Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. palmer acquired 90% of sutton in january of year 1

Palmer acquired 90% of Sutton in January of year 1. In allocating the newly acquired...

50.1K

Verified Solution

Question

Accounting

Palmer acquired 90% of Sutton in January of year 1. In allocating the newly acquired subsidiary's fair value at the acquistion date, Palmer noted that Sutton had developed a manufacturing process that was worth approximatly $78,000 (because the process had been developed internally, no value had been assigned or recorded in the accounting records). The process was deemed to have 4 years of remaining value. Any remaining excess fair value over Sutton's book value was atrributed to goodwill. During year 2, Sutton sold inventory costing $130,000 to Palmer for $180,000. Of this amount, 10% remained unsold in Palmer's warehouse at the end of year 2.

Required:

a) compute the balance of inventory as it would appear on Palmer's consolidated financial statements for year 2.

b) compute the balance of sales as it would appear on Palmer's consolidated financial statements for year 2.

c) compute the balance of cost of goods sold as it would appear on Palmer's consolidated financial statements for year 2.

d) If there was any gross profit deferral, how would it be allocated? All to Palmer? All to the noncontrolling interest? Allocated between Palmer and the noncontrolling interest?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students