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On January 1, 2018, Blanca Corporation purchased 75 percent of Aspen Companys stock at underlying book value. At that date, the fair value of the

On January 1, 2018, Blanca Corporation purchased 75 percent of Aspen Companys stock at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of Aspens book value. The balance sheets for Blanca and Aspen at December 31, 2021, and income statements for 2021 were reported as follows:

Blanca Corp

Aspen Co.

Income Statement

Sales

$ (450,000)

$ (250,000)

Equity in Aspen's Earnings

(20,250)

-

Interest Income

(18,500)

-

Cost of goods sold

285,000

136,000

Other operating Expenses

50,000

40,000

Depreciation expense

35,000

24,000

Interest Expense

24,000

10,500

Miscellaneous Expense

11,900

9,500

Separate Company NI

(82,850)

(30,000)

Statement of Retained Earnings

Retained Earnings, 1/1

(222,500)

(163,000)

Net Income

(82,850)

(30,000)

Dividends Paid

30,000

10,000

Retained Earnings, 12/31

(275,350)

(183,000)

Balance Sheet

Cash

53,100

47,000

Accounts receivable

176,000

65,000

Interest & other receivables

45,000

10,000

Inventory

140,000

50,000

Land

50,000

35,000

Building & equipment

400,000

240,000

Accumulated depreciation

(185,000)

(94,000)

Investment in Aspen Company stock

172,500

-

Investment in Aspen Company bonds

42,400

-

Other investments

110,850

-

Total assets

1,004,850

353,000

Accounts payable

(79,500)

(11,000)

Interest & other payables

(45,000)

(12,000)

Bonds payable

(300,000)

(100,000)

Bond Discount

3,000

Common Stock

(150,000)

(30,000)

Additional Paid-In Capital

(155,000)

(20,000)

Retained Earnings, 12/31

(275,350)

(183,000)

Total Liabilities and Equity

(1,004,850)

(353,000)

Note: Parentheses indicate a credit balance

Additional Information

  1. Aspen issued $100,000, par value 10-year bonds with a coupon rate of 10 percent on January 1, 2018, at $95,000. On January 1, 2021, Blanca purchased $40,000 par value of Aspens bonds for $42,800. Both companies amortize bond premiums and discounts on a straight-line basis. Interest payments are made on December 31.

  1. Since the date it was acquired by Blanca, Aspen has sold inventory to Blanca on a regular basis. The amount of such intercompany sales totaled $50,000 in 2021, including a 30-percentage gross profit. All inventory transferred in 2021 had been resold by December 31, 2021, except inventory for which Blanca had paid $10,000.

  1. Blanca sold a building to Aspen for $65,000 on January 1, 2021. Blanca had purchased the building for $125,000 and was depreciating it on a straight-line basis over 25 years. At the time of sale, Blanca reported accumulated depreciation of $75,000 and a remaining life of 10 years. Assume Blanca uses the equity method.

Use the provided pre-closing trial balances and additional information to prepare:

  1. a December 31, 2021 consolidation spreadsheet (on Excel), in good form. The worksheet should include balances for the controlling and non-controlling interests in consolidated net income.
  2. A separate worksheet in the same workbook should include the consolidation journal entries.
  3. Computations supporting your entries should be clearly labeled and included on a third worksheet in the same workbook.

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