1. Pizza Corporation acquired 100 percent of Slice Company on January 1, 2025, for $350,000. Following are selected account balances from Pizza and Slice Corporation as of December 31, 20X5: (13 points) Item Current Assets $ Pizza Corp Debit Credit 405,000 500,000 900,000 384,500 375.000 Slice Corp Debit Credit $ 110,000 180,000 400,000 Buildings & Equipment Copyrights Investment in Slice Cost of Goods Sold 100,000 Depreciation Expense Other Expenses Dividends Declared 60,000 220,000 80.000 30,000 100,000 30.000 Accumulated Depreciation Liabilities Common Stock Retained Earnings Sales $ 360,000 500,000 600.000 600.000 800,000 $ 60,000 300,000 90,000 200,000 300,000 Income from Slice 64,500 $ 2.924,500 $ 2.924,500 $ 950.000 $ 950.000 Additional Information: 1. On January 1, 20x5 the fair market value of Slice's assets equaled their book value with the exception of Plant Assets (with an estimated economic life of 6 years) which had a fair market value in excess in Slice's depreciable assets of $33.000. 2. Pizza used the equity method in accounting for its investment in Slice. 3. Detailed analysis of receivables and payables showed that Slice owed Pizza $10,000 on December 31, 20X5. Required: 1). Prepare a three-part consolidation worksheet as of December 31, 20X5. (6 points) 2). Give all consolidating entries needed to prepare a full set of consolidated financial statements for 20X5. (7 points) Answer: 1). Consolidation Entries DR CR Peerless Special Consolidated + + + 1,100,000 (475,000) Income Statement Sales Less: COGS Less: Depreciation Expense Less: Other Expenses Income from Special Foods Consolidated Net Income 800,000 (375,000) (60,000) (220,000) 64,500 209,500 300,000 (100,000) (30,000) (100,000) 70,000 + + Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance 600,000 209,500 (80,000) 729,500 200,000 70,000 (30.000) 240,000 Current Assets Building & Equipment Copyright Investment in Slice + 405,000 500,000 900,000 384,500 + 110,000 180,000 400,000 (360,000) (60,000) Less: Accu. Depreciation Goodwill Total Assets 1,829,500 630,000 + + + Liabilities Common Stock Retained Earnings Total Liabilities & Equity 500,000 600,000 729,500 1,829,500 300,000 90,000 240,000 630,000 2). Basic consolidation entry: Amortized excess value reclassification entry: Excess value (differential) reclassification entry: Eliminate intercompany accounts