On January 1, 2022, Aronsen Company acquired 90 percent of Siedel Companys outstanding shares. Siedel had a net book value on that date of $490,000: common stock ($10 par value) of $200,000 and retained earnings of $290,000.

Aronsen paid $665,100 for this investment. The acquisition-date fair value of the 10 percent noncontrolling interest was $73,900. The excess fair value over book value associated with the acquisition was used to increase land by $174,000 and to recognize copyrights (15-year remaining life) at $75,000. Subsequent to the acquisition, Aronsen applied the initial value method to its investment account.

In the 20222023 period, the subsidiarys retained earnings increased by $110,000. During 2024, Siedel earned income of $81,000 while declaring $21,000 in dividends. Also, at the beginning of 2024, Siedel issued 4,000 new shares of common stock for $45 per share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and therefore recorded no entry.

Required:

Prepare the appropriate 2024 consolidation entries for these two companies.

Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

1

Prepare entry *C to convert to the equity method.

2

Prepare Entry C1 to record the adjustment for the subsidiary stock transaction.

3

Prepare Entry S to eliminate the subsidiary accounts.

4

Prepare Entry A to record the allocation for fair value.

5

Prepare Entry I to account for the income accrual.

6

Prepare Entry E to recognize the current year amortization

Consolidation Worksheet Entries

• Prepare entry *C to convert to the equity method.

Note: Enter debits before credits.

Transaction	Accounts	Debit	Credit
Entry *C	Investment in Siedel
	Retained earnings (Aronsen)

• Prepare Entry C1 to record the adjustment for the subsidiary stock transaction.

Note: Enter debits before credits.

Transaction	Accounts	Debit	Credit
Entry C1	Investment in Siedel
	Additional paid-in capital (Aronsen)

• Prepare Entry C1 to record the adjustment for the subsidiary stock transaction.

Note: Enter debits before credits.

• Prepare Entry S to eliminate the subsidiary accounts.

Note: Enter debits before credits.

Transaction	Accounts	Debit	Credit
Entry S	Common stock (Siedel)
	Additional paid-in capital (Siedel)
	Retained earnings (Siedel)
	Investment in Siedel
	Noncontrolling interest in Siedel

Consolidation Worksheet Entries

Consolidation Worksheet Entries

Consolidation Worksheet Entries

• Prepare Entry I to account for the income accrual.

Note: Enter debits before credits.

Transaction	Accounts	Debit	Credit
Entry I	Dividend income
	Dividends declared

Consolidation Worksheet Entries

Consolidation Worksheet Entries

• Prepare Entry E to recognize the current year amortization.

Note: Enter debits before credits.

Transaction	Accounts	Debit	Credit
Entry E	Amortization expense
	Copyrights