Problem 5-31 (Algo) (LO 5-1, 5-2, 5-3, 5-4, 5-5, 5-6, 5-7) The individual financial statements...
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Problem 5-31 (Algo) (LO 5-1, 5-2, 5-3, 5-4, 5-5, 5-6, 5-7) The individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $330,000. At the acquisition date, the fair value of the noncontrolling interest was $220,000 and Bellstars book value was $430,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $120,000. This intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its investment in Bellstar. Abbey sold Bellstar land with a book value of
Problem 5-31 (Algo) (LO 5-1, 5-2, 5-3, 5-4, 5-5, 5-6, 5-7) The individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $330,000. At the acquisition date, the fair value of the noncontrolling interest was $220,000 and Bellstar's book value was $430,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $120,000. This intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its investment in Bellstar. Abbey sold Bellstar land with a book value of $55,000 on January 2,2023 , for $110,000. Bellstar still holds this land at the end of the current year. Bellstar regularly transfers inventory to Abbey. In 2023, it shipped inventory costing $110,500 to Abbey at a price of $170,000. During 2024 , intra-entity shipments totaled $220,000, although the original cost to Bellstar was only $132,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $40,000 at the end of 2024. Note: Parentheses indicate a credit balance. Requlred: a. Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar. b. How would the consolidation entries in requirement (a) have differed if Abbey had sold a building on January 2, 2023, with a $70,000 book value (cost of $160,000 ) to Bellstar for $120,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar. Note: Do not round intermediate calculations. 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. Input all amounts as positive values
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Problem 5-31 (Algo) (LO 5-1, 5-2, 5-3, 5-4, 5-5, 5-6, 5-7) The individual financial statements for Abbey Company and Bellstar Company for the year ending December 31, 2024, follow. Abbey acquired a 60 percent interest in Bellstar on January 1, 2023, in exchange for various considerations totaling $330,000. At the acquisition date, the fair value of the noncontrolling interest was $220,000 and Bellstar's book value was $430,000. Bellstar had developed internally a trademark that was not recorded on its books but had an acquisition-date fair value of $120,000. This intangible asset is being amortized over 20 years. Abbey uses the partial equity method to account for its investment in Bellstar. Abbey sold Bellstar land with a book value of $55,000 on January 2,2023 , for $110,000. Bellstar still holds this land at the end of the current year. Bellstar regularly transfers inventory to Abbey. In 2023, it shipped inventory costing $110,500 to Abbey at a price of $170,000. During 2024 , intra-entity shipments totaled $220,000, although the original cost to Bellstar was only $132,000. In each of these years, 20 percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $40,000 at the end of 2024. Note: Parentheses indicate a credit balance. Requlred: a. Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar. b. How would the consolidation entries in requirement (a) have differed if Abbey had sold a building on January 2, 2023, with a $70,000 book value (cost of $160,000 ) to Bellstar for $120,000 instead of land, as the problem reports? Assume that the building had a 10-year remaining life at the date of transfer. Prepare a worksheet to consolidate the separate 2024 financial statements for Abbey and Bellstar. Note: Do not round intermediate calculations. 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. Input all amounts as positive values
