Server Corporation was created on January 1, 20X0, to develop computer software. On January 1, 20X5, Proxy
Question:
Server Corporation was created on January 1, 20X0, to develop computer software. On January 1, 20X5, Proxy Company acquired 90 percent of Server’s common stock at its underlying book value. At that date, the fair value of the noncontrolling interest was equal to 10 percent of the book value of Server Corporation. Trial balances for Proxy and Server on December 31, 20X9, follow:
On January 1, 20X7, Server sold equipment to Proxy for $48,000. Server had purchased the equipment for $90,000 on January 1, 20X5, and was depreciating it on a straight-line basis with a 10-year expected life and no anticipated scrap value. The equipment’s total expected life is unchanged as a result of the intercompany sale. Assume Proxy uses the fully adjusted equity method.
Required
a. Give all consolidation entries required to prepare a three-part consolidated working paper at December 31, 20X9.
b. Prepare a three-part worksheet for 20X9 in good form.
Step by Step Answer:
Advanced Financial Accounting
ISBN: 9781260772135
13th Edition
Authors: Theodore Christensen, David Cottrell, Cassy Budd