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On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed,...

On January 1, 2017, QuickPort Company acquired 90 percent of the outstanding voting stock of NetSpeed, Inc., for $972,000 in cash and stock options. At the acquisition date, NetSpeed had common stock of $1,020,000 and Retained Earnings of $51,000. The acquisition-date fair value of the 10 percent noncontrolling interest was $108,000. QuickPort attributed the $9,000 excess of NetSpeed's fair value over book value to a database with a five-year remaining life.

During the next two years, NetSpeed reported the following:

Net Income Dividends Declared
2017 $ 12,600 $ 1,800
2018 18,000 1,800

On July 1, 2017, QuickPort sold communication equipment to NetSpeed for $12,000. The equipment originally cost $17,000 and had accumulated depreciation of $6,500 and an estimated remaining life of three years at the date of the intra-entity transfer.

1)Prepare the worksheet adjustments for the December 31, 2018, consolidation of QuickPort and NetSpeed.

Business   Accounting   
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Answer #1
Consideration Paid (Fair Value) 972000
Net Income for 2017 12600
Less: Data Base Amortization (Excess of fair value to book value) 9000/5 -1800
Adjusted net Income 10800
Ownership 90% 90%
Quickport share of income 9720
Less: Gain on Equipment transferred 12000-(17000-6500) 1500
Add: Depreciation (6 month 1500/3year=500/2 250
Equity earning of Netspeed 8470
Less: Dividend Share 90% 1800*90% 1620
Balance on 31/12/17 978850
Net Income for 2018 18000
Less: Data Base Amortization (Excess of fair value to book value) 9000/5 -1800
Adjusted net Income 16200
Ownership % 90%
Quickport share of income 14580
Add: Depreciation 1500/3 500
Equity earning of Netspeed 15080
Less: Dividend Share 90% 1800*90% 1620
Balance on 31/12/18 992310
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