Consolidation worksheet for gain on constructive retirement of subsidiary's debt with no AAP Equity method Assume that a Parent company acquires a 80% interest in its subsidiary on January 1, 2015. On the date of acquisition, the fair value of the percent controling interest was 5640,000 and the fair value of the 20 percent noncontrolling interest was 5160,000. On January 1, 2015, the book value of net assets equaled $800.000 and the fair value of the identifiable net assets equaled the book value of identable net assets there was no AAP or Goodwill) On Detember 31, 2016, the subsidiary company issued 1800.000 (face) 8 percent, five year bonds to an unamauted company for 5832.000. The bonds pay interest annually on December 31, and the bond premium is amortized using the straight line method. This results in annual bond-payable premium amortization equal to 56,400 per year. On December 31, 2018, the Parent paid 5776,000 to purchase all of the outstanding Subsidiary company bonds. The bond discount is amortized using the straight-line method, which results in annual bond investment discount amortization equal to 58.000 per year. The Parent and the Subsidiary report the following financial statements for the year ended December 31, 2019: Parent Subsidiary Gross prote Operating other expenses Band merest income Bandest expense $700.000 850.000 900,000 2000000 27560 $400.000 500.000 300000 1500 Parent Subsidiary Balance sheet 500 500 000 Tarooooo 15ooooo Cash .700.000 300.000 A r cate 1.000.000 14.000 PE, (57.600 tystent - estment intend net 4720 9600 L es and stochodu 51524300 A abe 720 96.400 Other current labities 0000 40000 Bondyable net 51312560 5297,200 Other long tem e s Common 5602 5100 500 Statement of retained in 500 000 900 000 $450.000 650000 812800 450000 Ending retained earnings 1000000 500000 1000000 12560 012560 330000 The parent uses the equity method of preconsolidation investment bookkeeping provide the consolidation entries and prepare a consolidation worksheet for the year ended December 31 2019 Round answers to the nearest whole number MY SUD Credit Round answers to the nearest whole number. Consolidation Journal Description Debit C Equity income Income attributable to NCI Dividends Subsidiary Investment in Subsidiary Noncontrolling Interest Common Stock Subsidiary APIC (Subsidiary BOY Retained earnings-Subsidiary ooooooooooooooo Noncontrolling interest [ibond] Bond payable (net) Interest expense investment in Subsidiary Use negative signs with your answers in the Consolidated column for: Cost of goods sold, all expenses (inc. Total expenses), Income attributable to NCI and Dividends. Consolidation Worksheet Parent Subsidiary Debit Credit Consolidated Income Statement Sales $4,500,000 $800.000 Cost of goods sold (2.800,000) (500,000) Gross profit 1,700,000 300,000 Operating & other expenses (1.400,000) (146,000) Bond interest income 72,000 [bond) Bond interest expense (57.600) O bond] Total expenses (1,328,000) (203,600) Equity Income from Subsidiary 62,720 [C] Consolidated Net Income 434.720 96,400 Income attributable to NCI 0 Income attributable to Control in $434,720 596,400 0 (1,400,000) 72,000 - (1,328,000) 62,720 434,720 (146,000) - [lbond] (57,600) (203,600) O [lbond] 96,400 [C] $434,720 $96,400 Operating & other expenses Bond interest income Bond interest expense Total expenses Equity Income from Subsidiary Consolidated Net Income Income attributable to NCI Income attributable to Control Int Retained Earnings Statement Beg. Ret. Earnings Income attributable to Control Int Dividends Declared Ending Retained Earnings Balance Sheet Cash Accounts receivable Inventories Property, Plant & Equipment, net Investment in Subsidiary (E) $1,577,840 434,720 (200,000) $1,812,560 $240,800 96,400 (40,000) $297,200 0 (C) $700,000 850,000 900,000 2,000,000 778,560 $400,000 600,000 800,000 1,500,000 o [C] 0 [E] 0 [lbond) 0 [lbond] 784,000 Investment in Bond (net) Total Assets Accounts Payable Other current liabilities Bond Payable (net) Other long-term liabilities Common Stock APIC Retained Earnings Noncontrolling Interest $6,012,560 $3,300,000 $700,000 $450,000 900,000 650,000 812,800 [bond) 1,000,000 450,000 600,000 140,000 (E) 1,000,000 500,000 (E) 1,812,560 297,200 0 0 0 [C] [E] Total Liabilities and Equity $6,012,560 $3,300,000 0 $ Check