Question - Anchovy acquired 90 percent of Yelton on January 1, 2009. Of Yelton's total acquisition-date fair value, $60,000 was allocated to undervalued equipment (with a 10-year life) and $80,000 was attributed to franchises (to be written off over a 20-year period).
Since the takeover, Yelton has transferred inventory to its parent as follows:
Year Cost Transfer Price Remaining at Year-End
2009 $ 20,000 $ 50,000 $ 20,000 (at transfer price)
2010 49,000 70,000 30,000 (at transfer price)
2011 50,000 100,000 40,000 (at transfer price)
On January 1, 2010, Anchovy sold Yelton a building for $50,000 that had originally cost $70,000 but had only a $30,000 book value at the date of transfer. The building is estimated to have a five year remaining life (straight-line depreciation is used with no salvage value).
Selected figures from the December 31, 2011, trial balances of these two companies are as follows:
Anchovy Yelton
Sales $ 600,000 $ 500,000
Cost of goods sold 400,000 260,000
Operating expenses 120,000 80,000
Investment income Not given 0
Inventory 220,000 80,000
Equipment (net) 140,000 110,000
Buildings (net) 350,000 190,000
Required: Determine consolidated totals for each of these account balances.