Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $580,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $725,000, and the fair value of the 20 percent noncontrolling interest was $145,000. No excess fair value over book value amortization accompanied the acquisition.
Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $580,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $725,000, and the fair value of the 20 percent noncontrolling interest was $145,000. 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 | $ | 840,000 | $ | 560,000 | ||
| Cost of goods sold | 390,000 | 297,000 | ||||
| Operating expenses | 170,000 | 125,000 | ||||
| 940,000 | 380,000 | |||||
| Inventory | 366,000 | 130,000 | ||||
| Buildings (net) | 378,000 | 177,000 | ||||
| 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 $110,000 in 2020 and $130,000 in 2021. Of this inventory, Seacraft retained and then sold $48,000 of the 2020 transfers in 2021 and held $62,000 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 $70,000 in 2020 and $100,000 in 2021. Of this inventory, $41,000 of the 2020 transfers were retained and then sold by Protrade in 2021, whereas $55,000 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 $120,000, although its book value was only $70,000 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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