Bower Corporation acquired 60 percent of Concerto Company's stock on January 1, 20X3, for $24,000 in excess of book value. On that date, the book values and fair values of Concerto's assets and liabilities were equal and the fair value of the noncontrolling interest was $16,000 in excess of book value. The full amount of the differential at acquisition was assigned to goodwill of $40,000. At December 31, 20X6, Bower management reviewed the amount assigned to goodwill and concluded it had been impaired. They concluded the correct carrying value at that date should be $30,000 and the impairment loss should be assigned proportionately between the controlling and noncontrolling interests.

Balance sheet data for January 1, 20X6, and December 31, 20X6, and income statement data for 20X6 for the two companies are as follows:

On January 1, 20X6, Bower held inventory purchased from Concerto for $48,000. During 20X6, Bower purchased an additional $90,000 of goods from Concerto and held $54,000 of its purchases on December 31, 20X6. Concerto sells inventory to the parent at 20 percent above cost.
Concerto also purchases inventory from Bower. On January 1, 20X6, Concerto held inventory purchased from Bower for $14,000, and on December 31, 20X6, it held inventory purchased from Bower for $7,000. Concerto’s total purchases from Bower were $22,000 in 20X6. Bower sells items to Concerto at 40 percent above cost.
During 20X6, Bower paid dividends of $50,000, and Concerto paid dividends of $20,000.
Assume that Bower uses the fully adjusted equity method that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition.

Required

a. Prepare all elimination entries needed to complete a consolidation worksheet as of December 31, 20X6.

b. Prepare a three-part consolidation worksheet as of December 31,20X6.

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BOWER CORPORATION AND CONCERTO COMPANY Balance Sheet Data January 1, 20X6 Item Bower Corporation 9,800 60,000 Concerto Company 10,000 50,000 80,000 Cash Accounts Receivable Inventory Total Current Assets Land Buildings & Equipment Less: Accumulated Depreciation Investment in Concerto Company Stock Total Assets 100,000 $169,800 70,000 $140,000 20,000 $300,000 (140,000) $200,000 (70,000) 130,000 160,000 135,200 $535,000 $ 30,000 120,000 $290,000 20,000 70,000 Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity 5100,000 285,000 5 50,000 150,000 385,000 $535.000 200,000 $290,000 BOWER CORPORATION AND CONCERTO COMPANY Balance Sheet Data December 31, 20X6 Bow er Corporation Concerto Company 35,000 40,000 90,000 Item 26,800 80,000 120,000 Cash Accounts Receivable Inventory Total Current Assets Land Buildings & Equipment Less: Accumulated Depreciation $226,800 70,000 $165,000 20,000 340,000 (165,000) $200,000 (85,000) 175,000 139,600 $611,400 80,000 120,000 115,000 Investment in Concerto Company Stock Total Assets $300,000 15,000 Accounts Payable Bonds Payable Common Stock Retained Earnings 70,000 215,000 $300,000 100,000 311,400 50,000 165,000 411,000 Total Liabilities & Stockholders' Equity $611,400 BOWER CORPORATION AND CONCERTO COMPANY Income Statement Data Year Ended December 31, 20X6 Item Sales Income from Subsidiary Bower Corporation Concerto Company $400,000 16,400 $416,400 $200,000 $200,000 Cost of Goods Sold Depreciation & Amortization Expense Other Expenses Net Income $280,000 25,000 35,000 5120,000 15,000 30,000 (340,000) 76,400 (165,000) 35,000