80%, equity, beginning and ending inventory, write-down, note. On January 1, 2015, Silvio Corporation exchanged on a 1-for-3 basis common stock it held in its treasury for 80% of the outstanding stock of Jenko Company. Silvio Corporation common stock had a market price of $40 per share on the exchange date. On the date of the acquisition, the stockholders’ equity section of Jenko Company was as follows:
Also on that date, Jenko Company’s book values approximated fair values, except for the land, which was undervalued by $75,000. The remaining excess was attributable to goodwill. Information regarding intercompany transactions for 2017 follows:
a. Silvio Corporation sold merchandise to Jenko Company, realizing a 30% gross profit. Sales during 2017 were $140,000. Jenko had $25,000 of the 2016 purchases in its beginning inventory for 2017 and $35,000 of the 2017 purchases in its ending inventory for 2017. Jenko wrote down to $28,000 the merchandise purchased from Silvio Corporation and remaining in its 2017 ending inventory.
b. Jenko signed a 12%, 4-month, $10,000 note to Silvio in order to cover the remaining balance of its payables on November 1, 2017. No new merchandise was purchased after this date.
The trial balances of Silvio Corporation and Jenko Company as of December 31, 2017, were as follows:
Prepare the worksheet necessary to produce the consolidated financial statements of Silvio Corporation and its subsidiary for the year ended December 31, 2017. Include the value analysis and determination and distribution of excess schedule and the income distribution schedules.