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On January 1 , 2 0 2 2 , Porto Corporation acquired 8 0 % of the voting stock of Sardinia Corporation for $ 1
On January Porto Corporation acquired of the voting stock of Sardinia Corporation for $ when Sardinia had Capital Stock of $ and Retained Earnings of $ On this date, the book value of Sardinias assets and liabilities was equal to the fair value, except for inventories, which were understated on the books by $ and were sold in land which was undervalued by $ and equipment with a remaining useful life of years under the straightline method which was undervalued by $ Any remainder was assigned to goodwill. Financial statements for the two corporations at the end of the fiscal year ended December appear in the first two columns of the partially completed consolidation working papers. Porto has accounted for its investment in Sardinia using the equity method of accounting. Porto Corporation owed Sardinia Corporation $ on open account at the end of the year. Dividends receivable in the amount of $ payable from Sardinia to Porto is included in Porto's net receivables. Required: Prepare the elimination entries required for consolidation on December Show all your calculations. Complete the consolidation working papers for Porto Corporation and Subsidiary for the year ended December State which items have been amortized and which have not in and why? Marks Porto Sardinia Eliminations Consolidated Debit Credit INCOME STATEMENT Sales Income from Sardinia Cost of Sales Depreciation Expense Other expenses Non controling Interest Share Net income Retained Earnings Add: Net income Less: Dividends Retained Earnings BALANCE SHEET Cash Receivablesnet Inventories Land Equipment and Buildingsnet Investment in Sardinia Corp Goodwill Unamortized Excess TOTAL ASSETS LIAB. & EQUITY Accounts Payable Dividends Payable Capital Stock Ret. Earnings Nonctl Interest Nonctl. Interest LIAB. & EQUITY
On January Porto Corporation acquired of the voting stock of Sardinia Corporation for $ when Sardinia had Capital Stock of $ and Retained Earnings of $ On this date, the book value of Sardinias assets and liabilities was equal to the fair value, except for inventories, which were understated on the books by $ and were sold in land which was undervalued by $ and equipment with a remaining useful life of years under the straightline method which was undervalued by $ Any remainder was assigned to goodwill.
Financial statements for the two corporations at the end of the fiscal year ended December appear in the first two columns of the partially completed consolidation working papers. Porto has accounted for its investment in Sardinia using the equity method of accounting. Porto Corporation owed Sardinia Corporation $ on open account at the end of the year. Dividends receivable in the amount of $ payable from Sardinia to Porto is included in Porto's net receivables.
Required:
Prepare the elimination entries required for consolidation on December Show all your calculations.
Complete the consolidation working papers for Porto Corporation and Subsidiary for the year ended December
State which items have been amortized and which have not in and why?
Marks
Porto Sardinia Eliminations Consolidated
Debit Credit
INCOME STATEMENT
Sales
Income from Sardinia
Cost of Sales
Depreciation Expense
Other expenses
Non controling Interest Share
Net income
Retained Earnings
Add: Net income
Less: Dividends
Retained Earnings
BALANCE SHEET
Cash
Receivablesnet
Inventories
Land
Equipment and Buildingsnet
Investment in Sardinia Corp
Goodwill
Unamortized Excess
TOTAL ASSETS
LIAB. & EQUITY
Accounts Payable
Dividends Payable
Capital Stock
Ret. Earnings
Nonctl Interest
Nonctl. Interest
LIAB. & EQUITY
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