On January 1, 2013, Piper Company acquired an 80% interest in Sand Company for $2,291,100. At that time the common stock and retained earnings of Sand Company were $1,801,600 and $731,300, respectively. Differences between the fair value and the book value of the identifiable assets of Sand Company were as follows: Inventory Equipment (net) Fair Value in Excess of Book Value $44,400 50,400 The book values of all other assets and liabilities of Sand Company were equal to their fair values on January 1, 2013. The equipment had a remaining useful life of eight years. Inventory is accounted for on a FIFO basis. Sand Company's reported net income and declared dividends for 2013 through 2015 are shown here: 2013 2014 2015 Net Income $101.900 $151,700 31,300 $80,600 14,700 Dividends 20.800 Prepare the eliminating/adjusting entries needed on the consolidated worksheet for the years ended 2013, 2014, and 2015. (a) Your answer is correct. Assume the use of the cost method. (If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 2013 Dividend Income 16640 Dividends Declared - Subsidiary Company 16640 (To eliminate intercompany dividends) Common Stock 1801600 Retained Earnings 731300 Difference between Implied and Book Value 330975 Investment in Subsidiary 2291100 Noncontrolling Interest 572775 (To eliminate the investment account) Cost of Goods Sold 44400 Equipment 44100 Depreciation Expense 6300 Goodwill 236175 Difference between Implied and Book Value 330975 (To allocate and depreciate the difference between implied and book value) 2014 Investment in Subsidiary 64880 Retained Earnings 64880 (To establish reciprocity/convert to equity method as of 1/1/2011) Dividend Income 25040 Dividends Declared - Subsidiary Company 25040 (To eliminate intercompany dividends) Common Stock 1801600 Retained Earnings 812400 Difference between Implied and Book Value 330975 Investment in Subsidiary 2355980 Noncontrolling Interest 588995 (To eliminate investment account and create noncontrolling interest account) Retained Earnings 40560 Noncontrolling Interest 10140 Depreciation Expense 6300 Equipment 37800 Goodwill 236175 Difference between Implied and Book Value 330975 (To allocate and depreciate the difference between implied and book value) 2015 Investment in Subsidiary 161200 Retained Earnings 161200 (To establish reciprocity/convert to equity method as of 1/1/2012) Dividend Income 11760 Dividends Declared - Subsidiary Company 11760 (To eliminate intercompany dividends) Common Stock 1801600 Retained Earnings 932800 Difference between Implied and Book Value 330975 Investment in Subsidiary 2452300 Noncontrolling Interest 613075 (To eliminate investment account and create noncontrolling interest account) Retained Earnings 45600 Noncontrolling Interest 11400 Depreciation Expense 6300 Equipment 31500 Goodwill 236175 Difference between Implied and Book Value 330975 (To allocate and depreciate the difference between implied and book value) (c) Assume the use of the complete equity method. (If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 2013 (To eliminate intercompany dividends and income) (To eliminate the investment account) (To allocate and depreciate the difference between implied and book value) 2014 (To eliminate intercompany dividends and income) (To eliminate investment account and create noncontrolling interest account) (To allocate and depreciate the difference between implied and book value) 2015 (To eliminate intercompany dividends and income) (To eliminate investment account and create noncontrolling interest account) (To allocate and depreciate the difference between implied and book value)
