On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of Sheridan, Incorporated, for $372,000. Sheridan's book value on that date consisted of common stock of $100,000 and retained earnings of $219,900. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $248,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $79,300 and also had unpatented technology (15- year estimated remaining life) undervalued by $54,900. Any remaining excess acquisition-date fair value was assigned to an indefinite- lived trade name. Since acquisition, Pulaski has applied the equity method to its Investment in Sheridan account. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Transfer Price to Sheridan $ 159,750 150, 400 Ending Balance (at transfer price) $ 53,250 37,600 The individual financial statements for these two companies as of December 31, 2024, and the year then ended follow: Pulaski, Incorporated $ (736,000) 483,700 198,540 (34,256) Sheridan, Incorporated $ (368,000) 224,800 76,600 0 $ (88,016) $ (780, 200) (88,016) 48,300 $ (819,916) $ 279,400 262,400 415, 112 339,000 242,000 0 Cost to Pulaski Year 2023 $ 127,800 2024 112,800 Items Sales Cost of goods sold Operating expenses Equity in earnings in Sheridan Net income Retained earnings, 1/1/24 Net income Dividends declared Retained earnings, 12/31/24 Cash and receivables Inventory Investment in Sheridan Buildings (net) Equipment (net) Patents (net) Total assets Liabilities Commor stock Retained earnings, 12/31/24 Total liabilities and equities Note: Parentheses indicate a credit balance. $ (66,600) $ (283,000) (66,600) 19,000 $ (330,600) $ 150,500 131, 200 0 205,600 89,400 24,000 $ 600, 700 $ (170,100) (100,000) (330,600) $ (1,537,912) $ (600,700) $ 1,537,912 $ (417,996) (300,000) (819,916) Required: a. Show how Pulaski determined the $415,112 Investment in Sheridan account balance. Assume that Pulaski defers 100 percent of downstream intra-entity profits against its share of Sheridan's income. b. Prepare a consolidated worksheet to determine appropriate balances for external financial reporting as of December 31, 2024.

Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $941, 800 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,177,250. Also at the acquisition date, Stanford's book value was $546, 100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 300, 900 $ 360, 900 Property and equipment (net, 8-year remaining life) 233, 600 262, 400 Patent (14-year remaining life) 120, 900 154, 500 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (795, 100) $ (782,600) Cost of goods sold 439, 600 331, 000 Depreciation expense 186, 400 29, 200…

On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $835,275 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $357,975 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $140,000 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is anticipated to have a remaining life of five years. The following financial information is available for these two companies for 2021. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.

On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $2,054,400 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $513,600. Seidel's acquisition-date total book value was $2,040,000. The fair value of Seidel's recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $294,000 and several customer relationships estimated to be worth $216,000 with four-year remaining lives. Any remaining acquisition-date fair value in the Seidel acquisition was considered goodwill. During 2021, Seidel reported $206,400 net income and declared and paid dividends totaling $60,000. Also in 2021, Ackerman reported $420,000 net income, but neither declared nor paid dividends. a. What amount should Ackerman assign to the 20 percent noncontrolling interest of Seidel at the acquisition date? b. How much of…

On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of Sheridan, Incorporated, for $384,600. Sheridan's book value on that date consisted of common stock of $100,000 and retained earnings of $227,300. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $256,400. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $78,400 and also had unpatented technology (15-year estimated remaining life) undervalued by $54,300. Any remaining excess acquisition-date fair value was assigned to an indefinite-lived trade name. Since acquisition, Pulaski has applied the equity method to its Investment in Sheridan account. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Year Cost to Pulaski Transfer Price to Sheridan Ending Balance (at transfer price) 2023 $…

On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of Sheridan, Incorporated, for $420,000. Sheridan's book value on that date consisted of common stock of $100,000 and retained earnings of $248,300. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $280,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $87,100 and also had unpatented technology (15- year estimated remaining life) undervalued by $63,000. Any remaining excess acquisition-date fair value was assigned to an indefinite- lived trade name. Since acquisition, Pulaski has applied the equity method to its Investment in Sheridan account. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Year 2023 2024 Cost to Pulaski Transfer Price to Sheridan Ending Balance (at transfer price) $…

On January 1, 2XX1, Bald Eagle Corporation purchased 100% of the common stock Ohio Enterprises for $1,800,000. This transaction is a "nontaxable" acquisition under the Internal Revenue Code. On the date of acquisition, Ohio had common stock of $600,000 and retained earnings of $840,000. The fair values of Ohio's net assets equal their respective book values except for equipment that is undervalued by $90,000 and an unrecorded brand name valued at $135,000. Assume that the tax bases of Ohio's pre-acquisition identifiable net assets equal their book values. Bald Eagle's tax effective tax rate is 30%. What is the amount of goodwill recorded in connection with this combination? Select one: O a. $135,000 O b. $202,500 O c. $67,500 d. $-0-

On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $792,400 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $339,600 both before and after Truman’s acquisition.   In reviewing its acquisition, Truman assigned a $125,500 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is anticipated to have a remaining life of five years.   The following financial information is available for these two companies for 2021. In addition, the subsidiary’s income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.     Truman   Atlanta Revenues $ (768,485 )   $ (536,000 ) Operating expenses   418,000       378,000   Income of subsidiary   (46,515 )     0   Net income $ (397,000 )   $ (158,000 ) Retained earnings, 1/1/21 $…

On January 1, 2017, Palka, Inc., acquired 70 percent of the outstanding shares of Sellinger Company for $1,666,000 in cash. The price paid was proportionate to Sellinger’s total fair value, although at the acquisition date, Sellinger had a total book value of $2,070,000. All assets acquired and liabilities assumed had fair values equal to book values except for a patent (six-year remaining life) that was undervalued on Sellinger’s accounting records by $300,000. On January 1, 2018, Palka acquired an additional 25 percent common stock equity interest in Sellinger Company for $656,250 in cash. On its internal records, Palka uses the equity method to account for its shares of Sellinger. During the two years following the acquisition, Sellinger reported the following net income and dividends:                                          2017                          2018                                       $525,000                      $701,000                                            Net…

On January 1, 2022, Aspen Company acquired 80 percent of Birch Company's voting stock for $452,000. Birch reported a $505,000 book value, and the fair value of the noncontrolling interest was $113,000 on that date. Then, on January 1, 2023, Birch acquired 80 percent of Cedar Company for $112,000 when Cedar had a $104,000 book value and the 20 percent noncontrolling interest was valued at $28,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life. These companies report the following financial information. Investment income figures are not included. Items Sales: Aspen Company Birch Company Cedar Company Expenses: Aspen Company 2022 $ 517,500 294,500 Not available 2023 2024 $ 715,000 368,000 247,100 $ 935,000 594,600 223,400 $ 557,500 510,000 181,000 $ 55,000 18,000 6,000 Birch Company Cedar Company Dividends declared: $ 477,500 241,000 Not available $ 495,000 305,000 236,000 Aspen Company Birch…