Consolidation worksheet for gain on constructive retirement of subsidiary's debt with no AAP Equity method Assume that a Parent company acquires a 80% interest in its subsidiary on January 1, 2015. On the date of acquisition, the fair value of the percent controling interest was 5640,000 and the fair value of the 20 percent noncontrolling interest was 5160,000. On January 1, 2015, the book value of net assets equaled $800.000 and the fair value of the identifiable net assets equaled the book value of identable net assets there was no AAP or Goodwill) On Detember 31, 2016, the subsidiary company issued 1800.000 (face) 8 percent, five year bonds to an unamauted company for 5832.000. The bonds pay interest annually on December 31, and the bond premium is amortized using the straight line method. This results in annual bond-payable premium amortization equal to 56,400 per year. On December 31, 2018, the Parent paid 5776,000 to purchase all of the outstanding Subsidiary company bonds. The bond discount is amortized using the straight-line method, which results in annual bond investment discount amortization equal to 58.000 per year. The Parent and the Subsidiary report the following financial statements for the year ended December 31, 2019: Parent Subsidiary Gross prote Operating other expenses Band merest income Bandest expense $700.000 850.000 900,000 2000000 27560 $400.000 500.000 300000 1500 Parent Subsidiary Balance sheet 500 500 000 Tarooooo 15ooooo Cash .700.000 300.000 A r cate 1.000.000 14.000 PE, (57.600 tystent - estment intend net 4720 9600 L es and stochodu 51524300 A abe 720 96.400 Other current labities 0000 40000 Bondyable net 51312560 5297,200 Other long tem e s Common 5602 5100 500 Statement of retained in 500 000 900 000 $450.000 650000 812800 450000 Ending retained earnings 1000000 500000 1000000 12560 012560 330000 The parent uses the equity method of preconsolidation investment bookkeeping provide the consolidation entries and prepare a consolidation worksheet for the year ended December 31 2019 Round answers to the nearest whole number MY SUD Credit Round answers to the nearest whole number. Consolidation Journal Description Debit C Equity income Income attributable to NCI Dividends Subsidiary Investment in Subsidiary Noncontrolling Interest Common Stock Subsidiary APIC (Subsidiary BOY Retained earnings-Subsidiary ooooooooooooooo Noncontrolling interest [ibond] Bond payable (net) Interest expense investment in Subsidiary Use negative signs with your answers in the Consolidated column for: Cost of goods sold, all expenses (inc. Total expenses), Income attributable to NCI and Dividends. Consolidation Worksheet Parent Subsidiary Debit Credit Consolidated Income Statement Sales $4,500,000 $800.000 Cost of goods sold (2.800,000) (500,000) Gross profit 1,700,000 300,000 Operating & other expenses (1.400,000) (146,000) Bond interest income 72,000 [bond) Bond interest expense (57.600) O bond] Total expenses (1,328,000) (203,600) Equity Income from Subsidiary 62,720 [C] Consolidated Net Income 434.720 96,400 Income attributable to NCI 0 Income attributable to Control in $434,720 596,400 0 (1,400,000) 72,000 - (1,328,000) 62,720 434,720 (146,000) - [lbond] (57,600) (203,600) O [lbond] 96,400 [C] $434,720 $96,400 Operating & other expenses Bond interest income Bond interest expense Total expenses Equity Income from Subsidiary Consolidated Net Income Income attributable to NCI Income attributable to Control Int Retained Earnings Statement Beg. Ret. Earnings Income attributable to Control Int Dividends Declared Ending Retained Earnings Balance Sheet Cash Accounts receivable Inventories Property, Plant & Equipment, net Investment in Subsidiary (E) $1,577,840 434,720 (200,000) $1,812,560 $240,800 96,400 (40,000) $297,200 0 (C) $700,000 850,000 900,000 2,000,000 778,560 $400,000 600,000 800,000 1,500,000 o [C] 0 [E] 0 [lbond) 0 [lbond] 784,000 Investment in Bond (net) Total Assets Accounts Payable Other current liabilities Bond Payable (net) Other long-term liabilities Common Stock APIC Retained Earnings Noncontrolling Interest $6,012,560 $3,300,000 $700,000 $450,000 900,000 650,000 812,800 [bond) 1,000,000 450,000 600,000 140,000 (E) 1,000,000 500,000 (E) 1,812,560 297,200 0 0 0 [C] [E] Total Liabilities and Equity $6,012,560 $3,300,000 0 $ Check