(Solution) - Peninsula Industries and Seaport Company a 90 percent owned subsidiary -(2025 Original AI-Free Solution)

Paper Details

Peninsula Industries and Seaport Company, a 90 percent owned subsidiary, engage in extensive intercompany transactions involving raw materials, component parts, and completed products. Peninsula acquired its interest in Seaport several years ago, at a cost of $3,000,000. At that time, Seaport's book value was $2,000,000 and the fair value of the noncontrolling interest in Seaport was $275,000. The excess of acquisition cost over book value was attributed to previously unrecorded indefinite-lived intangibles, valued at $500,000, and to goodwill. As of January 1, 2013, the intangibles were impaired by $200,000 and the goodwill was impaired by $300,000. Impairment testing reveals no additional impairment of either asset in 2013. Intercompany sales for 2013 and the unconfirmed intercompany profits in the beginning and ending inventories of both companies are summarized below:

Prior to consolidation at December 31, 2013, the separate condensed trial balances of the two companies arc shown below:
Required
a. Prepare a schedule to calculate total goodwill for this acquisition and its allocation to the controlling and noncontrolling interests.
b. Prepare a schedule to show how the equity method income accrual for 2013 was computed, and to compute noncontrolling interest in net income for 2013.
c. Prepare a working paper consolidating the trial balances of Peninsula and Seaport for 2013.