Kirby Moore Sales ..... Cost of goods sold. Operating and interest expenses Net income.... Retained earnings, 1/1/18. Net income..... Dividends declared.. Retained earnings, 12/31/18. $ (800,000) $ (600,000) 400,000 160,000 $ (40,000) 500,000 $ (200,000) $ (990,000) $ (550,000) 130,000 -0- $ (590,000) $(1,060,000) Moore Kirby $ 217,000 224,000 657,000 600,000 1,000,000 (100,000) 200,000 $ 2,798,000 Cash and receivables.. $ 180,000 Inventory.. Investment in Kirby. Equipment (net). Buildings.... Accumulated depreciation-buildings Other assets. 160,000 -0- 420,000 650,000 (200,000) 100,000 $ 1,310,000 $ (570,000) (150,000) (590,000) $(1,310,000) Total assets Liabilities.... $(1,138,000) (600,000) |(1,060,000) $(2,798,000) Common stock Retained earnings, 12/31/18. Total liabilities and equity .
Following are financial statements for Moore Company and Kirby Company for 2018:
• Moore purchased 90 percent of Kirby on January 1, 2017, for $657,000 in cash. On that date, the 10 percent noncontrolling interest was assessed to have a $73,000 fair value. Also at the acquisition date, Kirby held equipment (four-year remaining life) undervalued in its financial records by $20,000 and interest-bearing liabilities (five-year remaining life) overvalued by $40,000. The rest of the excess fair over book value was assigned to previously unrecognized brand names and amortized over a 10-year life.
• During 2017 Kirby reported a net income of $80,000 and declared no dividends.
• Each year Kirby sells Moore inventory at a 20 percent gross profit rate. Intra-entity sales were $145,000 in 2017 and $160,000 in 2018. On January 1, 2018, 30 percent of the 2017 transfers were still on hand, and on December 31, 2018, 40 percent of the 2018 transfers remained.
• Moore sold Kirby a building on January 2, 2017. It had cost Moore $100,000 but had $90,000 in
Determine all consolidated balances either computationally or by using a worksheet.
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How was the remaining excess of fair value assigned to brand names calculated - 50,000?
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