Investment in Skyline Trademarks 450000 450000 0 50000 0 50000 Land, Buildings and Equipment Patented Technology 637000 283000 920000 0 130000 130000 Goodwill 0 Total Assets 1502000 725000 2227000 Liabilities and Equities Accounts Payable -463000 -215000 -678000 Non-Controlling Interest 0 0 0 -530000 Common Stock -410000 -120000 -321000 Additional Paid-in-Capital -291000 -30000 -698000 Retained Earnings 12/31/21 -338000 -360000 Total Liabilities and Equities -1502000 -725000 0 0 -2227000 Required: 1. Complete the consolidation worksheet. On January 1, 2020 Parkway Inc. issued securities with a total fair value of $450,000 for 90 percent of Skyline Corporation. At the time the remaining 10% interest was valued at $40,000. Although Skyline's book value at the acquisition date was $200,000, the Company's trademarks were undervalued by $30,000. Additionally, Skyline's patented technology was undervalued by $100,000. The trademarks were considered to have indefinite lives while the patented technology was expected to have an estimated life of 10 years. In 2020, Skyline sold Parkway inventory costing $30,000 for $50,000. As of 12/31/20, Parkway had resold only 28% of the inventory (72% of the gross profits associated with Skyline's sale remained in inventory). In 2021, Parkway purchased $80,000 of inventory from Skyline, with Skyline's cost for this inventory equaling $40,000. At the end of 2021, Parkway held $28,000 of the Skyline 2021 purchases in its inventory and none of the 2020 purchases. Skyline still owes Parkway $6,000 related to its 2021 inventory purchases. Separate financial statements for the two companies follow: Income Statement Revenues Parkway Skyline -627000 -358000 Consolidation Entries DR+ CR- Totals -985000 Cost of goods Sold 289000 195000 484000 Operating Expenses Dividend Income -Skyline 170000 75000 -18000 245000 -18000 Net Income -186000 -88000 Minority Interest in Skyline's Earnings Parkways Interest in Skyline's Earnings -274000 Statement of Retained Earnings Retained Earnings 1/1/21 -222000 -292000 -514000 Net Income Dividends Paid Retained Earnings 12/31/21 -186000 70000 -338000 -88000 -274000 20000 -360000 90000 -698000 Balance Sheet Cash & Receivables Inventory 134000 150000 284000 281000 112000 393000

Investment in Skyline Trademarks 450000 450000 0 50000 0 50000 Land, Buildings and Equipment Patented Technology 637000 283000 920000 0 130000 130000 Goodwill 0 Total Assets 1502000 725000 2227000 Liabilities and Equities Accounts Payable -463000 -215000 -678000 Non-Controlling Interest 0 0 0 -530000 Common Stock -410000 -120000 -321000 Additional Paid-in-Capital -291000 -30000 -698000 Retained Earnings 12/31/21 -338000 -360000 Total Liabilities and Equities -1502000 -725000 0 0 -2227000 Required: 1. Complete the consolidation worksheet. On January 1, 2020 Parkway Inc. issued securities with a total fair value of $450,000 for 90 percent of Skyline Corporation. At the time the remaining 10% interest was valued at $40,000. Although Skyline's book value at the acquisition date was $200,000, the Company's trademarks were undervalued by $30,000. Additionally, Skyline's patented technology was undervalued by $100,000. The trademarks were considered to have indefinite lives while the patented technology was expected to have an estimated life of 10 years. In 2020, Skyline sold Parkway inventory costing $30,000 for $50,000. As of 12/31/20, Parkway had resold only 28% of the inventory (72% of the gross profits associated with Skyline's sale remained in inventory). In 2021, Parkway purchased $80,000 of inventory from Skyline, with Skyline's cost for this inventory equaling $40,000. At the end of 2021, Parkway held $28,000 of the Skyline 2021 purchases in its inventory and none of the 2020 purchases. Skyline still owes Parkway $6,000 related to its 2021 inventory purchases. Separate financial statements for the two companies follow: Income Statement Revenues Parkway Skyline -627000 -358000 Consolidation Entries DR+ CR- Totals -985000 Cost of goods Sold 289000 195000 484000 Operating Expenses Dividend Income -Skyline 170000 75000 -18000 245000 -18000 Net Income -186000 -88000 Minority Interest in Skyline's Earnings Parkways Interest in Skyline's Earnings -274000 Statement of Retained Earnings Retained Earnings 1/1/21 -222000 -292000 -514000 Net Income Dividends Paid Retained Earnings 12/31/21 -186000 70000 -338000 -88000 -274000 20000 -360000 90000 -698000 Balance Sheet Cash & Receivables Inventory 134000 150000 284000 281000 112000 393000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

See similar textbooks