Question - Anchovy acquired 90 percent of Yelton on January 1, 2011. 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
|
|
2011
|
$20,000
|
$ 50,000
|
$20,000 (at transfer price)
|
|
2012
|
49,000
|
70,000
|
30,000 (at transfer price)
|
|
2013
|
50,000
|
100,000
|
40,000 (at transfer price)
|
On January 1, 2012, 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, 2013, 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
|
Determine consolidated totals for each of these account balances.