Reference no: EM133975626

Problem

On January 1, Jarel acquired 80% of the outstanding voting stocks of Suarez for $260,000 cash consideration. The remaining 20% of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (5-year life) that was undervalued on its book by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded in Suarez's financial records, were estimated to have a 20-year future life.

As of December 31, the financial statements appeared as follows:

Jarel Suarez
Revenues (300,000) (200,000)
Cost of Goods Sold 140,000 80,000
Expenses 20,000 10,000
Equity in Investee Income (70,000)
Net Income (210,000) (110,000)
Retained Earnings, 1/1 (300,000) (150,000)
Net Income (210,000) (110,000)
Dividend Paid 0 0
Retained Earnings, 12/31 (510,000) (260,000)
Cash and receivables 210,000 90,000
Inventory 150,000 110,000
Investment in Suarez 330,000
Equipment (net) 440,000 300,000
Total Assets 1,130,000 500,000
Liabilities (420,000) (140,000)
Common Stock (200,000) (100,000)
Retained Earnings 12/31 (510,000) (260,000)
Total Liabilities and Equity (1,130,000) (500,000)

During the year, Jarel bought inventory for $80,000 and sold it to Suarez for $100,000. Of thesegoods,
Suarez still owns 60% on December 31.

I. What is the goodwill at the acquisition date?

II. What is the ECOBV amortization? Get the instant assignment help.

III. What is the consolidated total of non-controlling interest appearing on the balance sheet?

IV. Prepare the consolidation journal entries

V. Complete the consolidation worksheet and then answer the following questions:

i. What is the total consolidated revenue?
ii. What is the total consolidated cost of goods sold?
iii. What is the consolidated total for equipment (net) at December 31?
iv. What is the consolidated total for inventory at December 31?