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Pirate Corporation acquired 60 percent ownership of Ship Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Ship Company. Accumulated depreciation on Buildings and Equipment was $70,000 on the acquisition date. Trial balance data at December 31, 20X8, for Pirate and Ship are as follows: Pirate Corporation Ship Company Item Debit Credit Debit Credit Cash $ 31,000 $ 10,000 Accounts Receivable 79,000 26,000 Inventory 44,000 34,000 Buildings & Equipment 504,000 245,000 Investment in Row Company 43,000 Investment in Ship Company 101,040 Cost of Goods Sold 145,000 105,000 Depreciation Expense 26,000 6,000 Interest Expense 6,000 2,000 Dividends Declared 29,000 24,600 Accumulated Depreciation $131,000 $ 76,000 Accounts Payable 53,000 19,000 Bonds Payable 118,440 94,600 Common Stock 197,000 91,000 Retained Earnings 205,000 51,000 other Comprehensive Income from Ship Company (OCI)Unrealized Gain on Investments 6,000 Unrealized Gain on Investments (OCI) 10,000 Sales 230,000 154,000 Income from Ship Company 24,600 $965,040 $965,040 $495,600 $495,600 Additional Information Ship purchased stock of Row Company on January 1, 20X8, for $33,000 and classied the investment as availa bleforsale securities. The value of Row's securities increased to $43,000 at December 31, 2OX8. n- __ .!___I_ b. Prepare a three-part consolidation worksheet for 20X8 in good form. (Values in the rst 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 entries 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 in one amount and enter this amount in the credit column of the worksheet.) (250,000) _ (32.000) Less: Interest expense _ _ (8,000) Income from Ship Company Consolidated net income $ 94,000 NCI in net income Controlling Interest in Net Income $ 94,000 Statement of Retained Earnings Net income Less: Dividends declared (29,000) (24,600) _ 24,600 (29,000) Ending Balance $ (29,000) $ (24,600) $ 0 $ 24,600 $ (29,000) Beginning balance Ending Balance $ (29,000) (24,600) $ 0 $ 24,600 $ (29,000) Balance Sheet Cash $ 31,000 $ 10,000 $ 41,000 Accounts receivable 79,000 26,000 105,000 Inventory 44,000 34,000 78,000 Buildings and equipment 504,000 245,000 749,000 Less: Accumulated depreciation (131,000) (76,000) (207,000) Investment in Row Company 43,000 43,000 Investment in Ship Company 101,040 101,040 Total Assets $ 628,040 $ 282,000 $ o $ 0 $ 910,040 Accounts payable $ 53,000 $ 19,000 $ 72,000 Bonds payable 118,440 94,600 213,040 Common stock 197,000 91,000 91,000 197,000 Retained earnings Accumulated OCI NCI in NA of Ship Company Total Liabilities and Equity $ 368,440 $ 204,600 $ 91,000 $ 0 $ 482,040 Other Comprehensive Income Accumulated other comprehensive income, 1/1/20X8 Other comprehensive income from Ship Company Unrealized gain on investments Other comprehensive income to NCI Accumulated Other Comprehensive Income, 12/31/20X8 $ 0 $ 0 $ 0 $ 0 $ 0PIRATE CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X8 Assets Cash $ 41,000 Accounts receivable 105,000 Inventory 78,000 Buildings and equipment Accumulated depreciation 0 Investment in marketable securities 43,000 Total Assets $ 267,000 Liabilities Accounts payable $ 72,000 Bonds payable 213,040 Stockholders' Equity: Controlling Interest: Common stock Retained earnings Accumulated other comprehensive income 6,000 Total Controlling Interest 6,000 Noncontrolling interest Total Stockholder's Equity 6,000 Total Liabilities and Stockholders' Equity $ 291,040PIRATE CORPORATION AND SUBSIDIARY Consolidated Income Statement Year Ended December 31, 20X8 Sales $ 384,000 Cost of goods sold $ 250,000 Depreciation expense 32,000 Interest expense 8,000 Total expenses 290,000 Consolidated net income 94,000 Income to noncontrolling interest Income to controlling interest $ 94,000Consolidated net income Other comprehensive income: Unrealized gain on investments held by subsidiary Total consolidated comprehensive income Less: Comprehensive income attributable to noncontrolling interest Comprehensive income attributable to controlling interest
