On January 1, 2024, Power acquired a 60% ownership in Streng…
On January 1, 2024, Power acquired a 60% ownership in Strength for $372. Strength’s book value on that date consisted of common stock of $100 and retained earnings of $220. Also, the acquisition-date fair value of the 40 percent NCI was $248. Strength held patents with a 10-year remaining life that were undervalued within the accounting records by $70 and an unrecorded customer list with a 15-year remaining life assessed at a $45 fair value. In 2025, Power sold inventories to Strength for $160, although the original cost was only $112. At year-end, $40 of the goods (at the transfer price) were still on hand. Please fill out the following blanks. (1) FV of Consideration Transferred FV of NCI at the Acquisition date Total FV – Book Value of Strength Excess Payment FV adjustments: Remaining life Annual Amortization Patents 10 Customer List 15 Goodwill (2) The unrealized gain from the intra-entity inventory transaction in 2025 is: (3) Please complete the 2025 worksheet below: Power Strength DR CR NCI Sales (700) (335) TI Cost of goods sold 460 205 G TI Operating expenses 188 70 E Income of Strength (28) I Separate income (80) (60) Consolidated net income to NCI to parent Retained earnings, 1/1 (695) (280) S Net income (above) (80) (60) Dividends paid 45 15 D Retained earnings, 12/31 (730) (325) Cash and receivables 248 148 Inventory 233 129 G Investment in Strength 421 D S A I Buildings (net) 308 202 Equipment (net) 220 86 Patents (net) 20 A E Customer list A E Goodwill A Total assets 1,430 585 Liab. (400) (160) Common stock (300) (100) S Noncontrolling interest 1/1 S A Noncontrolling interest 12/31 Retained earnings, 12/31 (730) (325) Total liabilities and equities (1,430) (585)