Park Corporation acquired 100 % of Safe Corporation on October 1, 2012 for $796,000. The annual excess amortization as a result the overvaluation of buildings (with a 40-year life) was calculated to be $1,200 each year, while the annual excess amortization as a result of the undervaluation of a patent was calculated to be $4,000 each year (over the next 15 years). The purchase was accounted for using the equity method.
Inventory records reveal that from 2014 to 2016 the Park transferred the following inventory to Safe as follows:
Cost Transfer Price Unsold goods at Year-End*
50,000 80,000 10,000
80,000 100,000 20,000
100,000 125,000 30,000
*The ending inventories are at transfer price.
1. Prepare Consolidation Worksheet Entry E at December 31, 2016:
2. The unsold goods at 12/31/15 were sold in 2016. Prepare Consolidation Worksheet Entry *G at December 31, 2016. (In order to receive credit, you must show your calculations):
3. Prepare Consolidation Worksheet Entry TI at December 31, 2016:
4. Prepare Consolidation Worksheet Entry G at December 31, 2016 (In order to receive credit, you must show your calculations):
Continuing with the facts above, in addition to the inventory transactions, on January 1, 2015, Park Corp. transferred equipment to Safe Corp for $100,000. The equipment had originally cost $120,000 but had accumulated depreciation of $80,000 on the date of the transfer. The equipment's remaining estimated useful life was 4 years (straight-line depreciation and $0 salvage value).
5. Prepare Consolidation Worksheet Entry TA at December 31, 2016 (In order to receive credit, you must show your calculations):
6. Prepare Consolidation Worksheet Entry ED at December 31, 2016 (In order to receive credit, you must show your calculations):
7. Below is a worksheet at December 31, 2016 containing only specified accounts. Using the book value totals provided below, post each of the worksheet entries for this problem for the specific accounts and total. Be sure to label your worksheet entries below:
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12/31/2016
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12/31/2016
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park corp.
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safe corp.
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DR.
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CR.
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Consolidated
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cost of goods sold
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350,000
|
120,000
|
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depreciation expense
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140,000
|
115,000
|
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amortization expense
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84,000
|
68,000
|
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equipment
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540,000
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285,000
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accumulated depreciation equipment
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(230,000)
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(166,000)
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|
inventory
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216,000
|
185,000
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