -321000 Additional Paid-in-Capital -291000 -30000 -698000 Retained Earnings 12/31/21 -338000 -360000 Total Liabilities and Equities -1502000 -725000 0 0 -2227000 Required: 1. Complete the consolidation worksheet.
On January 1, 2020 Parkway Inc. issued securities with a total fair value of $450,000 for 90 percent
of Skyline Corporation. At the time the remaining 10% interest was valued at $40,000.
Although Skyline's book value at the acquisition date was $200,000, the Company's trademarks
were undervalued by $30,000. Additionally, Skyline's patented technology
was undervalued by $100,000. The trademarks were considered to have indefinite lives while
the patented technology was expected to have an estimated life of 10 years.
In 2020, Skyline sold Parkway inventory costing $30,000 for $50,000. As of 12/31/20,
Parkway had resold only 28% of the inventory (72% of the gross profits associated with Skyline's sale remained
in inventory). In 2021, Parkway purchased $80,000 of inventory from Skyline, with Skyline's cost
for this inventory equaling $40,000. At the end of 2021, Parkway held $28,000 of the Skyline 2021 purchases
in its inventory and none of the 2020 purchases.
Skyline still owes Parkway $6,000 related to its 2021 inventory purchases.
Separate financial statements for the two companies follow:
Income Statement
Revenues
Parkway Skyline
-627000 -358000
Consolidation Entries
DR+
CR-
Totals
-985000
Cost of goods Sold
289000 195000
484000
Operating Expenses
Dividend Income -Skyline
170000
75000
-18000
245000
-18000
Net Income
-186000
-88000
Minority Interest in Skyline's Earnings
Parkways Interest in Skyline's Earnings
-274000
Statement of Retained Earnings
Retained Earnings 1/1/21
-222000
-292000
-514000
Net Income
Dividends Paid
Retained Earnings 12/31/21
-186000
70000
-338000
-88000
-274000
20000
-360000
90000
-698000
Balance Sheet
Cash & Receivables
Inventory
134000 150000
284000
281000
112000
393000
Transcribed Image Text:On January 1, 2020 Parkway Inc. issued securities with a total fair value of $450,000 for 90 percent of Skyline Corporation. At the time the remaining 10% interest was valued at $40,000. Although Skyline's book value at the acquisition date was $200,000, the Company's trademarks were undervalued by $30,000. Additionally, Skyline's patented technology was undervalued by $100,000. The trademarks were considered to have indefinite lives while the patented technology was expected to have an estimated life of 10 years. In 2020, Skyline sold Parkway inventory costing $30,000 for $50,000. As of 12/31/20, Parkway had resold only 28% of the inventory (72% of the gross profits associated with Skyline's sale remained in inventory). In 2021, Parkway purchased $80,000 of inventory from Skyline, with Skyline's cost for this inventory equaling $40,000. At the end of 2021, Parkway held $28,000 of the Skyline 2021 purchases in its inventory and none of the 2020 purchases. Skyline still owes Parkway $6,000 related to its 2021 inventory purchases. Separate financial statements for the two companies follow: Income Statement Revenues Parkway Skyline -627000 -358000 Consolidation Entries DR+ CR- Totals -985000 Cost of goods Sold 289000 195000 484000 Operating Expenses Dividend Income -Skyline 170000 75000 -18000 245000 -18000 Net Income -186000 -88000 Minority Interest in Skyline's Earnings Parkways Interest in Skyline's Earnings -274000 Statement of Retained Earnings Retained Earnings 1/1/21 -222000 -292000 -514000 Net Income Dividends Paid Retained Earnings 12/31/21 -186000 70000 -338000 -88000 -274000 20000 -360000 90000 -698000 Balance Sheet Cash & Receivables Inventory 134000 150000 284000 281000 112000 393000
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