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On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $365,400. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $216,100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $243,600. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $75,100 and an unrecorded customer list (15-year remaining life) assessed at a $50,700 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Transfer Price to Stinson $155,625 150,800 Ending Balance (at transfer price) $51,875 37,700 Year Cost to McIlroy 2020 2021 $124,500 113, 100

On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $365,400. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $216,100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $243,600. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $75,100 and an unrecorded customer list (15-year remaining life) assessed at a $50,700 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Transfer Price to Stinson $155,625 150,800 Ending Balance (at transfer price) $51,875 37,700 Year Cost to McIlroy 2020 2021 $124,500 113, 100

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $365,400. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $216,100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $243,600. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $75,100 and an unrecorded customer list (15-year remaining life) assessed at a $50,700 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Ending Balance Transfer Price to Stinson (at transfer price) $155,625 150, 800 Year Cost to McIlroy 2020 2021 $124,500 113, 100 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: McIlroy, Inc. Stinson, Inc. $ (356,000) 217,699 74,290 0 Sales Cost of goods sold Operating expenses Equity in earnings in Stinson Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities (Note: Parentheses indicate a credit balance.) $51,875 37,700 $(717,000) 471,299 193,440 (32,936) (85, 296) $ $ < Required A (753,900) (85, 296) 46,709 $ (792,496) $ 269,899 253, 400 410,467 328,000 234, 299 0 $ 1,495,867 $ (403,371) (300,000) (792,496) $(1,495,867) Show Transcribed Text $ (64,200) $ (281,400) (64,290) 16,990 $ (328,700) $ 149,700 130, 500 0 203, 890 87,400 22,090 $ 593,400 $ (164,700) (100, 000) (328,700) $ (593,400) Complete this question by entering your answers in the tabs below. Required A Required B Show how McIlroy determined the $410,467 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream Intra-entity profits against its share of Stinson's Income. (Amounts to be deducted should be indicated with a minus sign.) Required B >
Transcribed Image Text:On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $365,400. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $216,100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $243,600. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $75,100 and an unrecorded customer list (15-year remaining life) assessed at a $50,700 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Ending Balance Transfer Price to Stinson (at transfer price) $155,625 150, 800 Year Cost to McIlroy 2020 2021 $124,500 113, 100 The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow: McIlroy, Inc. Stinson, Inc. $ (356,000) 217,699 74,290 0 Sales Cost of goods sold Operating expenses Equity in earnings in Stinson Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Total assets Liabilities Common stock Retained earnings, 12/31/21 Total liabilities and equities (Note: Parentheses indicate a credit balance.) $51,875 37,700 $(717,000) 471,299 193,440 (32,936) (85, 296) $ $ < Required A (753,900) (85, 296) 46,709 $ (792,496) $ 269,899 253, 400 410,467 328,000 234, 299 0 $ 1,495,867 $ (403,371) (300,000) (792,496) $(1,495,867) Show Transcribed Text $ (64,200) $ (281,400) (64,290) 16,990 $ (328,700) $ 149,700 130, 500 0 203, 890 87,400 22,090 $ 593,400 $ (164,700) (100, 000) (328,700) $ (593,400) Complete this question by entering your answers in the tabs below. Required A Required B Show how McIlroy determined the $410,467 Investment in Stinson account balance. Assume that McIlroy defers 100 percent of downstream Intra-entity profits against its share of Stinson's Income. (Amounts to be deducted should be indicated with a minus sign.) Required B >
Accounts Sales Cost of goods sold Operating expenses Equity in earnings of Stinson Separate company net income Consolidated net income To noncontrolling interest To Mcllroy, Inc. Retained earnings 1/1/21 Net income Dividends declared Retained earnings 12/31/21 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Customer list Goodwill Total assets Liabilities Common stock Noncontrolling interest 1/1/21 Noncontrolling interest 12/31/21 Retained earnings 12/31/21 Total liabilities and equities MCILROY, INC., AND STINSON, INC. Consolidation Worksheet $ $ For Year Ending December 31, 2021 Mcllroy $ (717,000) $ 471,200 193,440 (32,936) (85,296) (753,900) (85,296) 46,700 (792,496) $ 269,800 $ 253,400 410,467 328,000 234,200 0 $ 1,495,867 $ (403,371) (300,000) (792,496) $ (1,495,867) $ Stinson (356,000) 217,600 74,200 0 (64,200) (281,400) (64,200) 16,900 (328,700) 149,700 130,500 0 203,800 87,400 22,000 593,400 (164,700) (100,000) (328,700) (593,400) Consolidation Entries Debit Credit NCI Consolidated Totals
Transcribed Image Text:Accounts Sales Cost of goods sold Operating expenses Equity in earnings of Stinson Separate company net income Consolidated net income To noncontrolling interest To Mcllroy, Inc. Retained earnings 1/1/21 Net income Dividends declared Retained earnings 12/31/21 Cash and receivables Inventory Investment in Stinson Buildings (net) Equipment (net) Patents (net) Customer list Goodwill Total assets Liabilities Common stock Noncontrolling interest 1/1/21 Noncontrolling interest 12/31/21 Retained earnings 12/31/21 Total liabilities and equities MCILROY, INC., AND STINSON, INC. Consolidation Worksheet $ $ For Year Ending December 31, 2021 Mcllroy $ (717,000) $ 471,200 193,440 (32,936) (85,296) (753,900) (85,296) 46,700 (792,496) $ 269,800 $ 253,400 410,467 328,000 234,200 0 $ 1,495,867 $ (403,371) (300,000) (792,496) $ (1,495,867) $ Stinson (356,000) 217,600 74,200 0 (64,200) (281,400) (64,200) 16,900 (328,700) 149,700 130,500 0 203,800 87,400 22,000 593,400 (164,700) (100,000) (328,700) (593,400) Consolidation Entries Debit Credit NCI Consolidated Totals
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