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House Corporation has been operating profitably since its creation in 1960. At the beginning of 2016, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: $ 875,000 375,000 $ 1,250,000 856,000 5 394,000 Consideration transferred for 70% interest in Wilson Fair value of the 30% noncontrolling interest Wilson business fair value Wilson book value Excess fair value over book value Assignments to adjust Wilson's assets to fair value: To buildings (20-year remaining life) To equipment (4-year remaining life) To franchises (18-year remaining life) To goodwill (indefinite life) $ 154, eee (30,400) 72.500 196,100 197,900 House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House's purchases during 2016 and 2017 and related ending inventory balances follow Intra-Entity Remaining Intra-Entity Inventory Year Purchases End of Year (at transfer price) 2016 $105,820 $35,000 2017 137,500 55,000 On January 1, 2018, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's outstanding common stock The total price of these shares was $312,000, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2018. House acquired additional Inventory from Wilson at a price of $295.000. Of this merchandise. 45 percent is still held at year-end. $ Wilson Company (859, 200) 37e, eee 290, eee $ Cuddy Company (390, 400) 216, eee 99,900 $ Sales and other revenues Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equities House Corporation $ (1,821,760) 576, eee 285,000 (139,440) (29,800) $ (330, eee) $ (851,890) (330, eee) 100, eee $ (1,081, eee) $ 38,610 432,950 1,846,640 165,888 424, eee 251, eee 201,000 $ 2,560,000 $ (659,000) (820,000) (1,081, eee) $ (2,560,000) (74,500) (240,000) (74,500) 50,000 (264, See) 72,5ee 260, 700 @ $ $ (29,880) $ (229, eee) $ (688, eee) (229, eee) 96, eee $ (821, eee) 275, 200 320, eee 165,800 410, eee 212, eee 352, eee $ 1,735, eee $ (684, eee) (310, eee) (821, eee $ (1,735, eee) $ $ 166,080 88,700 21,600 609,5ee (195,000) (150,000) (264, See) (609,500) $ Note: Parentheses indicate a credit balance. Using the three companies' following financial records for 2018, prepare a consolidation worksheet. The partial equity method based on separate company incomes has been applied to each investment. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) Noncontrolling Consolidated Interest Balance 0 HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries Accounts House Wilson Cuddy Debit Corporation Company Company Credit Sales and other revenue (1.021,760) (859,200) (390,400) Cost of goods sold 576,000 370,000 216,000 Operating expenses 285,000 290,000 99,900 Income of Wilson Company (139,440) Income of Cuddy Company (29,800) (29,800) Net income (330,000) (229,000) (74,500) Consolidated net income Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuddy) Net income attributable to House Corporation Retained earnings, 1/1/18: House Corporation (851,000) Wilson Company (688,000) Cuddy Company (240.000) Not income (330,000) (229,000) (74,500) Dividends declared House Corporation 100,000 Wilson Company 96,000 Cuddy Company 50,000 Retained earnings, 12/31/18 (1,081,000) (821,000) (264,500) Cash and receivables 38,610 275,200 72,500 Inventory 432,950 320,000 260,700 0 1,046,640 165,800 424,000 251,000 201,000 165,800 410,000 212,000 352,000 166,000 88.700 21.600 Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Goodwill Franchise contracts Total assets Liabilities Noncontrolling interest in Cuddy Noncontrolling interest in Wilson Noncontrolling interest in subsidiary companies Common stock Retained earnings (above) Total liabilities and equities 2,560,000 (659,000) 1,735,000 (604,000) 609,5001 (195,000) (820,000) (310.000) (1,081,000) (821,000) (2,560,000) (1,735,000) (150,000) (264,500) (609,500) 0 House Corporation has been operating profitably since its creation in 1960. At the beginning of 2016, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: $ 875,000 375,000 $ 1,250,000 856,000 5 394,000 Consideration transferred for 70% interest in Wilson Fair value of the 30% noncontrolling interest Wilson business fair value