On January 1, 2011, Press Company acquires 90% of the common stock of Soap Company for $324,000. On this date, Soap has total owners€™ equity of $270,000, including retained earnings of $100,000.
On January 1, 2011, any excess of cost over book value is attributable to the undervaluation of land, building, and goodwill. Land is worth $20,000 more than cost. Building is worth $40,000 more than book value. It has a remaining useful life of 20 years and is depreciated using the straight-line method. During 2011 and 2012, Press has appropriately accounted for its investment in Soap using the simple equity method.
During 2012, Soap sells merchandise to Press for $40, 000, of which $15,000 is held by Press on December 31, 2012. Soap€™s usual gross profit on affiliated sales is 40%. On December 31, 2012, Press still owes Soap $8,000 for merchandise acquired in December.
On October 1, 2010, Soap sells $100,000 par value of 10-year, 10% bonds for $102,000. The bonds pay interest semiannually on April 1 and October 1. Straight-line amortization is used. On October 2, 2011, Press repurchases $60,000 par value of the bonds for $59,100.Straight-line amortization is used. On January 1, 2012, Press purchases equipment for $111,332 and immediately leases the equipment to Soap on a 3-year lease. The minimum lease payments of $40,000 are to be made annually on January 1, beginning immediately, for a total of three payments. The implicit interest rate is 8%. The useful life of the equipment is three years. The lease has been capitalized by both companies. Soap is depreciating the equipment using the straight-line method and assuming a salvage value of $6,332. A lease amortization schedule, applicable to both companies, follows:

The balance sheet for the companies on December 31, 2012, is as follows:

Required
Complete the worksheet for a consolidated balance sheet as of December 31, 2012. Include a determination and distribution of excess schedule. Round all computations to the nearest dollar.

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Carrying Carrying Value 111,332 (40,000 71,332 (34,293) 37,039 (37,039) Interest Rate Principa Reduction Value on January 1, 2011 January 1, 2012 January 1, 2013 January 1, 2014 Interest ment 3% $5,707$40,000 $34,293 8% 2,961* 40,000 37,039 0 Press Soa Assets ompan Compan Accounts receivable 65,000 50,000 1,500 80,000 (2,961) 86,000 60,236 351,000 59,225 60,000 300,000 (100,000 80,000 183,668 Investment in Soap Company Investment in Soap bonds Land . 30,000 230,000 (50,000) 111,332 (35,000) $ 960,000 $600,000 Accumulated depreciated equipment under lease .. .. ress оар Liabilities and Equity Company ompany $ 78,000 70,000 2,500 5,707 48,911 71,332 100,000 1,550 Accounts payable Bond interest payable .. 57,000 Lease obligation payable . Bonds payable.... Premium on bonds 150,000 200,000 150,000 325,000 Other paid-in capital in excess of par-Press . . . + ·.. . . . . . . . . . . . . . 100,000 70,000 130,000 $960,000 $600,000 Other paid-in capital in excess of par Soap . . . . . . . . . . _ . . . . . . Totals