Reference no: EM132770929

Protrade Corporation acquired 70 percent of the outstanding voting stock of Seacraft Company on January 1, 2020, for $416,500 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $595,000, and the fair value of the 30 percent noncontrolling interest was $178,500. 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, 2021:

                                                Protrade             Seacraft

Sales                                  $710,000             $430,000

Cost of goods sold                  325,000               232,000

Operating expenses                   157,000              112,000

Retained earnings, 1/1/21             810,000              250,000

Inventory                                  353,000                 117,000

Buildings (net)                          365,000                   164,000

Investment income                    Not given                       0

Each of the following problems is an independent situation:

a Assume that Protrade sells Seacraft inventory at a markup equal to 60 percent of cost. Intra-entity transfers were $97,000 in 2020 and $117,000 in 2021. Of this inventory, Seacraft retained and then sold $35,000 of the 2020 transfers in 2021 and held $49,000 of the 2021 transfers until 2022.

Problem 1: Determine balances for the following items that would appear on consolidated financial statements for 2021:

1. Cost of Goods Sold
2. Inventory
3. Net Income Attributable to Noncontrolling Interest