Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $1,007,100 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,258,875. Also at the acquisition date, Stanford's book value was $533,800.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $1,007,100 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,258,875. Also at the acquisition date, Stanford's book value was $533,800.

Several individual items on Stanford’s financial records had fair values that differed from their book values as follows:

Items Book Value Fair Value
Trade names (indefinite life) $ 272,600 $ 405,100
Property and equipment (net, 8-year remaining life) 225,600 244,800
Patent (14-year remaining life) 130,400 161,200

For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies.

Accounts Plaza Stanford
Revenues $ (829,600) $ (681,100)
Cost of goods sold 458,600 300,000
Depreciation expense 194,400 28,200
Amortization expense 0 21,300
Equity in income of Stanford (261,600) 0
Net income $ (438,200) $ (331,600)
     
Retained earnings, 1/1/24 $ (966,500) $ (401,300)
Net income (438,200) (331,600)
Dividends declared 227,400 24,000
Retained earnings, 12/31/24 $ (1,177,300) $ (708,900)
     
Current assets $ 652,000 $ 327,300
Investment in Stanford 1,249,500 0
Trade names 182,000 272,600
Property and equipment (net) 781,100 197,400
Patents 0 109,100
Total assets $ 2,864,600 $ 906,400
     
Accounts payable $ (107,700) $ (65,000)
Common stock (227,500) (118,000)
Additional paid-in capital (1,352,100) (14,500)
Retained earnings (above) (1,177,300) (708,900)
Total liabilities and equities $ (2,864,600) $ (906,400)

At year-end, there were no intra-entity receivables or payables.

Required:

Prepare a worksheet to consolidate the financial statements of Plaza, Incorporated, and its subsidiary Stanford.

Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.

 
Accounts
Revenues
Cost of goods sold
Depreciation expense
Amortization expense
Equity in income of Stanford
Net income
Consolidated net income
Noncontrolling interest share of consolidated net income
Plaza share of consolidated net income
Retained earnings, 1/1/24
Net income
Dividends declared
Retained earnings, 12/31/24
Current assets
Investment in Stanford
Tradenames
Property and equipment (net)
Patents
Goodwill
Total assets
Accounts payable
Common stock
Additional paid-in capital
Noncontrolling interest
Retained earnings, 12/31
Total liabilities and equities
For Year Ending December 31, 2024
$
$
$
$
$
$
Plaza
(829,600) $ (681,100)
458,600
300,000
194,400
28,200
21,300
0
(261,600)
(438,200) $ (331,600)
Stanford
(966,500)
(438,200)
227,400
$ (401,300)
(331,600)
24,000
(1,177,300) $ (708,900)
652,000 $ 327,300
1,249,500
182,000
781,100
0
2,864,600 $
(107,700)
(227,500)
(1,352,100)
0
0
272,600
197,400
109,100
906,400
(65,000)
(118,000)
(14,500)
(1,177,300)
(708,900)
$ (2,864,600) $ (906,400)
Consolidation Entries
Credit
Debit
2,400
2,200
261,600
401,300
19,200
132,500
19,200
30,800
542,575
118,000
$ 1,529,775 $
19,200
261,600
2,400
2,200
106,760
145,015
537,175
Noncontrolling
Interest
(65,400)
4,800
Consolidated
Totals
$
(1,510,700)
758,600
225,000
23,500
Transcribed Image Text:Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Equity in income of Stanford Net income Consolidated net income Noncontrolling interest share of consolidated net income Plaza share of consolidated net income Retained earnings, 1/1/24 Net income Dividends declared Retained earnings, 12/31/24 Current assets Investment in Stanford Tradenames Property and equipment (net) Patents Goodwill Total assets Accounts payable Common stock Additional paid-in capital Noncontrolling interest Retained earnings, 12/31 Total liabilities and equities For Year Ending December 31, 2024 $ $ $ $ $ $ Plaza (829,600) $ (681,100) 458,600 300,000 194,400 28,200 21,300 0 (261,600) (438,200) $ (331,600) Stanford (966,500) (438,200) 227,400 $ (401,300) (331,600) 24,000 (1,177,300) $ (708,900) 652,000 $ 327,300 1,249,500 182,000 781,100 0 2,864,600 $ (107,700) (227,500) (1,352,100) 0 0 272,600 197,400 109,100 906,400 (65,000) (118,000) (14,500) (1,177,300) (708,900) $ (2,864,600) $ (906,400) Consolidation Entries Credit Debit 2,400 2,200 261,600 401,300 19,200 132,500 19,200 30,800 542,575 118,000 $ 1,529,775 $ 19,200 261,600 2,400 2,200 106,760 145,015 537,175 Noncontrolling Interest (65,400) 4,800 Consolidated Totals $ (1,510,700) 758,600 225,000 23,500
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