Protrade Corporation acquired 70 percent of the outstanding voting stock of Seac

Question

Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $441,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of$775,000 and the fair value of the 30 percent noncontrolling interest was $189,000. 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, 2018: Sales Cost of goods sold Operating expenses Retained earnings, 1/1/18 Inventory Buildings (net) Investment income Protrade Seacraft 890,000 610,000 415,000 322,000 175,000 130,000 990,000 430,000 371,000 135,000 383,000 182,000 Not given Each of the following problems is an independent situation:

Explanation / Answer

PART A cost of goods sold 553250 inventory 471125 noncontrolling interest in subsidiary's net income 40200 cost of goods sold Protrade’s cost of goodssold 385000 Seacraft’s cost of goodssold 292000 Elimination of 2018 intra-entity transfers -129000 Reduction of beginningInventory because of2017 unrealized grossprofit -17625 (47000/1.6)-47000 Reduction of endinginventory because of2018 unrealized grossprofit 22875 61000-(61000 /1.6) Consolidated costof goods sold 553250 Consolidated inventory Protrade book value 365000 Seacraft book value 129000 Defer ending unrealized gross profit -22875 Consolidated inventory 471125 noncontrolling interest in subsidiary's net income sales 550000 less: cost of goods sold 292000 Less: operating expenses 124000 net income 134000 owership 30% noncontrolling interest in subsidiary's net income 40200 PART B cost of goods sold 583250 inventory 473750 noncontrolling interest in subsidiary's net income 38625 cost of goods sold Protrade’s cost of goodssold 385000 Seacraft’s cost of goodssold 292000 Elimination of 2018 intra-entity transfers -99000 Reduction of beginningInventory because of2017 unrealized grossprofit -15000 (40000/1.6)-40000 Reduction of endinginventory because of2018 unrealized grossprofit 20250 54000-(54000 /1.6) Consolidated costof goods sold 583250 Consolidated inventory Protrade book value 365000 Seacraft book value 129000 Defer ending unrealized gross profit -20250 Consolidated inventory 473750 noncontrolling interest in subsidiary's net income sales 550000 less: cost of goods sold 292000 Less: operating expenses 124000 net income 134000 unrealized profit prior year 15000 unrealized profit current year -20250 128750 owership 30% noncontrolling interest in subsidiary's net income 38625 PART C consolidated buildings 517800 consolidated operatinge expenses 283200 noncontrolling interest in subsidiary's net income 40200 consolidated buildings Protrade’s builing 377000 Seacraft’s building 176000 removal of write up from transfer -49000 69000-118000 years used 13800 (118000/5)-((118000/5)-(69000/5)) consolidated buildings 517800 consolidated operatinge expenses Protrade operating expense 169000 Seacraft operating expense 124000 Less: annual depreciaiton -9800 (-((118000/5)-(69000/5))) Consolidated inventory 283200 noncontrolling interest in subsidiary's net income sales 550000 less: cost of goods sold 292000 Less: operating expenses 124000 net income 134000 owership 30% noncontrolling interest in subsidiary's net income 40200

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