Parker Company acquires an 80% interest in Sargent Company for $300,000 in cash on January 1, 2015, when Sargent Company has the following balance sheet:

The excess of the price paid over book value is attributable to the fixed assets, which have a fair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parker Company uses the cost method to record its investment in Sargent Company.
The following trial balances of the two companies are prepared on December 31, 2015:

Prepare all the eliminations and adjustments that would be made on the 2015 consolidated worksheet.

Transcribed Image Text:

Assets Liabilities and Equity $100,000 Current liabilities 200,000 Common stock ($10 par) $50,000 100,000 150,000 $300,000 Current assets Depreciable fixed assets Retained earnings. Total assets $300,000 lities and equity Parker Sargent Current Assets Depreciable Fixed Assets Accumulated Depreciation Investment in Sargent Company Current Liabilities. Common Stock ($10 par 0,000 30,000 00,000200,000 (106,000] (20,000] 300,000 (60,000 40,000] 300,000 (100,000 Retained Eamings, January 1,2016 Sales Expenses Dividend Income (from Sargent Company) Dividends Declared (200,000) 150,000) 50,000 100,000] 75,000 110,000 (4,000 5,000 Totals 0)