Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $564,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $705,000, and the fair value of the 20 percent noncontrolling interest was $141,000. 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 Seacraft Sales $

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $564,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $705,000, and the fair value of the 20 percent noncontrolling interest was $141,000. 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 Seacraft
Sales $ 820,000   $ 540,000  
Cost of goods sold   380,000     287,000  
Operating expenses   168,000     123,000  
Retained earnings, 1/1/21   920,000     360,000  
Inventory   364,000     128,000  
Buildings (net)   376,000     175,000  
Investment income Not given   0  
 


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 $108,000 in 2020 and $128,000 in 2021. Of this inventory, Seacraft retained and then sold $46,000 of the 2020 transfers in 2021 and held $60,000 of the 2021 transfers until 2022.
Determine balances for the following items that would appear on consolidated financial statements 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 $68,000 in 2020 and $98,000 in 2021. Of this inventory, $39,000 of the 2020 transfers were retained and then sold by Protrade in 2021, whereas $53,000 of the 2021 transfers were held until 2022.
Determine balances for the following items that would appear on consolidated financial statements for 2021:


Cost of Goods Sold
Inventory
Net Income Attributable to Noncontrolling Interest

c.

Protrade sells Seacraft a building on January 1, 2020, for $116,000, although its book value was only $68,000 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

 

 

 

 
 
 
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 7 steps

Blurred answer
Knowledge Booster
Consolidations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education