Consolidation Worksheet (Continuation of Problem 5-4) Pya Inc., a calendar-year reporting com¬

pany, acquired 100% of Sya Inc.’s outstanding common stock at a cost of $325,000 on 12/31/05.

The analysis of the parent’s Investment account as of the acquisition date follows: Remaining Life Book value element;

Common Retained stock earnings

.

.

Under- or (over)valuation of net assets element:

Inventory Land .

.

Goodwill Covenant-not-to-compete Equipment element

.

. .

Cost .

Each company’s financial statements for the year ended 12/31/06 follow:

Income Statement (2006)

Sales Cost of

.

sales .

Expenses Equity in

.

net income (of Sya). .

Dividend income .

Net Income .

Balance Sheet (as of 12/31/06)

Cash Accounts

.

receivable, net .

Inventory Investment

.

in Sya .

Land Buildings

.

and equipment .

Accumulated depreciation . . . .

Total Assets .

Payables and accruals .

Common Long-term stock debt . .

Retained earnings .

Total Liabilities and Equity .

Dividends declared during 2006

$100,000 90,000

(5,000) 2 months 30,000 Indefinite 50,000 40,000 10 years 20,000

$325,000 4 years Pya Sya

$ 950,000 $ 600,000 (520,000) (300,000)

(370,000) (240,000)

50,000

$ 110,000 $ 60,000

$ 75,000 $ 25,000 95,000 60,000 115,000 120,000 340,000 100,000 70,000 250,000 224,000

(210,000) (59,000)

$ 765,000 $ 440,000

$ 65,000 $ 75,000 20,000 150,000 300,000 100,000 380,000 115,000

$ 765,000 $ 440,000

$ 80,000 $ 35,000 Required 1. Update the analyses of the Investment account through 12/31/06.

2. Prepare all consolidation entries as of 12/31/06.

3. Prepare a consolidation worksheet at 12/31/06. (The parent’s retained earnings as of 1/1/06 were $350,000.)