question archive Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $416,500 in cash and other consideration

Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $416,500 in cash and other consideration

Subject:AccountingPrice: Bought3

Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $416,500 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $595,000, and the fair value of the 30 percent noncontrolling interest was $178,500. 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:

 ProtradeSeacraftSales$710,000 $430,000 Cost of goods sold 325,000  232,000 Operating expenses 157,000  112,000 Retained earnings, 1/1/21 810,000  250,000 Inventory 353,000  117,000 Buildings (net) 365,000  164,000 Investment incomeNot given 0 

Each of the following problems is an independent situation:

  • Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $97,000 in 2020 and $117,000 in 2021. Of this inventory, Seacraft retained and then sold $35,000 of the 2020 transfers in 2021 and held $49,000 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
  • Assume that Seacraft sells inventory to Protrade at a markup equal to 60 percent of cost. Intra-entity transfers were $57,000 in 2020 and $87,000 in 2021. Of this inventory, $28,000 of the 2020 transfers were retained and then sold by Protrade in 2021, whereas $42,000 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
  • Protrade sells Seacraft a building on January 1, 2020, for $94,000, although its book value was only $57,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value.
  • 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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