mmon Consolidated Worksheet at End of the First Year of Ownership (Equity Method) On January 1, 2009, Zigma Company acquired 100 percent of Standard Company's com shares at underlying book value. Zigma uses the equity method in accounting for its ownership of Standard. On December 31, 20X9, the trial balances of the two companies are as follows: Zigma Co Standard Co. Debit Credit Debit Credit Current Assets $238,000 $95,000 Depreciable Assets 300,000 170,000 Investment in Standard Co. 100,000 Other Expenses 90,000 70,000 Depreciation Expense 30,000 17,000 Dividends Declared 32,000 10,000 Accumulated Depreciation $120,000 $ 85,000 Current Liabilities 50,000 30,000 Long-Term Debt 120,000 50,000 Common Stock 100,000 50,000 Retained Earnings 175,000 35,000 Sales 200,000 112,000 Income from Standard Co. 25,000 Total $790,000 $790,000 $362,000 $362,000 Required: a. Prepare the journal entries on Zigma's books for the acquisition of Standard on January 1,20x9 as well as any normal equity method entry (ies) related to the investment in Standard Company during 20x9. b. Prepare the consolidation entries needed as of December 31, 2009, to complete a consolidation worksheet. c. Prepare a three-part consolidation worksheet as of December 31, 20X9. a. Equity Method Entries on Zigma Co.'s Books: Record the initial investment in Standard Co. Record Zigma Co.'s 100% share of Standard Co.'s 20X9 income Record Zigma Co.'s 100% share of Standard Co.'s 20X9 dividend Investment in Standard Co. Income from Standard Co. Acquisition Price Net Income Net Income Dividends Ending Balance Ending Balance Common Stock Retained Earnings Beginning Balance Beg Balance Ending Balance Post-Closing Balance b. Elimination Entries: To reverse equity method entries made during the year and return Investment account to the beginning of year balance To eliminate the Investment account c. Consolidation Worksheet: Zigma Co. Standard Co. Elimination Entries DR CR Consolidated Income Statement Sales Less: Depreciation Expense Less: Other Expenses Income from Standard Co. Net Income 200,000 (90,000) (30,000) 25,000 105,000 112,000 (70,000) (17,000) 25,000 175,000 35,000 Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance (32,000) (10,000) Balance Sheet Current Assets Depreciable Assets Less: Accumulated Depreciation 238,000 300,000 95,000 170,000 (120,000) (85,000) Investment in Standard Co. Total Assets 100,000 518,000 180,000 Current Liabilities Long-Term Debt Common Stock Retained Earnings Total Liabilities & Equity 50,000 120,000 100,000 30,000 50,000 50,000 518,000 180,000