Thomas, the President of Turkey Corporation (Turkey), a fabric material company, gobbled up Stuffing Company (Stuffing), a pillow manufacturer, when Turkey paid $26,800 cash for a 70% interest in Stuffing on January 1, 2009, when Stuffing's stockholders’ equity consisted of $15,000 Capital Stock and $9,000 of Retained Earnings.
Stuffing' s Assets and Liabilities were tailored specifically for this company and had total Fair Market Value differentials as follows at the time of acquisition:
Inventory was undervalued by $1,000 and were sold evenly over a two year period starting at the date of acquisition
Plant Assets with a 5 yr life were undervalued by $5,000
Trade Marks with a 20 yr life and $6,000 in value were not recorded
A mortgage with 10 yrs of remaining payments were overvalued by $1,000
Any remaing difference in Cost vs Book was attributed to Goodwill
1. Turkey sold feathers that cost $4,000 to Stuffing for $4,800 during 2009 and one-half of these feathers remained in stock by Stuffing on December 31, 2009.
2. During 2010 Turkey Corporation sold feathers that cost $5,000 to Stuffing for $6,000 and 30% of these feathers remained unsold by Stuffing on December 31, 2010. Stuffing Company owed Turkey $700 on account at year-end 2010.
3. Turkey Corporation sold a plucking machine with a 5-year remaining life and a book value of $4,000 to Stuffing for $5,000 on January 1, 2010. Straight-line depreciation is used.
4. In 2010 Turkey shaved the price to $4,000 on a turkey feather trimming machine it bought from Stuffing when the trimming machine had a book value of $6,000 with a 10 year remaining life.
5. Turkey and Stuffing declared annual dividends of $10,000 and $3,000, respectively so that their shareholders could share in the gravy.
6. Separate financial statements for Turkey and Stuffing appear on partially completed consolidation working papers.
Please prepare all the required carryforward schedules
Please prepare the equity entries for the Parent for 2010
We need to put the Stuffing back into the Turkey as a consolidated group as of December 31, 2010. So please complete the working papers to consolidate the financial statements for 2010 including all entries required in good journal form. Also prepare all proofs that you deem necessary (please note I am looking for your discretion on what you should prove but I believe there is a minimum that you need to do, so use your professional judgment and hopefully you will do all the right ones). If you believe there is an error in the underlying accounting of the parent's equity accounting please make the appropriate correcting entry
Recently Asked Questions
- I do not understand this homework problem. I do not know how to find the acceleration of the magnitude.
- Create a new table containing the category code and description for the categories of books sold by JustLee Books. The table should be called CATEGORY, and the
- Please refer to the attachment to answer this question. This question was created from 8.1.3 Final Exam_ U.S. Government and Politics Final Exam.pdf.