Wilson book value Excess fair value over book value Assignments to adjust Wilson's assets to fair value: To buildings (20-year remaining life) To equipment (4-year remaining life) To franchises (18-year remaining life) To goodwill (indefinite life) $ 154, eee (30,400) 72.500 196,100 197,900 House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House's purchases during 2016 and 2017 and related ending inventory balances follow Intra-Entity Remaining Intra-Entity Inventory Year Purchases End of Year (at transfer price) 2016 $105,820 $35,000 2017 137,500 55,000 On January 1, 2018, House and Wilson acted together as co-acquirers of 80 percent of Cuddy Company's outstanding common stock The total price of these shares was $312,000, indicating neither goodwill nor other specific fair-value allocations. Each company put up one-half of the consideration transferred. During 2018. House acquired additional Inventory from Wilson at a price of $295.000. Of this merchandise. 45 percent is still held at year-end. $ Wilson Company (859, 200) 37e, eee 290, eee $ Cuddy Company (390, 400) 216, eee 99,900 $ Sales and other revenues Cost of goods sold Operating expenses Income of Wilson Company Income of Cuddy Company Net income Retained earnings, 1/1/18 Net income (above) Dividends declared Retained earnings, 12/31/18 Cash and receivables Inventory Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Total assets Liabilities Common stock Retained earnings, 12/31/18 Total liabilities and equities House Corporation $ (1,821,760) 576, eee 285,000 (139,440) (29,800) $ (330, eee) $ (851,890) (330, eee) 100, eee $ (1,081, eee) $ 38,610 432,950 1,846,640 165,888 424, eee 251, eee 201,000 $ 2,560,000 $ (659,000) (820,000) (1,081, eee) $ (2,560,000) (74,500) (240,000) (74,500) 50,000 (264, See) 72,5ee 260, 700 @ $ $ (29,880) $ (229, eee) $ (688, eee) (229, eee) 96, eee $ (821, eee) 275, 200 320, eee 165,800 410, eee 212, eee 352, eee $ 1,735, eee $ (684, eee) (310, eee) (821, eee $ (1,735, eee) $ $ 166,080 88,700 21,600 609,5ee (195,000) (150,000) (264, See) (609,500) $ Note: Parentheses indicate a credit balance. Using the three companies' following financial records for 2018, prepare a consolidation worksheet. The partial equity method based on separate company incomes has been applied to each investment. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the Noncontrolling Interest and Consolidated Totals columns should be entered with a minus sign.) Noncontrolling Consolidated Interest Balance 0 HOUSE CORPORATION AND CONSOLIDATED SUBSIDIARIES Consolidation Worksheet December 31, 2018 Consolidation Entries Accounts House Wilson Cuddy Debit Corporation Company Company Credit Sales and other revenue (1.021,760) (859,200) (390,400) Cost of goods sold 576,000 370,000 216,000 Operating expenses 285,000 290,000 99,900 Income of Wilson Company (139,440) Income of Cuddy Company (29,800) (29,800) Net income (330,000) (229,000) (74,500) Consolidated net income Net income attributable to noncontrolling interest (Wilson) Net income attributable to noncontrolling interest (Cuddy) Net income attributable to House Corporation Retained earnings, 1/1/18: House Corporation (851,000) Wilson Company (688,000) Cuddy Company (240.000) Not income (330,000) (229,000) (74,500) Dividends declared House Corporation 100,000 Wilson Company 96,000 Cuddy Company 50,000 Retained earnings, 12/31/18 (1,081,000) (821,000) (264,500) Cash and receivables 38,610 275,200 72,500 Inventory 432,950 320,000 260,700 0 1,046,640 165,800 424,000 251,000 201,000 165,800 410,000 212,000 352,000 166,000 88.700 21.600 Investment in Wilson Company Investment in Cuddy Company Buildings Equipment Land Goodwill Franchise contracts Total assets Liabilities Noncontrolling interest in Cuddy Noncontrolling interest in Wilson Noncontrolling interest in subsidiary companies Common stock Retained earnings (above) Total liabilities and equities 2,560,000 (659,000) 1,735,000 (604,000) 609,5001 (195,000) (820,000) (310.000) (1,081,000) (821,000) (2,560,000) (1,735,000) (150,000) (264,500) (609,500) 0

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