Exercise 5-13 (Algo) Consolidation Worksheet for Majority-Owned Subsidiary LO 5-2

Proud Corporation acquired 80 percent of Spirited Companys 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 $40,000 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:

Item	Proud Corporation	Spirited Company
Debit	Credit	Debit	Credit
Current Assets	$ 175,000		$ 111,000
Depreciable Assets	505,000		310,000
Investment in Spirited Company	125,440
Depreciation Expense	20,000		10,000
Other Expenses	99,000		72,000
Dividends Declared	49,000		21,200
Accumulated Depreciation		$ 170,000		$ 50,000
Current Liabilities		39,000		29,000
Long-Term Debt		135,240		185,200
Common Stock		181,000		92,000
Retained Earnings		211,000		42,000
Sales		202,000		126,000
Income from Spirited Company		35,200
	$ 973,440	$ 973,440	$ 524,200	$ 524,200

Required: Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X3.

Note: Amounts to be deducted should be indicated with a minus sign.