In January 1, 2011, Cullmon Company acquired an 80% interest in Toner Company for a purchase price that was $550,000 over the book value of Toner’s Stockholders’ Equity on the acquisition date. The Cullmon allocated the excess to the following [A] assets: [A] Asset Initial Fair Value Useful Life (years) Patent 300,000 10 Goodwill 250,000 Indefinite $550,000 Toner sells inventory to the Cullmon (upstream) which includes that inventory in products that it (Cullmon), ultimately, sells to customers outside of the controlled group. You have compiled the following data as of 2016 and 2017: 2016 2017 Transfer price for inventory sale $ 671,000 $ 733,000 Cost of goods sold (615,000) (653,000) Gross profit $ 56,000 $ 80,000 % inventory remaining 25% 35% Gross profit deferred $ 14,000 $ 28,000 EOY Receivable/Payable $ 90,000 $ 100,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. Cullmon and the Toner report the following financial statements at December 31, 2017: Income Statement Cullmon Toner Sales $ 6,770,000 $ 2,518,500 Cost of goods sold (4,739,000) (1,511,100) Gross Profit 2,031,000 1,007,400 Equity investment income 246,872 Operating expenses (1,242,600) (654,810) Net income $ 1,035,272 $ 352,590 Statement of Retained Earnings Cullmon Toner BOY Retained Earnings $3,401,248 $1,301,225 Net income 1,035,272 352,590 Dividends (199,210) (35,259) EOY Retained Earnings $4,237,310 $1,618,556 Balance Sheet Cullmon Toner Assets: Cash $ 795,240 $ 696,785 Accounts receivable 866,560 584,292 Inventory 1,313,380 750,513 Equity Investment 1,846,665 PPE, net 6,317,764 1,388,533 $11,139,609 $3,420,123 Liabilities and Stockholders’ Equity: Current Liabilities $ 972,849 $ 584,292 Long-term Liabilities 4,000,000 839,500 Common Stock 1,106,895 167,900 APIC 822,555 209,875 Retained Earnings 4,237,310 1,618,556 $11,139,609 $3,420,123 Compute the end of year noncontrolling interest equity balance.
In January 1, 2011, Cullmon Company acquired an 80% interest in Toner Company for a purchase price that was $550,000 over the book value of Toner’s
|
[A] Asset |
Initial Fair Value |
Useful Life (years) |
|
Patent |
300,000 |
10 |
|
|
250,000 |
Indefinite |
|
$550,000 |
Toner sells inventory to the Cullmon (upstream) which includes that inventory in products that it (Cullmon), ultimately, sells to customers outside of the controlled group. You have compiled the following data as of 2016 and 2017:
|
2016 |
2017 |
|
|
Transfer price for inventory sale |
$ 671,000 |
$ 733,000 |
|
Cost of goods sold |
(615,000) |
(653,000) |
|
Gross profit |
$ 56,000 |
$ 80,000 |
|
% inventory remaining |
25% |
35% |
|
Gross profit deferred |
$ 14,000 |
$ 28,000 |
|
EOY Receivable/Payable |
$ 90,000 |
$ 100,000 |
The inventory not remaining at the end of the year has been sold outside of the controlled group.
Cullmon and the Toner report the following financial statements at December 31, 2017:
|
Income Statement |
||
|
Cullmon |
Toner |
|
|
Sales |
$ 6,770,000 |
$ 2,518,500 |
|
Cost of goods sold |
(4,739,000) |
(1,511,100) |
|
Gross Profit |
2,031,000 |
1,007,400 |
|
Equity investment income |
246,872 |
|
|
Operating expenses |
(1,242,600) |
(654,810) |
|
Net income |
$ 1,035,272 |
$ 352,590 |
|
Statement of |
||
|
Cullmon |
Toner |
|
|
BOY Retained Earnings |
$3,401,248 |
$1,301,225 |
|
Net income |
1,035,272 |
352,590 |
|
Dividends |
(199,210) |
(35,259) |
|
EOY Retained Earnings |
$4,237,310 |
$1,618,556 |
|
|
||
|
Cullmon |
Toner |
|
|
Assets: |
||
|
Cash |
$ 795,240 |
$ 696,785 |
|
|
866,560 |
584,292 |
|
Inventory |
1,313,380 |
750,513 |
|
Equity Investment |
1,846,665 |
|
|
PPE, net |
6,317,764 |
1,388,533 |
|
$11,139,609 |
$3,420,123 |
|
|
Liabilities and Stockholders’ Equity: |
||
|
Current Liabilities |
$ 972,849 |
$ 584,292 |
|
Long-term Liabilities |
4,000,000 |
839,500 |
|
Common Stock |
1,106,895 |
167,900 |
|
APIC |
822,555 |
209,875 |
|
Retained Earnings |
4,237,310 |
1,618,556 |
|
$11,139,609 |
$3,420,123 |
|
Compute the end of year noncontrolling interest equity balance.
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