Determination of Investment in Stinson account balance

Consideration transferred 334,800.00

Increase in Stinson’s retained earnings 1/1/17 to 1/1/18
[(285,800 – 197900) × 60%] 52740
Excess fair value amortization × 60% -7668
2017 ending inventory profit deferral (100%) -11475 33597.0
McIlroy’s equity in earnings of Stinson for 2018 37917
Stinson 2018 dividends declared to McIlroy -12660
Investment account balance 12/31/18 393,654.00

Stinson’s 2018 net income 72,600

Excess fair value amortization -12780
Adjusted net income 59,820
McIlroy’s percentage ownership 60%
McIlroy’s share of Stinson’s adjusted net income 35892
2017intra-entity inventory profit recognized 11475
2018 intra-entity inventory profit deferred -9450
McIlroy’s equity in earnings of Stinson 37917

Consideration transferred 334800

Noncontrolling interest fair value 223200
Subsidiary fair value at acquisition-date 558000
Acquisition-date book value 297900
Fair value in excess of book value 260100
Excess fair value assignments
to patents -86200
to customer list -62400
to goodwill 111500

Intra-entity profits (downstream) 2017 2018

Intra-entity transfers remaining in inventory 57375 37800
Gross profit rate** 20% 25%
11475 9450
**(172,125 – 137,700) ÷ 172,175 = 20%
(151,200 – 113,400) ÷ 151,200= 25%

NCI beginning 223200

Share in increase in RE 30048 (285800-197900-12780)*0.4
NINIS (2018) ( 59820-37917) 23,928
Dividends ( 21100*.40) -8440
NCI End 268736
 Remaining Annual Excess
Life Amortizations
-86,200 10 -8620
-62,400 15 -4160
-12780

85800-197900-12780)*0.4
 McIlroy, Inc. Stinson, Inc. Dr Cr Consolidated

Sales -757,000 -398,000 151,200 -1,003,800

Cost of goods sold 497,500 242,800 9,450 162,675 587,075
Operating expenses 201,705 82,600 12,780 297,085
Equity in earnings in
-37,917 0 37,917 0
Stinson
Net income -95,712 -72,600 -119,640
Retained earnings,
-838,200 -285,800 285,800 -838,200
1/1/18
Net income -95,712 -72,600 -119,640
NINIS 23,928 23,928
Dividends declared 50,900 21,100 21,100 50,900
Retained earnings,
-883,012 -337,300 -883,012
12/31/18
Cash and receivables 300,500 153,600 454,100
Inventory 282,300 133,800 9,450 406,650
Investment in Stinson 393,654 0 393,654 0
Buildings (net) 366,000 208,300 574,300
Equipment (net) 261,100 91,800 352,900
Patents (net) 0 26,600 86200 17,240 95,560
Customer list 62,400 8,320 54,080
Goodwill 111500 111500
Total assets 1,603,554 614,100 2,049,090
Liabilities -420,542 -176,800 -597,342
Common stock -300,000 -100,000 100,000 -300,000
Retained earnings,
-883,012 -337,300 -883,012
12/31/18
NCI 268,736 -268,736
Total liabilities and
-1,603,554 -614,100 -2,049,090
equities
0

The problem relates to business combination. The problem requires worksheetr for consolidation.