Refer to the preceding facts for Presss acquisition of Simon common stock. Press uses the simple equity

Refer to the preceding facts for Press’s acquisition of Simon common stock. Press uses the simple equity method to account for its investment in Simon. On January 1, 2012, Press held merchandise acquired from Simon for $10,000. During 2012, Simon sold $40,000 worth of merchandise to Press.

Press held $12,000 of this merchandise at December 31, 2012. Press owed Simon $6,000 on December 31 as a result of this intercompany sale. Simon has a gross profit rate of 25%. On January 1, 2012, Simon signed a 5-year lease with Press for the rental of equipment, which has a 5-year life. Payments of $23,363 are due each January 1, and there is a guaranteed residual value of $10,000 at the end of the five years. The market value of the equipment at the inception of the lease was $100,000. Press has a 12% implicit rate on the lease. The following amortization table was prepared for the lease.

On January 1, 2011 Press Company acquired Simon Company. Press paid $450,000 for 80% of Simon's common stock. On the date of acquisition, Simon had the following balance sheet:

Buildings, which have a 20-year life, are undervalued by $100,000. Any excess cost is considered to be goodwill.

Required
Prepare the worksheet necessary to produce the consolidated financial statements for Press Company and its subsidiary Simon Company for the year ended December 31, 2012. Include the determination and distribution of excess and income distribution schedules.

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Simon Company Balance Sheet January 1, 2011 Assets Liabilities and Equi Accounts receivable$40,000 Accounts payable . . . $80,000 10,000 190,000 190,000 60,000 Common stock ($1 par). . . _ . . . 100,000 P . . Land aid-in capital in excess of par Accumulated depreciation (200,000) 100,000 (30,000) Accumulated depreciation . Payment $23,363 23,363 23,363 23,363 23,363 10,000 eriod Interest Princ Balance Jan. 1, 2012 Jan. 1, 2013 Jan. 1,2014 Jan. 1, 201.5 Jan. 1, 2016 Jan. 1, 2017 $9,196 7,496 5,592 3,460 1,071 $(23,363) (14,167) (15,867) (17,771) (19,903) (8,929 $76,637 62,470 46,603 28,832 8,929 0 Press Simon Compan Compan 73,637 45,000 56,000 . 100,000 100,000 72,363 72,000 120,000 ash Land. 506,643 Minimum Lease Payments Receivable Unearned Interest. Buildings.. . . . . . . . . . . . . . .. (17,619) 800,000400,000 (220,000 (220,000) 150,000 100,000 90,000 (50,000) 100,000 (18,000 ..(60,000 40,000) 76,637) (9,196) (100,000) 10,000) (800,000 90,000) (450,000 (230,000) (800,000) (400,000) 450,000 240,000 10,000 28,000 72,000 9,196 Equipment .. Accumulated Depreciation-Capital Lease. ._ . Accounts Payable . . _ . Accrued Interest Capital Lease . . . . . . . . . . . . . .. ._ . .. .. 30,000 15,000 140,000 Other Expenses... Interest Expense. Subsidiary Income.. .. Dividends Declared .. (9,196) (32,643) . 20,000 10,000 Totals 0 0