Company Granite purchased 80% of Company Marble on January 1, 20X1, for $700,000, when the net book value of Company Marble was $900,000. The fair value of the net identifiable assets of Marble on that date was $1,000,000. The carrying (i.e., book) and fair values of the net identifiable assets and associated future expected lives of Company Marble are provided below:
All amortization is charged on a straight-line basis. The retained earnings of Company Marble on the date of acquisition were $400,000. The separate entity SFP of Granite on January 1, 20X1, after the acquisition is provided below:
During 20X1, Marble sold inventory costing $100,000 to Granite for $150,000. Half of the inventory purchased from Marble remained unsold in the inventory of Granite at the end of 20X1. The remaining inventory was sold to an outside party by Granite in 20X2.
During 20X1, Marble sold land costing $100,000 to Granite for $150,000. This land remains unsold with Granite at the end of 20X2.
In 20X2, Granite sold goods costing $80,000 to Marble for $120,000. One-quarter of the inventory purchased from Granite during 20X2 remained unsold in the of Marble at the end of 20X2.
The separate-entity balance sheets of Company Granite and Company Marble as at December 31, 20X2, are provided below.
Required
a. Provide the consolidated on the date of acquisition under proportional consolidation.
b. Provide the following SFP consolidated amounts on December 31, 20X2, under the entity method:
i. Consolidated retained earnings; and
ii. Non-controlling interest balance.
Provide the adjusted net incomes of Granite and Marble, respectively, for 20X2 if the separate entity net incomes of Granite and Marble in 20X2 were $150,000 and $120,000, respectively, and Marble paid dividends of $30,000 in 20X2.
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