The Individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent Interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $960,000. At the acquisition date, the fair value of the noncontrolling Interest was $640,000 and Bellstar's book value was $1,280,000. Bellstar had developed Internally a trademark that was not recorded on its books but had an acquisition-date fair value of $320,000. This Intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its Investment in Bellstar. Abbey sold Bellstar land with a book value of $65,000 on January 2, 2023, for $150,000. Bellstar still holds this land at the end of the current year. Bellstar regularly transfers Inventory to Abbey. In 2023, it shipped Inventory costing $259,000 to Abbey at a price of $370,000. During 2024, Intra-entity shipments totaled $420,000, although the original cost to Bellstar was only $273,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $70,000 at the end of 2024. Items Sales Cost of goods sold Operating expenses Equity in earnings of Bellstar Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Cash Accounts receivable Inventory Investment in Bellstar Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/24 Total liabilities and equities Note: Parentheses Indicate a credit balance. Required: Abbey Company Bellstar Company $ (1,020,000) 720,000 100,000 (81,000) $ (281,000) $ (1,336,000) (281,000) 135,000 $ (1,482,000) $ 191,000 400,000 610,000 1,047,000 190,000 518,000 $ 2,956,000 $ (664,000) (810,000) Ө (1,482,000) $ (2,956,000) $ (720,000) 520,000 65,000 $ (135,000) $ (730,000) (135,000) 80,000 $ (785,000) $ 80,000 630,000 540,000 610,000 520,000 $ 2,380,000 $ (955,000) (540,000) (100,000) (785,000) $ (2,380,000) a. Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar. For the Year Ending December 31, 2024 Consolidation Entries Accounts Abbey Bellstar Debit Credit Noncontrolling Consolidated Interest Totals $ (1,020,000) $ (720,000) $ 420,000 0 $ (1,320,000) 720,000 520,000 29,400 442,200 0 827,200 100,000 65,000 16,000 0 181,000 (81,000) 0 81,000 0 0 $ (281,000) $ (135,000) Sales Cost of goods sold Operating expenses Equity in earnings of Bellstar Separate company net income Consolidated net income To noncontrolling interest To Abbey Company Retained earnings, Abbey, 1/1 Retained earnings, Bellstar, 1/1 Net income $ 311,800 (44,720) 44,720 $ 287,080 $ (1,336,000) (730,000) 730,000 0 이 (281,000) (135,000) 이 Dividends declared 135,000 80,000 48,000 32,000 135,000 Retained earnings, 12/31 $ (1,482,000) $ (785,000) Cash $ 191,000 $ 80,000 0 $ 271,000 Accounts receivable 400,000 630,000 70,000 0 980,000 Inventory 610,000 540,000 29,400 1,120,600 Investment in Bellstar 1,047,000 48,000 1,095,000 이 Land 190,000 610,000 85,000 이 Buildings and equipment (net) 518,000 520,000 0 Trademark 304,000 16,000 이 Total assets $ 2,958,000 $2,380,000 Liabilities $ (664,000) $ (955,000) 70,000 Common stock (810,000) (540,000) 540,000 Additional paid-in capital (100,000) 100,000 Retained earnings, 12/31 (1,482,000) (785,000) 0 이 0 715,000 1,038,000 288,000 $ 4,392,600 0 $ (1,549,000) (810,000) 0 Noncontrolling interest 1/1 Noncontrolling interest 12/31 Total liabilities and equity $ (2,958,000) $ (2,380,000) $2,338,400 $ 1,785,800|| $ (4,382,600)

The Individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent Interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $960,000. At the acquisition date, the fair value of the noncontrolling Interest was $640,000 and Bellstar's book value was $1,280,000. Bellstar had developed Internally a trademark that was not recorded on its books but had an acquisition-date fair value of $320,000. This Intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its Investment in Bellstar. Abbey sold Bellstar land with a book value of $65,000 on January 2, 2023, for $150,000. Bellstar still holds this land at the end of the current year. Bellstar regularly transfers Inventory to Abbey. In 2023, it shipped Inventory costing $259,000 to Abbey at a price of $370,000. During 2024, Intra-entity shipments totaled $420,000, although the original cost to Bellstar was only $273,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $70,000 at the end of 2024. Items Sales Cost of goods sold Operating expenses Equity in earnings of Bellstar Net income Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Cash Accounts receivable Inventory Investment in Bellstar Land Buildings and equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, 12/31/24 Total liabilities and equities Note: Parentheses Indicate a credit balance. Required: Abbey Company Bellstar Company $ (1,020,000) 720,000 100,000 (81,000) $ (281,000) $ (1,336,000) (281,000) 135,000 $ (1,482,000) $ 191,000 400,000 610,000 1,047,000 190,000 518,000 $ 2,956,000 $ (664,000) (810,000) Ө (1,482,000) $ (2,956,000) $ (720,000) 520,000 65,000 $ (135,000) $ (730,000) (135,000) 80,000 $ (785,000) $ 80,000 630,000 540,000 610,000 520,000 $ 2,380,000 $ (955,000) (540,000) (100,000) (785,000) $ (2,380,000) a. Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar. For the Year Ending December 31, 2024 Consolidation Entries Accounts Abbey Bellstar Debit Credit Noncontrolling Consolidated Interest Totals $ (1,020,000) $ (720,000) $ 420,000 0 $ (1,320,000) 720,000 520,000 29,400 442,200 0 827,200 100,000 65,000 16,000 0 181,000 (81,000) 0 81,000 0 0 $ (281,000) $ (135,000) Sales Cost of goods sold Operating expenses Equity in earnings of Bellstar Separate company net income Consolidated net income To noncontrolling interest To Abbey Company Retained earnings, Abbey, 1/1 Retained earnings, Bellstar, 1/1 Net income $ 311,800 (44,720) 44,720 $ 287,080 $ (1,336,000) (730,000) 730,000 0 이 (281,000) (135,000) 이 Dividends declared 135,000 80,000 48,000 32,000 135,000 Retained earnings, 12/31 $ (1,482,000) $ (785,000) Cash $ 191,000 $ 80,000 0 $ 271,000 Accounts receivable 400,000 630,000 70,000 0 980,000 Inventory 610,000 540,000 29,400 1,120,600 Investment in Bellstar 1,047,000 48,000 1,095,000 이 Land 190,000 610,000 85,000 이 Buildings and equipment (net) 518,000 520,000 0 Trademark 304,000 16,000 이 Total assets $ 2,958,000 $2,380,000 Liabilities $ (664,000) $ (955,000) 70,000 Common stock (810,000) (540,000) 540,000 Additional paid-in capital (100,000) 100,000 Retained earnings, 12/31 (1,482,000) (785,000) 0 이 0 715,000 1,038,000 288,000 $ 4,392,600 0 $ (1,549,000) (810,000) 0 Noncontrolling interest 1/1 Noncontrolling interest 12/31 Total liabilities and equity $ (2,958,000) $ (2,380,000) $2,338,400 $ 1,785,800|| $ (4,382,600)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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