(1) RECORD THE BASIC CONSOLIDATION ENTRY

(2) RECORD THE OPTIONAL ACCUMULATED DEPRECIATION CONSOLIDATION ENTRY

Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling Interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $44,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited during 20X3. On December 31, 20X3, the trial balances of the two companies are as follows: Spirited Company Debit Credit $118,000 303,000 11,000 68,000 21,200 Item Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Spirited Company Proud Corporation Debit Credit $ 186,000 517,000 138,240 21,000 102,000 47,000 $ 161,000 45,000 172,040 181,000 211,000 206,000 35,200 $1,011, 240 $1,011, 240 $ 55,000 35,000 158,200 100,000 50,000 123,000 $521,200 $521,200 Required: a. Prepare all consolidation entries required as of December 31, 20X3, to prepare consolidated financial statements. (If no entry Is required for a transaction/event, select "No journal entry required" In the first account field.) b. Prepare a three-part consolidation worksheet. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entrles are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) PROUD CORPORATION AND SUBSIDIARY Worksheet for Consolidated Financial Statements December 31, 20X3 Consolidation Entries Proud Corp. Spirited Co. DR CR Consolidated $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 GA 0 $ 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 $ 0 Income Statement Sales Less: Depreciation expense Less: Other expenses Income from Spirited Co. Consolidated Net Income NCI in Net income Controlling Interest in Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Current assets Depreciable assets Less: Accumulated depreciation Investment in Spirited Co. Total Assets Liabilities and Equity Current liabilities Long-term debt Common stock Retained earnings NCI in NA of Spirited Co. Total Liabilities and Equity $ 0 $ 0 $ 0 $ 0 $ 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 $ 0 C. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X3. (Amounts to be deducted should be indicated with a minus sign.) PROUD CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X3 Assets 0 Total Assets $ 0 Liabilities Stockholders' Equity: Controlling Interest: Total Controlling Interest 0 0 Total Stockholder's equity Total Liabilities and Stockholders' Equity $ 0 PROUD CORPORATION AND SUBSIDIARY Consolidated Income Statement Year Ended December 31, 20X3 0 Total expenses Consolidated net income 0 Income to controlling interest $ 0 PROUD CORPORATION AND SUBSIDIARY Consolidated Retained Earnings Statement Year Ended December 31, 20X3 Retained Earnings, January 1, 20X3 Income to Controlling Interest, 20X3 $ Dividends Declared, 20X3 Retained Earnings, December 31, 20X3 0