Chapter 7 Hoyle Consolidation
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Transcript of Chapter 7 Hoyle Consolidation
"Son's" Fair Value 1,010,000 Percent Interest in "Son" 70%Consideration Transferred 707,000 Fair Value of NCI 303,000 "Son's" Book Value 790,000
Excess Fair Value Over Book Value 220,000 Depreciable Life
To Buildings 60,000 20 3,000 To Equipment (20,000) 4 (5,000)To Franchises 40,000 10 4,000 To Goodwill 140,000 Indefinite
Year 25% Markup
2012 120,000 40,000 $ 32,000 $ 8,000 2013 150,000 60,000 $ 48,000 $ 12,000 2014 200,000 90,000 $ 72,000 $ 18,000
House Corporation and Consolidated Subsidiaries
Debit
Sales and other revenues (900,000) (700,000) (300,000) 200,000 Cost of goods sold 551,000 300,000 140,000 $ 18,000 Operating expenses 219,000 270,000 90,000 2,000 Income of "Son" Company (91,000) - - 91,000 Income of "Grandson" Company (28,000) (28,000) - 56,000
Net income $ (249,000) $ (158,000) $ (70,000)Net Income NCI "Son"Net Income NCI "Grandson"Net Income - Parent
Retained earnings, 1/1/14 (820,000) (590,000) (150,000) Parent 11,200 Son 590,000 Grandson 150,000 Net income (above) (249,000) (158,000) (70,000)Dividends paid 100,000 96,000 50,000 Parent Son GrandsonRetained earnings, 12/31/14 $ (969,000) $ (652,000) $ (170,000)
Cash and receivables 220,000 334,000 67,000 Inventory 390,200 320,000 103,000 Investment in "Son" Company 807,800 - - $ 67,200
Depreciation Per Year
Intra-EntityPurchases
Retained Intra-Entity Inventory
OriginalCost
Parent Corporation
Son Corporation
Grandson Corporation
Investment in "Grandson" Company 128,000 128,000 - 40,000
Buildings 385,000 320,000 144,000 54,000 Equipment 310,000 130,000 88,000 5,000 Land 180,000 300,000 16,000 Franchise Contracts 32,000 Goodwill 140,000
Total assets $ 2,421,000 $ 1,532,000 $ 418,000
Liabilities (632,000) (570,000) (98,000) Noncontrolling Interest Son
Noncontrolling Interest GrandsonNoncontrolling Interest in SubsCommon stock (820,000) (310,000) (150,000) 460,000 Retained earnings, 12/31/14 (969,000) (652,000) (170,000)
Total liabilities and equities $ (2,421,000) $ (1,532,000) $ (418,000) 1,916,400
FMV Grandson $ 300,000 % Interest 80%
$ 240,000 % NCI 20%NCI Grandson $ 60,000
No. of Years 2
Resold in 2013Resold in 2014 *G transaction Resold in 2015
House Corporation and Consolidated Subsidiaries
Credit Consolidated
(1,700,000) $ 212,000 797,000
581,000 - -
(322,000) (45,000.0) 45,000.0 (14,000.0) 14,000.0
(263,000)
(808,800)
(263,000)
100,000 67,200 $ 28,800 40,000 $ 10,000
$ (971,800)
621,000 $ 18,000 795,200 $ 621,600 -
InvestmentIn Grandson
Non-ControllingInterest
$ 91,000.0 $ 11,200.0 $ 151,200 $ 240,000 - $ 56,000 3,000 900,000 10,000 523,000
496,000 4,000 28,000
140,000
3,503,200
(1,300,000) $ 64,800 $ 266,400 $ (331,200) $ - $ 60,000 $ (60,000) $ -
$ (411,400) (820,000) $ (971,800)
1,916,400 (411,400) (3,503,200)