On January 1, 2014, P Company purchased an 80% interest in the capital stock of S Company for O.R3,400,000. At that time, S Company had common stock of O.R2,200,000 and retained earnings of O.R620,000. P Company uses the cost method to record its investment in S Company. Differences between the fair value and the book value of the identifiable assets of S Company were as follows:

Fair Value in Excess of Book Value

Equipment O.R400,000

Land 200,000

Inventory 80,000

The book values of all other assets and liabilities of S Company were equal to their fair values on January 1, 2014. The equipment had a remaining life of five years on January 1, 2014; the inventory was sold in 2014.

S Companys net income and dividends declared in 2014 were as follows:

Year 2014 Net Income of O.R400,000; Dividends Declared of O.R100,000

Required:

Prepare the necessary workpaper eliminating on December 31, 2014 and 2015 (the information for 2015 is available in the partially completed worksheet below).

Prepare a consolidated statements workpaper for the year ended December 31, 2015 using the partially completed worksheet.

P COMPANY AND SUBSIDIARY
Consolidated Statements Workpaper
For the Year Ended December 31, 2015
	P	S	Eliminations		Noncontrolling	Consolidated
	Company	Company	Dr.	Cr.	Interest	Balances
Income Statement
Sales	4,400,000	1,800,000
Dividend Income	192,000
Total Revenue	4,592,000	1,800,000
Cost of Goods Sold	3,600,000	800,000
Depreciation Expense	160,000	120,000
Other Expenses	240,000	200,000
Total Cost & Expenses	4,000,000	1,120,000
Net/Consolidated Income	592,000	680,000
Noncontrolling Interest in Income
Net Income to Retained Earnings	592,000	680,000
Retained Earnings Statement
1/1 Retained Earnings
P Company	2,000,000
S Company		920,000
Net Income from above	592,000	680,000
Dividends Declared
P Company	(360,000)
S Company		(240,000)
12/31 Retained Earnings to
Balance Sheet	2,232,000	1,360,000
	P	S	Eliminations		Noncontrolling	Consolidated
	Company	Company	Dr.	Cr.	Interest	Balances
Balance Sheet
Cash	280,000	260,000
Accounts Receivable	1,040,000	760,000
Inventory	960,000	700,000
Investment in S Company	3,400,000
Difference between Implied and Book Value
Land		1,280,000
Plant and Equipment	1,440,000	1,120,000
Total Assets	7,120,000	4,120,000
Accounts Payable	528,000	440,000
Notes Payable	360,000	120,000
Common Stock:
P Company	4,000,000
S Company		2,200,000
Retained Earnings from above	2,232,000	1,360,000
1/1 Noncontrolling Interest in Net Assets
12/31 Noncontrolling Interest in Net Assets
Total Liabilities & Equity	7,120,000	4,120,000