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Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2019. Adams paid a total of $603,000 in cash for these shares. The 10 percent noncontrolling interest shares traded on a daily basis at fair value of $67,000 both before and after Adams's acquisition. On December 31, 2019, Barstow had the following account balances: Current assets Land Buildings (10-year remaining life) Equipment (5-year remaining life) Patents (10-year remaining life) Notes payable (due in 5 years) Common stock Retained earnings, 12/31/19 Debits Current assets Land Buildings Equipment Investment in Barstow, Inc. December 31, 2021, adjusted trial balances for the two companies follow: Adams Corporation Cost of goods sold Depreciation expense Interest expense Dividends declared Total debits Credits. Notes payable Common stock Retained earnings, 1/1/21 Revenues Investment income. Total credits $ Book Value $ 160,000 120,000 220,000 160,000 0 (200,000) (180,000) (280,000) $ 610,000 380,000 490,000 873,000 702,000 480,000 100,000 40,000 110,000 $ 3,785,000 Fair Value $ 160,000 150,000 200,000 200,000 50,000 (180,000) Barstow, Inc. $ 250,000 150,000 250,000 150,000 0 90,000 55,000 15,000 70,000 $ 1,030,000 860,000 510,000 1,367,000 940,000 108,000 $ 3,785,000 $ 1,030,000 $ 230,000 180,000 340,000 280,000 0 At year-end, there were no intra-entity receivables or payables. a. Prepare schedules for acquisition-date fair-value allocations and amortizations for Adams's investment in Barstow. b. Determine Adams's method of accounting for its investment in Barstow. c.&d. Prepare a consolidation worksheet for Adams Corporation and Barstow, Inc., as of December 31, 2021.

Adams Corporation acquired 90 percent of the outstanding voting shares of Barstow, Inc., on December 31, 2019. Adams paid a total of $603,000 in cash for these shares. The 10 percent noncontrolling interest shares traded on a daily basis at fair value of $67,000 both before and after Adams's acquisition. On December 31, 2019, Barstow had the following account balances: Current assets Land Buildings (10-year remaining life) Equipment (5-year remaining life) Patents (10-year remaining life) Notes payable (due in 5 years) Common stock Retained earnings, 12/31/19 Debits Current assets Land Buildings Equipment Investment in Barstow, Inc. December 31, 2021, adjusted trial balances for the two companies follow: Adams Corporation Cost of goods sold Depreciation expense Interest expense Dividends declared Total debits Credits. Notes payable Common stock Retained earnings, 1/1/21 Revenues Investment income. Total credits $ Book Value $ 160,000 120,000 220,000 160,000 0 (200,000) (180,000) (280,000) $ 610,000 380,000 490,000 873,000 702,000 480,000 100,000 40,000 110,000 $ 3,785,000 Fair Value $ 160,000 150,000 200,000 200,000 50,000 (180,000) Barstow, Inc. $ 250,000 150,000 250,000 150,000 0 90,000 55,000 15,000 70,000 $ 1,030,000 860,000 510,000 1,367,000 940,000 108,000 $ 3,785,000 $ 1,030,000 $ 230,000 180,000 340,000 280,000 0 At year-end, there were no intra-entity receivables or payables. a. Prepare schedules for acquisition-date fair-value allocations and amortizations for Adams's investment in Barstow. b. Determine Adams's method of accounting for its investment in Barstow. c.&d. Prepare a consolidation worksheet for Adams Corporation and Barstow, Inc., as of December 31, 2021.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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### Acquisition Details of Adams Corporation On December 31, 2019, Adams Corporation acquired 90% of the voting shares of Barstow, Inc., paying $603,000 in cash for these shares. The 10% noncontrolling interest shares were valued at $67,000, both before and after the acquisition. #### Account Balances of Barstow, Inc. (December 31, 2019) | Account | Book Value | Fair Value | |------------------------------|------------|------------| | Current assets | $160,000 | $150,000 | | Land | $120,000 | $150,000 | | Buildings (10-year remaining life) | $220,000 | $300,000 | | Equipment (5-year remaining life) | $160,000 | $200,000 | | Patents (10-year remaining life) | $100,000 | $150,000 | | Notes payable (due in 5 years) | $(200,000) | $(250,000) | | Common stock | | | | Retained earnings, 12/31/19 | $(280,000) | | #### Adjusted Trial Balances (December 31, 2021) **Debits** | Account | Adams Corporation | Barstow, Inc. | |-----------------------------|-------------------|---------------| | Current assets | $610,000 | $250,000 | | Land | $380,000 | $150,000 | | Buildings | $490,000 | $250,000 | | Equipment | $873,000 | $150,000 | | Investment in Barstow, Inc. | $702,000 | $0 | | Cost of goods sold | $480,000 | $90,000 | | Depreciation expense | $100,000 | $80,000 | | Interest expense | $40,000 | $15,000 | | Dividends declared | $110,000 | $70,000 | | **Total debits** | $3,785,000 | $1,030,000 | **Credits** | Account | Adams Corporation | Barstow, Inc
Transcribed Image Text:### Acquisition Details of Adams Corporation On December 31, 2019, Adams Corporation acquired 90% of the voting shares of Barstow, Inc., paying $603,000 in cash for these shares. The 10% noncontrolling interest shares were valued at $67,000, both before and after the acquisition. #### Account Balances of Barstow, Inc. (December 31, 2019) | Account | Book Value | Fair Value | |------------------------------|------------|------------| | Current assets | $160,000 | $150,000 | | Land | $120,000 | $150,000 | | Buildings (10-year remaining life) | $220,000 | $300,000 | | Equipment (5-year remaining life) | $160,000 | $200,000 | | Patents (10-year remaining life) | $100,000 | $150,000 | | Notes payable (due in 5 years) | $(200,000) | $(250,000) | | Common stock | | | | Retained earnings, 12/31/19 | $(280,000) | | #### Adjusted Trial Balances (December 31, 2021) **Debits** | Account | Adams Corporation | Barstow, Inc. | |-----------------------------|-------------------|---------------| | Current assets | $610,000 | $250,000 | | Land | $380,000 | $150,000 | | Buildings | $490,000 | $250,000 | | Equipment | $873,000 | $150,000 | | Investment in Barstow, Inc. | $702,000 | $0 | | Cost of goods sold | $480,000 | $90,000 | | Depreciation expense | $100,000 | $80,000 | | Interest expense | $40,000 | $15,000 | | Dividends declared | $110,000 | $70,000 | | **Total debits** | $3,785,000 | $1,030,000 | **Credits** | Account | Adams Corporation | Barstow, Inc
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