Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $1,079,300 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,349,125. Also at the acquisition date, Stanford's book value was $565,100. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Tradenames (indefinite life) $ 292,900 $ 439,200 Property and equipment (net, 8-year remaining life) 241,600 260,000 Patent ( 14-year remaining life) 140,400 182,400 For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies. Plaza Stanford Revenues $ (938,600) $ (719,900) Cost of Good sold 518,900 322,400 Depreciation Expense 219,900 30,200 Amortization Expense 23,000 Equity in income Stanford (271,200) 0 Net Income $ (471,000) $ ( 344,300) Retained earnings, 1/1/18 $ (1,038,800) $ (431,100) Net Income (471,000) (344,300) Dividends declared 244,500 23,000 Retained earnings, 12/31/18 $ (1,265,300) $ (752,400) Currents assets $ 700,600 $ 351,700 Investment in Stanford 1,332,100 0 tradenames 195,600 292,900 Property and equipment (net) 839,500 211,400 Patents 0 117,400 Total assets $ 3,067,800 $ 973,400 Account Payable $ (115,800) $ ( 87,000) Common stock (244,500) (88,000) Additional paid-in capital (1,442,200) (46,000) Retained earnings (above) (1,265,300) (752,400) Total liabilities and equities $ ( 3,067,800) $ (973,400) At year-end, there were no intra-entity receivables or payables. Prepare a worksheet to consolidate the financial statements of Plaza, Inc. and its subsidiary Stanford. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.)
Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $1,079,300 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,349,125. Also at the acquisition date, Stanford's book value was $565,100. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Tradenames (indefinite life) $ 292,900 $ 439,200 Property and equipment (net, 8-year remaining life) 241,600 260,000 Patent ( 14-year remaining life) 140,400 182,400 For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies. Plaza Stanford Revenues $ (938,600) $ (719,900) Cost of Good sold 518,900 322,400 Depreciation Expense 219,900 30,200 Amortization Expense 23,000 Equity in income Stanford (271,200) 0 Net Income $ (471,000) $ ( 344,300) Retained earnings, 1/1/18 $ (1,038,800) $ (431,100) Net Income (471,000) (344,300) Dividends declared 244,500 23,000 Retained earnings, 12/31/18 $ (1,265,300) $ (752,400) Currents assets $ 700,600 $ 351,700 Investment in Stanford 1,332,100 0 tradenames 195,600 292,900 Property and equipment (net) 839,500 211,400 Patents 0 117,400 Total assets $ 3,067,800 $ 973,400 Account Payable $ (115,800) $ ( 87,000) Common stock (244,500) (88,000) Additional paid-in capital (1,442,200) (46,000) Retained earnings (above) (1,265,300) (752,400) Total liabilities and equities $ ( 3,067,800) $ (973,400) At year-end, there were no intra-entity receivables or payables. Prepare a worksheet to consolidate the financial statements of Plaza, Inc. and its subsidiary Stanford. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
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Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $1,079,300 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,349,125. Also at the acquisition date, Stanford's book value was $565,100. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows:
| Book Value | Fair Value | |
| Tradenames (indefinite life) | $ 292,900 | $ 439,200 |
| Property and equipment (net, 8-year remaining life) | 241,600 | 260,000 |
| Patent ( 14-year remaining life) | 140,400 | 182,400 |
For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies.
| Plaza | Stanford | |
| Revenues | $ (938,600) | $ (719,900) |
| Cost of Good sold | 518,900 | 322,400 |
| Depreciation Expense | 219,900 | 30,200 |
| Amortization Expense | 23,000 | |
| Equity in income Stanford | (271,200) | 0 |
| Net Income | $ (471,000) | $ ( 344,300) |
| $ (1,038,800) | $ (431,100) | |
| Net Income | (471,000) | (344,300) |
| Dividends declared | 244,500 | 23,000 |
| Retained earnings, 12/31/18 | $ (1,265,300) | $ (752,400) |
| Currents assets | $ 700,600 | $ 351,700 |
| Investment in Stanford | 1,332,100 | 0 |
| tradenames | 195,600 | 292,900 |
| Property and equipment (net) | 839,500 | 211,400 |
| Patents | 0 | 117,400 |
| Total assets | $ 3,067,800 | $ 973,400 |
| Account Payable | $ (115,800) | $ ( 87,000) |
| Common stock | (244,500) | (88,000) |
| Additional paid-in capital | (1,442,200) | (46,000) |
| Retained earnings (above) | (1,265,300) | (752,400) |
| Total liabilities and equities | $ ( 3,067,800) | $ (973,400) |
At year-end, there were no intra-entity receivables or payables.
Prepare a worksheet to consolidate the financial statements of Plaza, Inc. and its subsidiary Stanford. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all
credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.)
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