ProForm acquired 80 percent of ClipRite on June 30, 2020, for $1,280,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $800,000 was recognized and is being amortized at the rate of $14,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $320,000 at the acquisition date. The 2021 financial statements are as follows: Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in ClipRite. Fixed assets Accumulated depreciation Totals Liabilities Common stock Retained earnings, 12/31/21 Totals ProForm $ (980,000) 625,000 280,000 (80,000) $ (155,000) $ (280,000) Sales Cost of Goods Sold $(2,500,000) (155,000) 280,000 $(2,375,000) $ 580,000 470,000 1,280,000 1,500,000 (400,000) $ 3,430,000 $ (555,000) (500,000) (2,375,000) $(3,430,000) ClipRite $ (960,000) 490,000 190,000 0 $(1,030,000) (280,000) 100,000 $(1,210,000) 480,000 880,000 $ 0 1,500,000 (450,000) $ 2,410,000 $(700,000) (500,000) (1,210,000) $(2,410,000) (Note: Parentheses indicate a credit balance.) ClipRite sold ProForm inventory costing $87,000 during the last six months of 2020 for $270,000. At year-end, 30 percent remained. ClipRite sold ProForm inventory costing $290,000 during 2021 for $430,000. At year-end, 10 percent is left. Determine the consolidated balances for the following: (Input all amounts as positive values.)
ProForm acquired 80 percent of ClipRite on June 30, 2020, for $1,280,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $800,000 was recognized and is being amortized at the rate of $14,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $320,000 at the acquisition date. The 2021 financial statements are as follows: Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in ClipRite. Fixed assets Accumulated depreciation Totals Liabilities Common stock Retained earnings, 12/31/21 Totals ProForm $ (980,000) 625,000 280,000 (80,000) $ (155,000) $ (280,000) Sales Cost of Goods Sold $(2,500,000) (155,000) 280,000 $(2,375,000) $ 580,000 470,000 1,280,000 1,500,000 (400,000) $ 3,430,000 $ (555,000) (500,000) (2,375,000) $(3,430,000) ClipRite $ (960,000) 490,000 190,000 0 $(1,030,000) (280,000) 100,000 $(1,210,000) 480,000 880,000 $ 0 1,500,000 (450,000) $ 2,410,000 $(700,000) (500,000) (1,210,000) $(2,410,000) (Note: Parentheses indicate a credit balance.) ClipRite sold ProForm inventory costing $87,000 during the last six months of 2020 for $270,000. At year-end, 30 percent remained. ClipRite sold ProForm inventory costing $290,000 during 2021 for $430,000. At year-end, 10 percent is left. Determine the consolidated balances for the following: (Input all amounts as positive values.)
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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
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