Anchovy acquired 90 percent of Yelton on January 1, 2009. 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
2009
$20,000
$ 50,000
$20,000 (at transfer price)
2010
49,000
70,000
30,000 (at transfer price)
2011
50,000
100,000
40,000 (at transfer price)
On January 1, 2010, Anchovy sold Yelton a building for $50,000 that had originally cost $70,000but had only a $30,000 book value at the date of transfer. The building is estimated to have a fiveyear remaining life (straight-line depreciation is used with no salvage value).
Selected figures from the December 31, 2011, 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
Equipment (net)
140,000
110,000
Buildings (net)
350,000
190,000
Determine consolidated totals for each of these account balances.
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