On January 1, 2022, Allan Company acquired 80 percent of Bond Company. Of Bond's total business fair value, $131,000 was allocated to copyrights with a 20-year remaining life. Subsequently, on January 1, 2023, Bond obtained 70 percent of Cole Company's outstanding voting shares. In this second acquisition, $123,600 of Cole's total business fair value was assigned to copyrights that had a remaining life of 12 years. Bond's book value was $655,000 on January 1, 2022, and Cole reported a book value of $164,000 on January 1, 2023. Bond has made numerous inventory transfers to Allan since the business combination was formed. Intra-entity gross profits of $21,000 were present in Allan's inventory as of January 1, 2024. During the year, $212,000 in additional intra-entity sales were made with $23,320 in Intra-entity gross profits in inventory remaining at the end of the period. Both Allan and Bond utilized the equity method to account for their investment balances. Following are the individual financial statements for the companies for 2024 with consolidated totals Sales Operating expenses Cost of goods sold Income of subsidiary Separate company net income Consolidated net income Accounts Net income attributable to noncontrolling interest (Bond Company) Net income attributable to noncontrolling interest (Cole Company) Net income attributable to Allan Company Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Cash and receivables Inventory Investment in Bond Company Investment in Cole Company Property, plant, and equipment Copyrights Total assets Liabilities Common stock Retained earnings, 12/31/24 Noncontrolling interest in Bond Company, 12/31/24 Noncontrolling interest in Cole Company, 12/31/24 Total liabilities and equities Note: Parentheses indicate a credit balance. Required: Develop the worksheet entries necessary to derive these reported balances: Allan Company Bond Company $ (930,000) 512,000 297,000 (133,928) $ (254,928) $ (584,400) (254,928) 50,000 $ (789,328) $ 148,880 293,000 $ (512,000) 246,000 132,000 (42,280) $ (176,280) $ (565,000) (176,280) 40,000 $ (701,280) $ 375,390 507,500 Cole Company $ (285,700) 131,000 84,000 0 $ (70,700) $ (124,000) (70,700) 50,000 $ (144,700) $ 24,700 180,000 0 0 329,000 0 $ 533,700 Consolidated Totals $ (1,515,700) 679,320 529,850 0 $ (306,530) 33,482 18,120 $ (254,928) $ (584,400) (254,928) 50,000 $ (789,328) $ 548,970 957,180 0 0 1,108,500 214,350 $ 2,829,000 727,448 0 0 432,000 243,390 347,500 0 0 $ 1,601,328 $ 1,473,780 $ (652,500) (120,000) (701,280) $ (289,000) (100,000) (144,700) $ (1,553,500) (200,000) 0 0 0 (181,862) 0 0 0 (104,310) $ (1,601,328) $ (1,473,780) $ (533,700) $ (2,829,000) $ (612,000) (200,000) (789,328) (789,328)

On January 1, 2022, Allan Company acquired 80 percent of Bond Company. Of Bond's total business fair value, $131,000 was allocated to copyrights with a 20-year remaining life. Subsequently, on January 1, 2023, Bond obtained 70 percent of Cole Company's outstanding voting shares. In this second acquisition, $123,600 of Cole's total business fair value was assigned to copyrights that had a remaining life of 12 years. Bond's book value was $655,000 on January 1, 2022, and Cole reported a book value of $164,000 on January 1, 2023. Bond has made numerous inventory transfers to Allan since the business combination was formed. Intra-entity gross profits of $21,000 were present in Allan's inventory as of January 1, 2024. During the year, $212,000 in additional intra-entity sales were made with $23,320 in Intra-entity gross profits in inventory remaining at the end of the period. Both Allan and Bond utilized the equity method to account for their investment balances. Following are the individual financial statements for the companies for 2024 with consolidated totals Sales Operating expenses Cost of goods sold Income of subsidiary Separate company net income Consolidated net income Accounts Net income attributable to noncontrolling interest (Bond Company) Net income attributable to noncontrolling interest (Cole Company) Net income attributable to Allan Company Retained earnings, 1/1/24 Net income (above) Dividends declared Retained earnings, 12/31/24 Cash and receivables Inventory Investment in Bond Company Investment in Cole Company Property, plant, and equipment Copyrights Total assets Liabilities Common stock Retained earnings, 12/31/24 Noncontrolling interest in Bond Company, 12/31/24 Noncontrolling interest in Cole Company, 12/31/24 Total liabilities and equities Note: Parentheses indicate a credit balance. Required: Develop the worksheet entries necessary to derive these reported balances: Allan Company Bond Company $ (930,000) 512,000 297,000 (133,928) $ (254,928) $ (584,400) (254,928) 50,000 $ (789,328) $ 148,880 293,000 $ (512,000) 246,000 132,000 (42,280) $ (176,280) $ (565,000) (176,280) 40,000 $ (701,280) $ 375,390 507,500 Cole Company $ (285,700) 131,000 84,000 0 $ (70,700) $ (124,000) (70,700) 50,000 $ (144,700) $ 24,700 180,000 0 0 329,000 0 $ 533,700 Consolidated Totals $ (1,515,700) 679,320 529,850 0 $ (306,530) 33,482 18,120 $ (254,928) $ (584,400) (254,928) 50,000 $ (789,328) $ 548,970 957,180 0 0 1,108,500 214,350 $ 2,829,000 727,448 0 0 432,000 243,390 347,500 0 0 $ 1,601,328 $ 1,473,780 $ (652,500) (120,000) (701,280) $ (289,000) (100,000) (144,700) $ (1,553,500) (200,000) 0 0 0 (181,862) 0 0 0 (104,310) $ (1,601,328) $ (1,473,780) $ (533,700) $ (2,829,000) $ (612,000) (200,000) (789,328) (789,328)

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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