Jet Corp Acquired All of the Outstanding Shares of Nittle Inc

question 92

Essay

Jet Corp. acquired all of the outstanding shares of Nittle Inc. on January 1, 2011, for $644,000 in cash. Of this price, $42,000 was attributed to equipment with a ten-year remaining useful life. Goodwill of $56,000 had also been identified. Jet applied the partial equity method so that income would be accrued each period based solely on the earnings reported by the subsidiary.
On January 1, 2014, Jet reported $280,000 in bonds outstanding with a book value of $263,200. Nittle purchased half of these bonds on the open market for $135,800.
During 2014, Jet began to sell merchandise to Nittle. During that year, inventory costing $112,000 was transferred at a price of $140,000. All but $14,000 (at Jet's selling price) of these goods were resold to outside parties by year's end. Nittle still owed $50,400 for inventory shipped from Jet during December.
The following financial figures were for the two companies for the year ended December 31, 2014. Required:
Prepare a consolidation worksheet for the year ended December 31, 2014.

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Definitions:

Liable to Third Parties

The legal responsibility of an individual or entity towards individuals who are not a direct party to a contract or agreement.

Professional's Expertise

The specialized knowledge and skills possessed by a professional in their field of work.

Relied Upon

A term used to describe something that is trusted or depended on for support, help, or decision-making.

Cross-functional Teams

Groups composed of members from different departments or areas of expertise working together toward a common goal.