Following are several figures reported for Alister and Barone as of December 31,

Question

Following are several figures reported for Alister and Barone as of December 31, 2015: Barone 490,000 $ 290,000 980,000 780,000 Allister Inventory Sales Investment income Cost of goods sold Operating expenses not given 490,000 390,000 225,000 295,000 Allister acquired 80 percent of Barone in January 2014. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $76,000 that was unrecorded on its accounting records and had a five-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2015, Barone sells inventory costing $129,000 to Allister for $178,000. Of this amount, 20 percent remains unsold in Allister's warehouse at year-end. Determine balances for the following items that would appear on Allister's consolidated financial statements for 2015: Amounts Inventory Sales Cost of goods sold Operating expenses Net income attributable to Noncontrolling Interest

Explanation / Answer

SOLUTION Amounts Inventory (490,000 + 290,000 - 9800) 770,200 Sales (980,000 + 780,000 - 178,000) 1,582,000 COGS (490000 + 390000 + 9800 - 178000 711,800 Operating Expenses 535,200 (46,000/5 = 15,200; 225000 + 295000 + 15200 Net income contributed to noncontrolling interest (20%) 14,000 Working Intra-entity gross profit (178000 - 129000) 49,000 Inventory remaining at the end 20% Intra-entity gross profit in ending inventory 9,800 Barone's net income 95,000 Intra-entity gross profit deferral -9,800 Excess fair value amortization -15,200 Adjusted subsidiary net income 70,000 Net income contributed to noncontrolling interest (20%) 14,000

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