accounting-Alpha acquires 80 perecent of Delta total buisnesss fair value
On January 1, 2012, Alpha acquires 80 perecent of Delta total buisnesss fair value, $125,000 was allocated to copyrights with a 20-year remainining life. nSubsequenetly, On 1, 2013, Delta obtained 70 pervcent of Omega outstanding voting shres. In this second acquisition, $120,000 of Omega;s total buisnesss fair value was assigned to copyrights thatnhad a remaining life of 12 years. Delta book value was $490,000 on January 1, 2012. Omega reported a book value of $140,000 on January 1, 2013.Deltamade numerours inventory transfers to Alpha since the business combination was formed. Unrealized groasss profits of $15,000 were present in Alpha;s inventory as of Janaury 1, 2014. During the year, $200,000 in additional intra-entity slaes were made with $22,000 in gross profit remaining unrealized at the end of the period.Both Alpha and Delta utilized the partial equity method to account for their invesmne balances.Following are the individual financial statesment for the companies for 2014 with consolidated total. Develop the worksheet entries necessary to derive these reported balance:Alpha Delta Omega ConsolidatedCompany Company Comp TotalSalesâ¦â¦â¦â¦â¦â¦â¦â¦ $(900,000) $(500,000) $(200,000) $(1,400,000)Cost of goods soldâ¦â¦â¦â¦â¦â¦â¦.. 500,000 240,000 80,000 627,000Operating expensesâ¦â¦â¦â¦â¦â¦â¦â¦â¦ 294,000 129,000 50,000 489,250Income of subsidiaryâ¦â¦â¦â¦â¦â¦â¦â¦â¦..(144,000) (49,000) 0 0Separterae company net incomeâ¦â¦â¦â¦….$(250,000) $(180,000) $(70,000)Consolidated net income â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦ $(283,750)Net income attributed to the noncontrollingIntereste(Delta Compnay)â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦.31,950Net income attributed to the noncontrollIntereset(Omega Company)â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦18,000Netincome attributable to the Alpha Companyâ¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦ 233,800Retained earnings, 1/1/14 . . . . . . . . . . $ (600,000) $ (400,000) $(100,000) $ (572,400)Net income (above) . . . . . . . . . . . . . . . . . . . . . . (250,000) (180,000) (70,000) (233,800)Dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 40,000 50,000 50,000Retained earnings, 12/31/14 . . . . . . . . . . . . . $ (800,000) $ (540,000) $(120,000) $ (756,200)Cash and receivables . . . . . . . . . . . . . . . . . . . . . $ 262,000 $ 206,000 $ 70,000 $ 538,000Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290,000 310,000 160,000 738,000Investment in Delta Company . . . . . . . . . . . . . . 628,000 â0â â0â â0âInvestment in Omega Company. . . . . . . . . . . . . â0â 238,000 â0â â0âProperty, plant, and equipment . . . . . . . . . . . . . 420,000 316,000 270,000 1,006,000Copyrights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . â0â â0â â0â 206,250Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,600,000 $ 1,070,000 $ 500,000 $ 2,488,250Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (600,000) $ (410,000) $(280,000) $(1,290,000)Common stock . . . . . . . . . . . . . . . . . . . . . . . . . (200,000) (120,000) (100,000) (200,000)Retained earnings, 12/31/14 . . . . . . . . . . . . . . . (800,000) (540,000) (120,000) (756,200)Noncontrolling interestin Delta Company, 12/31/14 . . . . . . . . . . . . . . â0â ,â0â, â0â , (146,050)Noncontrolling interestin Omega Company, 12/31/14. . . . . . . . . . . . . â0â â0â â0â (96,000)Total liabilities and equities. . . . . . . . . . . . . $(1,600,000) $(1,070,000) $(500,000) $(2,488,250)Summit owns a 90 percent majority voting interest in Treeline. In turn, Treeline owns a 70 percentmajority voting interest in Basecamp. In the current year, each firm reports the following income anddividends. Operating income figures do not include any investment or dividend income.Operating Income Dividends PaidSeparate Company Income Dividend DeclareSummit $345,000 $150,000Treeline 280,000 100,000Basecamp 175,000 40,000In addition, in computing its income on a full accrual basis, Treelineâs acquisition of Basecamp necessitatesexcess acquisition-date fair value over book value amortizations of $25,000 per year. Similarly,Summitâs acquisition of Treeline requires $20,000 of excess fair-value amortizations.RequiredPrepare an Excel spreadsheet that computes the following:1. Treelineâs income including its equity in Basecamp earnings.2. Summitâs income including its equity in Treelineâs total earnings.3. Total entity net income for the three companies.4. Total noncontrolling interest in the total entityâs net income.5. Difference between these elements:â¢Summitâs net income.â¢Total entity net income for the three companies less noncontrolling interest in the total entityâs netincome.(Hint:The difference between these two amounts should be zero.)
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