ProForm acquired 70 percent of ClipRite on June 30, 2023, for $910,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2024 financial statements are as follows: Items Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/24 Net income Dividends declared Retained earnings, 12/31/24 Cash and receivables Inventory Investment in ClipRite Fixed assets Accumulated depreciation Totals Liabilities Common stock ProForm $ (800,000) 535,000 100,000 (35,000) $ (200,000) $ (1,300,000) (200,000) 100,000 $ (1,400,000) $ 400,000 290,000 910,000 1,000,000 (300,000) $ 2,300,000 $ (600,000) (300,000) ClipRite $ (600,000) 400,000 100,000 0 $ (100,000) $ (850,000) (100,000) 50,000 $ (900,000) $ 300,000 700,000 0 600,000 (200,000) $ 1,400,000 $ (400,000) (100,000)
ProForm acquired 70 percent of ClipRite on June 30, 2023, for $910,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2024 financial statements are as follows: Items Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/24 Net income Dividends declared Retained earnings, 12/31/24 Cash and receivables Inventory Investment in ClipRite Fixed assets Accumulated depreciation Totals Liabilities Common stock ProForm $ (800,000) 535,000 100,000 (35,000) $ (200,000) $ (1,300,000) (200,000) 100,000 $ (1,400,000) $ 400,000 290,000 910,000 1,000,000 (300,000) $ 2,300,000 $ (600,000) (300,000) ClipRite $ (600,000) 400,000 100,000 0 $ (100,000) $ (850,000) (100,000) 50,000 $ (900,000) $ 300,000 700,000 0 600,000 (200,000) $ 1,400,000 $ (400,000) (100,000)
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions
Section: Chapter Questions
Problem 38P
Related questions
Question
![ProForm acquired 70 percent of ClipRite on June 30, 2023, for $910,000 in cash. Based on ClipRite's acquisition-date fair value, an
unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was
recognized in the acquisition. The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2024
financial statements are as follows:
Items
Sales
Cost of goods sold
Operating expenses
Dividend income
Net income
Retained earnings, 1/1/24
Net income
Dividends declared
Retained earnings, 12/31/24
Cash and receivables
Inventory
Investment in ClipRite
Fixed assets
Accumulated depreciation
Totals
Liabilities
Common stock
Retained earnings, 12/31/24
Totals
Note: Parentheses indicate a credit balance.
ProForm
$ (800,000)
535,000
100,000
(35,000)
$ (200,000)
$ (1,300,000)
(200,000)
100,000
$ (1,400,000)
$ 400,000
290,000
910,000
1,000,000
(300,000)
$ 2,300,000
Sales
Cost of goods sold
Operating expenses
Dividend income
Net income attributable to noncontrolling interest
Inventory
Noncontrolling interest in subsidiary, 12/31/24
> Answer is complete but not entirely correct.
Consolidated
Balance
ClipRite
$ (600,000)
400,000
100,000
Required:
With these facts, determine the consolidated balances for the following:
Note: Input all amounts as positive values.
$
$
$
$
$
$
$
$ (600,000)
(300,000)
(1,400,000)
$ (400,000)
(100,000)
(900,000)
$ (2,300,000) $ (1,400,000)
ClipRite sold ProForm inventory costing $72,000 during the last six months of 2023 for $120,000. At year-end, 30 percent remained.
ClipRite sold ProForm inventory costing $200,000 during 2024 for $250,000. At year-end, 10 percent is left.
1,150,000
675,600
210,000
$ (100,000)
$ (850,000)
(100,000)
50,000
$ (900,000)
$ 300,000
700,000
0
985,000
355,500
600,000
(200,000)
$ 1,400,000
0
0✓
27,000 X](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6624f8de-2dcc-46b1-8ea2-b740df52ef7a%2Fd4f53d41-3035-4a19-84ee-679f9b53b75a%2Fkttvql_processed.jpeg&w=3840&q=75)
Transcribed Image Text:ProForm acquired 70 percent of ClipRite on June 30, 2023, for $910,000 in cash. Based on ClipRite's acquisition-date fair value, an
unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was
recognized in the acquisition. The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2024
financial statements are as follows:
Items
Sales
Cost of goods sold
Operating expenses
Dividend income
Net income
Retained earnings, 1/1/24
Net income
Dividends declared
Retained earnings, 12/31/24
Cash and receivables
Inventory
Investment in ClipRite
Fixed assets
Accumulated depreciation
Totals
Liabilities
Common stock
Retained earnings, 12/31/24
Totals
Note: Parentheses indicate a credit balance.
ProForm
$ (800,000)
535,000
100,000
(35,000)
$ (200,000)
$ (1,300,000)
(200,000)
100,000
$ (1,400,000)
$ 400,000
290,000
910,000
1,000,000
(300,000)
$ 2,300,000
Sales
Cost of goods sold
Operating expenses
Dividend income
Net income attributable to noncontrolling interest
Inventory
Noncontrolling interest in subsidiary, 12/31/24
> Answer is complete but not entirely correct.
Consolidated
Balance
ClipRite
$ (600,000)
400,000
100,000
Required:
With these facts, determine the consolidated balances for the following:
Note: Input all amounts as positive values.
$
$
$
$
$
$
$
$ (600,000)
(300,000)
(1,400,000)
$ (400,000)
(100,000)
(900,000)
$ (2,300,000) $ (1,400,000)
ClipRite sold ProForm inventory costing $72,000 during the last six months of 2023 for $120,000. At year-end, 30 percent remained.
ClipRite sold ProForm inventory costing $200,000 during 2024 for $250,000. At year-end, 10 percent is left.
1,150,000
675,600
210,000
$ (100,000)
$ (850,000)
(100,000)
50,000
$ (900,000)
$ 300,000
700,000
0
985,000
355,500
600,000
(200,000)
$ 1,400,000
0
0✓
27,000 X
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