Company's voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and retained earnings of $30,000. The differential is assigned to buildings and equipment, which had a fair value $20,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $35,000 higher than book value and a remaining life of
Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $108,500. At that date, the noncontrolling interest had a fair value of $46,500 and Soda reported $70,000 of common stock outstanding and
| Pop Corporation | Soda Company | |||||||||||||||
| Item | Debit | Credit | Debit | Credit | ||||||||||||
| Cash & Accounts Receivable | $ | 15,400 | $ | 21,600 | ||||||||||||
| Inventory | 165,000 | 35,000 | ||||||||||||||
| Land | 80,000 | 40,000 | ||||||||||||||
| Buildings & Equipment | 340,000 | 260,000 | ||||||||||||||
| Investment in Soda Company | 109,600 | |||||||||||||||
| Cost of Goods Sold | 186,000 | 79,800 | ||||||||||||||
| 20,000 | 15,000 | |||||||||||||||
| Interest Expense | 16,000 | 5,200 | ||||||||||||||
| Dividends Declared | 30,000 | 15,000 | ||||||||||||||
| Accumulated Depreciation | $ | 140,000 | $ | 80,000 | ||||||||||||
| Accounts Payable | 92,400 | 35,000 | ||||||||||||||
| Bonds Payable | 200,000 | 100,000 | ||||||||||||||
| Bond Premium | 1,600 | |||||||||||||||
| Common Stock | 120,000 | 70,000 | ||||||||||||||
| Retained Earnings | 127,900 | 60,000 | ||||||||||||||
| Sales | 260,000 | 125,000 | ||||||||||||||
| Other Income | 13,600 | |||||||||||||||
| Income from Soda Company | 8,100 | |||||||||||||||
| $ | 962,000 | $ | 962,000 | $ | 471,600 | $ | 471,600 | |||||||||
On December 31, 20X2, Soda purchased inventory for $32,000 and sold it to Pop for $48,000. Pop resold $27,000 of the inventory (i.e., $27,000 of the $48,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3.
During 20X3, Soda sold inventory purchased for $60,000 to Pop for $90,000, and Pop resold all but $24,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $15,000 to Soda for $30,000. Soda sold all but $7,600 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition.
Help with below:
- Record the deferral of the unrealized profit on inventory transfers from 20X2.
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