CONSOLIDATION WORKSHEET PROBLEM


Question Description:

$69
CONSOLIDATION WORKSHEET PROBLEM
Prepare the corresponding consolidating worksheets based on the following facts.
Companies involved:  Parent and Sub.
Date of acquisition: Jan. 1, 20X3
Date of the worksheets you must prepare: December 31, 20X4
20X5
20X6
Percentage of common shares of S owned by P 75%
Price paid by P  $   5,700,000
At the time of acquisition these were some values concerning S:
Common stock  $      950,000
Aditional paid-in capital  $      950,000
Retained earnings  $      627,000
Years FMV-BV
Inventories <1  $      760,000
Other current assets <1  $      285,000
Plant & equipment, remaining life:             8  $   1,900,000
Land  $   1,330,000
Long term liabilities; remaining life: 5  $      285,000
Intangibles amortization: 6
Intercompany transactions:
20X3 20X4 20X5 20X6
Upstream inventory sales                  –  $     142,500  $      121,125  $      129,604
% in ending inventory                  – 7.50% 9.00% 10.80%
Gross profit rate on sales                  – 37.50% 45.00% 54.00%
Upstream building sale, Dec. 31
Sold for  $  1,900,000
Book value at time of sale  $     760,000
Remaining life:           10
% of S bonds purchased by P, Jan. 1 55%
Price paid  $   1,551,104
BV at that date  $   1,534,930
Remaining life: 5
Maturity value of acquired bonds  $   1,567,500

Required:

1. Complete the worksheets for 20X4-6.

2. Show how the Controlling and   Non-controlling shares of Income from S were arrived at in X5 and X6.

3. In separate schedules for year ends X5 and   X6, reconcile the Investment account with S’s stockholders’ equity.

4.   In separate schedules for year ends X5 and X6, reconcile the ending   Noncontrolling Interest with S’s stockholders’equity.     .

Answer

$69