# Use the following data for problems 1015 on january 1

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Use the following data for Problems 10–15:On January 1, Jarel acquired 80 percent of the outstanding voting stock of Suarez for \$260,000cash consideration. The remaining 20 percent of Suarez had an acquisition-date fair value of\$65,000. On January 1, Suarez possessed equipment (5-year remaining life) that was under-valued on its books by \$25,000. Suarez also had developed several secret formulas that Jarelassessed at \$50,000. These formulas, although not recorded on Suarez’s financial records, wereestimated to have a 20-year future life.As of December 31, the financial statements appeared as follows:LO 5-7JarelSuarezRevenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\$(300,000)\$(200,000)Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . .140,00080,000Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20,00010,000Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\$(140,000)\$(110,000)Retained earnings, 1/1 . . . . . . . . . . . . . . . . . . . . . . . .\$(300,000)\$(150,000)Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(140,000)(110,000)Dividends declared. . . . . . . . . . . . . . . . . . . . . . . . . . .–0––0–Retained earnings, 12/31 . . . . . . . . . . . . . . . . . . . .\$(440,000)\$(260,000)Cash and receivables . . . . . . . . . . . . . . . . . . . . . . . . .\$210,000\$90,000Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150,000110,000Investment in Suarez . . . . . . . . . . . . . . . . . . . . . . . . .260,000–0–Equipment (net). . . . . . . . . . . . . . . . . . . . . . . . . . . . .440,000300,000Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\$ 1,060,000\$ 500,000Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\$(420,000)\$(140,000)Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . .(200,000)(100,000)Retained earnings, 12/31 . . . . . . . . . . . . . . . . . . . . . .(440,000)(260,000)Total liabilities and equities. . . . . . . . . . . . . . . . . . .\$(1,060,000)\$(500,000)During the year, Jarel bought inventory for \$80,000 and sold it to Suarez for \$100,000. Ofthese goods, Suarez still owns 60 percent on December 31.10. What is the total of consolidated revenues?a.\$500,000.b.\$460,000.c.\$420,000.d.\$400,000.11. What is the total of consolidated cost of goods sold?a.\$140,000.b.\$152,000.c.\$132,000.d.\$145,000.12. What is the total of consolidated expenses?a.\$30,000.b.\$36,000.c.\$37,500.d.\$39,000.LO 5-2LO 5-2, 5-3LO 3-1(Chapter 3)
Consolidated Financial Statements—Intra-Entity Asset Transactions23913. What is the consolidated total of noncontrolling interest appearing on the balance sheet?a.\$85,500.b.\$83,100.c.\$87,000.d.\$70,500.14. What is the consolidated total for equipment (net) at December 31?a.\$740,000.b.\$756,000.c.\$760,000.d.\$765,000.15. What is the consolidated total for inventory at December 31?a.\$240,000.b.\$248,000.c.\$250,000.d.\$260,000.16. Following are several figures reported for Allister and Barone as of December 31, 2015:LO 5-5LO 5-7LO 5-3LO 5-2, 5-3, 5-5Net IncomeDividendsDeclaredInventory Purchases from Corgan2014\$150,000\$35,000\$100,0002015130,00045,000120,000AllisterBaroneInventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\$500,000\$300,000Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,000,000800,000Investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . .not givenCost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . .500,000400,000Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .230,000300,000Allister acquired 90 percent of Barone in January 2014. In allocating the newly acquiredsubsidiary’s fair value at the acquisition date, Allister noted that Barone had developed acustomer list worth \$78,000 that was unrecorded on its accounting records and had a 4-yearremaining life. Any remaining excess fair value over Barone’s book value was attributed togoodwill. During 2015, Barone sells inventory costing \$130,000 to Allister for \$180,000. Ofthis amount, 10 percent remains unsold in Allister’s warehouse at year-end.Determine balances for the following items that would appear on Allister’s consolidatedfinancial statements for 2015:InventorySalesCost of Goods SoldOperating ExpensesNet Income Attributable to Noncontrolling Interest17. On January 1, 2014, Corgan Company acquired 80 percent of the outstanding voting stockof Smashing, Inc., for a total of \$980,000 in cash and other consideration. At the acquisitiondate, Smashing had common stock of \$700,000, retained earnings of \$250,000, and a noncon-trolling interest fair value of \$245,000. Corgan attributed the excess of fair value over Smash-

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Term
Winter
Professor
N/A
Tags
Generally Accepted Accounting Principles, Noncontrolling Interest