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  3. on january 1,2020, mcllroy, inc., acquired a 60 pe

On January 1,2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of...

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Accounting

On January 1,2020, Mcllroy, Inc., acquired a 60 percent interest in the common stock of Stinson, Inc., for $384,000. Stinson's book value on that date consisted of common stock of $100,000 and retained earnings of $227,100. Also, the acquisition-date fair value of the 40 percent noncontrolling interest was $256,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $73,300 and an unrecorded customer list (15-year remaining life) assessed at a $49,500 fair value. Any remaining excess acquisition-date fair value was assigned to goodwill. Since acquisition, Mcllroy has applied the equity method to its Investment in Stinson account and no goodwill impairment has occurred. At year-end, there are no intra-entity payables or receivables.
Intra-entity inventory sales between the two companies have been made as follows:
\table[[,,Transfer Price,Ending Balance],[Year,Cost to McIlroy,to Stinson,(at transfer price)],[2020,$123,600,$154,500,$51,500
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