Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $564,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $705,000, and the fair value of the 20 percent noncontrolling interest was $141,000. No excess fair value over book value amortization accompanied the acquisition. The following selected account balances are from the individual financial records of these two companies as of December 31, 2021: Protrade Seacraft Sales $
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $564,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $705,000, and the fair value of the 20 percent noncontrolling interest was $141,000. No excess fair value over book value amortization accompanied the acquisition.
The following selected account balances are from the individual financial records of these two companies as of December 31, 2021:
| Protrade | Seacraft | |||||
| Sales | $ | 820,000 | $ | 540,000 | ||
| Cost of goods sold | 380,000 | 287,000 | ||||
| Operating expenses | 168,000 | 123,000 | ||||
| 920,000 | 360,000 | |||||
| Inventory | 364,000 | 128,000 | ||||
| Buildings (net) | 376,000 | 175,000 | ||||
| Investment income | Not given | 0 | ||||
Each of the following problems is an independent situation:
a.
Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $108,000 in 2020 and $128,000 in 2021. Of this inventory, Seacraft retained and then sold $46,000 of the 2020 transfers in 2021 and held $60,000 of the 2021 transfers until 2022.
Determine balances for the following items that would appear on consolidated financial statements for 2021:
Cost of Goods Sold
Inventory
Net Income Attributable to Noncontrolling Interest
b.
Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra-entity transfers were $68,000 in 2020 and $98,000 in 2021. Of this inventory, $39,000 of the 2020 transfers were retained and then sold by Protrade in 2021, whereas $53,000 of the 2021 transfers were held until 2022.
Determine balances for the following items that would appear on consolidated financial statements for 2021:
Cost of Goods Sold
Inventory
Net Income Attributable to Noncontrolling Interest
c.
Protrade sells Seacraft a building on January 1, 2020, for $116,000, although its book value was only $68,000 on this date. The building had a five-year remaining life and was to be
Determine balances for the following items that would appear on consolidated financial statements for 2021:
Buildings (net)
Operating Expenses
Net Income Attributable to Noncontrolling Interest
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