N1. On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $365,400. Stinson's bookvalue on that date consisted of common stock of $100,000 and retained earnings of $216,100. Also, the acquisition-date fair value ofthe 40 percent noncontrolling interest was $243,600. The subsidiary held patents (with a 10-year remaining life) that were undervaluedwithin the company's accounting records by $75,100 and an unrecorded customer list (15-year remaining life) assessed at a $50,700fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equitymethod to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payablesor receivables.Intra-entity inventory sales between the two companies have been made as follows:Ending BalanceTransfer Priceto Stinson(at transfer price)$155,625150, 800Year Cost to McIlroy20202021$124,500113, 100The individual financial statements for these two companies as of December 31, 2021, and the year then ended follow:McIlroy, Inc. Stinson, Inc.$ (356,000)217,69974,2900SalesCost of goods soldOperating expensesEquity in earnings in StinsonNet incomeRetained earnings, 1/1/21Net incomeDividends declaredRetained earnings, 12/31/21Cash and receivablesInventoryInvestment in StinsonBuildings (net)Equipment (net)Patents (net)Total assetsLiabilitiesCommon stockRetained earnings, 12/31/21Total liabilities and equities(Note: Parentheses indicate a credit balance.)$51,87537,700$(717,000)471,299193,440(32,936)(85, 296)$$< Required A(753,900)(85, 296)46,709$ (792,496)$269,899253, 400410,467328,000234, 2990$ 1,495,867$ (403,371)(300,000)(792,496)$(1,495,867)Show Transcribed Text$ (64,200)$ (281,400)(64,290)16,990$ (328,700)$ 149,700130, 5000203, 89087,40022,090$ 593,400$ (164,700)(100, 000)(328,700)$ (593,400)Complete this question by entering your answers in the tabs below.Required A Required BShow how McIlroy determined the $410,467 Investment in Stinson account balance. Assume that McIlroy defers 100 percentof downstream Intra-entity profits against its share of Stinson's Income. (Amounts to be deducted should be indicated with aminus sign.)Required B > AccountsSalesCost of goods soldOperating expensesEquity in earnings of StinsonSeparate company net incomeConsolidated net incomeTo noncontrolling interestTo Mcllroy, Inc.Retained earnings 1/1/21Net incomeDividends declaredRetained earnings 12/31/21Cash and receivablesInventoryInvestment in StinsonBuildings (net)Equipment (net)Patents (net)Customer listGoodwillTotal assetsLiabilitiesCommon stockNoncontrolling interest 1/1/21Noncontrolling interest 12/31/21Retained earnings 12/31/21Total liabilities and equitiesMCILROY, INC., AND STINSON, INC.Consolidation Worksheet$$For Year Ending December 31, 2021Mcllroy$ (717,000) $471,200193,440(32,936)(85,296)(753,900)(85,296)46,700(792,496) $269,800 $253,400410,467328,000234,2000$ 1,495,867 $(403,371)(300,000)(792,496)$ (1,495,867) $Stinson(356,000)217,60074,2000(64,200)(281,400)(64,200)16,900(328,700)149,700130,5000203,80087,40022,000593,400(164,700)(100,000)(328,700)(593,400)Consolidation EntriesDebitCreditNCIConsolidatedTotals

Consolidation refers to the process of combining the financial statements of two or more companies…

On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $365,400. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $216,100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $243,600. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $75,100 and an unrecorded customer list (15-year remaining life) assessed at a $50,700 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Transfer Price to Stinson $155,625 150,800 Ending Balance (at transfer price) $51,875 37,700 Year Cost to McIlroy 2020 2021 $124,500 113, 100

On January 1, 2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $365,400. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $216,100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $243,600. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $75,100 and an unrecorded customer list (15-year remaining life) assessed at a $50,700 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables. Intra-entity inventory sales between the two companies have been made as follows: Transfer Price to Stinson $155,625 150,800 Ending Balance (at transfer price) $51,875 37,700 Year Cost to McIlroy 2020 2021 $124,500 113, 100

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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