Question
On January 1, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for $316,000. On this date, Subsidiary had common stock, other
On January 1, 20X1, Parent Company purchased 80% of the common stock of Subsidiary Company for $316,000. On this date, Subsidiary had common stock, other paid-in capital, and retained earnings of $40,000, $120,000, and $190,000, respectively. Net income and dividends for 2 years for Subsidiary Company were as follows:
| 20X1 | 20X2 | |
| Net income | $50,000 | $90,000 |
| Dividends | 10,000 | 20,000 |
On January 1, 20X1, the only tangible assets of Subsidiary that were undervalued were inventory and building. Inventory, for which FIFO is used, was worth $5,000 more than cost. The inventory was sold in 20X1. Building, which was worth $15,000 more than book value, has a remaining life of 8 years, and straight-line depreciation is used. Any remaining excess is goodwill
Complete the consolidating worksheet for December 31, 20X2. (8 points) Prepare your own worksheet from the following and complete.
| Parent Co. | Sub Co. | Debit | Credit | Consolidated Inc. Stmt | NCI | Controlling Retianed Earnings | 12/31/x2 Consolidated Balance sheet | |||
| Inventory, December 31 | 60,000 | 40,000 | ||||||||
| Other Current Assets | 118,000 | 180,000 | ||||||||
| Investment in Sub. Co. | ||||||||||
| Land | 60,000 | 80,000 | ||||||||
| Buildings & Equipment | 350,000 | 300,000 | ||||||||
| Accum. Depreciation | (120,000) | (50,000) | ||||||||
| Goodwill | ||||||||||
| Current Liabilities | (150,000) | (40,000) | ||||||||
| Bonds Payable | (50,000) | |||||||||
| Other Long Term Liab. | (100,000) | |||||||||
| Common Stock - P Co. | (100,000) | |||||||||
| Other Pd. In Capital - P Co. | (200,000) | |||||||||
| Retained Earnings - P Co. | (200,000) | |||||||||
| Common Stock - S Co. | (40,000) | |||||||||
| Other Pd. In Capital - S Co. | (120,000) | |||||||||
| Retained Earnings - S Co. | (230,000) | |||||||||
| Net Sales | (550,000) | (400,000) | ||||||||
| Cost of Goods Sold | 320,000 | 210,000 | ||||||||
| Oerating Expenses | 130,000 | 100,000 | ||||||||
| Subsidiary Income | (72,000) | |||||||||
| Dividend Declared - P Co. | 50,000 | |||||||||
| Dividends Declared - S Co. | 20,000 | |||||||||
| Consolidated Net Income | ||||||||||
| NCI | ||||||||||
| Controling Interest | ||||||||||
| Total NCI | ||||||||||
| Retained Earnings Contr. Int. 12-31 | ||||||||||
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