House Corporation has been operating profitably since its creation in 1960. At the beginning of 2012, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: Consideration transferred for 70 percent 843,500 interest in Wilson Fair value of the 30% noncontrolling 361,500 interest Wilson business fair value $1,205,000 Wilson book value 821,000 Excess fair value over book value 384,000 Assignments to adjust Wilson’s assets to fair value: To buildings (20-year life) $156,000 To equipment (4-year life) (33,000) To franchises (10-year life) 49.000 172,000 212,000 To goodwill (indefinite life House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House’s purchases during 2012 and 2013 and related ending inventory balances follow: Retained Intra-Entity Intra-Entity Inventory End of Year (at transfer price) Year Purchases 2012 90,000 $30,000 2013 125,000 50.000 Show transcribed image text House Corporation has been operating profitably since its creation in 1960. At the beginning of 2012, House acquired a 70 percent ownership in Wilson Company. At the acquisition date, House prepared the following fair-value allocation schedule: Consideration transferred for 70 percent 843,500 interest in Wilson Fair value of the 30% noncontrolling 361,500 interest Wilson business fair value $1,205,000 Wilson book value 821,000 Excess fair value over book value 384,000 Assignments to adjust Wilson’s assets to fair value: To buildings (20-year life) $156,000 To equipment (4-year life) (33,000) To franchises (10-year life) 49.000 172,000 212,000 To goodwill (indefinite life House regularly buys inventory from Wilson at a markup of 25 percent more than cost. House’s purchases during 2012 and 2013 and related ending inventory balances follow: Retained Intra-Entity Intra-Entity Inventory End of Year (at transfer price) Year Purchases 2012 90,000 $30,000 2013 125,000 50.000
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