On January 1, 20X8, Ashford company acquired 80 percent of Simpson Company's ownership for $120,000 cash. At that date, the fair value of the noncontrolling
On January 1, 20X8, Ashford company acquired 80 percent of Simpson Company's ownership for $120,000 cash. At that date, the fair value of the noncontrolling interest was $30,000. The book value of Simpson's net assets at acquisition was $125,000. (Common stock, $100,000, R/E, $25,000) The book values and fair values of Simpson's assets and liabilities were equal, except for building and equipment, which were worth $15,000 more than book value. Building and equipment are depreciated on a 10-year basis. Depreciation is on a straight-line basis.
Ashford uses the equity method to account for the investment in Simpson Company.
Although Goodwill is not amortized, the management of Ashford concluded at December 31, 20X8, that Goodwill from its acquisition of Simpson's shares had been impaired and the correct carrying amount was $5,000. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders.
No additional impairment occurred in 20X9.
- Prepare a 2019 consolidated worksheet.
Trial balance data for Ashford and Simpson on December 31, 20x9, are as follows: Simpson Co. Ashford Co. Debit Credit Credit Item Debit $ 30,000 Cash $ 100,000 25,000 Accounts Receivable 60,000 30,000 Inventory 80,000 50,000 Land 150,000 150,000 Buildings and Equipment 300,000 Investment in Simpson Co. 144.800 180,000 100,000 Cost of Goods Sold 50,000 34,000 Wage Expense Depreciation Expense 30,000 15,000 Interest Expense 25,000 6,000 Other Expenses 40,000 21,000 Dividends Declared 40,000 10,000 Accumulated Depreciation $ 150,000 $ 36,000 Accounts Payable 90,000 26,000 Wages Payable 30,800 9,000 Notes Payable 180,000 50,000 Common Stock 150,000 Retained Earnings 100,000 181,000 50,000 Sales 400,000 Income from Simpson 200,000 18,000 $1,199,800 $1,199.800 $471,000 $471.000 Consolidation Entries Debit Credit Accounts Parent (400,000) 180.000 50,000 30,000 25,000 40,000 (18,000) (93,000) Sub (200,000) 100,000 34,000 15,000 E Revenues Cost of goods sold Wage Expense Depreciation expense Interest expense Other Expenses Equity in Sub's earnings Separate company net income Consolidated net income controlling Consolidated Interest Totals (600,000) 280,000 84,000 46,500 31,000 1,500 6.000 61,000 21,0062 -01 (24,000) 18.000 -0 (97,500) (4,500) NI to noncontrolling interest Ni to Parent Company 4,500 (93,000) 50,000 (181,000) (93,000) Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 (181.000) (93,000) 40,000 (234,000) (50,000) S (24,000) 10,000 (64,000) D 8,000 2,000 40,000 (234,000) 85,000 Current assets Land Fixed Assets (net) Investment in Sub 240,000 150.000 150,000 144,800 50.000 114,000 A D 325,000 200,000 276,000 -0 1,500 13,500 E 8,000 S 1 A 5,000 120,000 18.000 14,800 Goodwill Total assets -OA 249,000 5,000 806,000 684,800 Accounts Payable Wages Payable Notes Payable NCI in Sub 1/1 (90,000) (30,800) (180,000) (26,000) (9,000) (50,000) (116,000) (39,800) (230,000) S A 30,000 3.700 (33,700) (36,200) NCI in Sub 12/31 (36,200) Trial balance data for Ashford and Simpson on December 31, 20x9, are as follows: Simpson Co. Ashford Co. Debit Credit Credit Item Debit $ 30,000 Cash $ 100,000 25,000 Accounts Receivable 60,000 30,000 Inventory 80,000 50,000 Land 150,000 150,000 Buildings and Equipment 300,000 Investment in Simpson Co. 144.800 180,000 100,000 Cost of Goods Sold 50,000 34,000 Wage Expense Depreciation Expense 30,000 15,000 Interest Expense 25,000 6,000 Other Expenses 40,000 21,000 Dividends Declared 40,000 10,000 Accumulated Depreciation $ 150,000 $ 36,000 Accounts Payable 90,000 26,000 Wages Payable 30,800 9,000 Notes Payable 180,000 50,000 Common Stock 150,000 Retained Earnings 100,000 181,000 50,000 Sales 400,000 Income from Simpson 200,000 18,000 $1,199,800 $1,199.800 $471,000 $471.000 Consolidation Entries Debit Credit Accounts Parent (400,000) 180.000 50,000 30,000 25,000 40,000 (18,000) (93,000) Sub (200,000) 100,000 34,000 15,000 E Revenues Cost of goods sold Wage Expense Depreciation expense Interest expense Other Expenses Equity in Sub's earnings Separate company net income Consolidated net income controlling Consolidated Interest Totals (600,000) 280,000 84,000 46,500 31,000 1,500 6.000 61,000 21,0062 -01 (24,000) 18.000 -0 (97,500) (4,500) NI to noncontrolling interest Ni to Parent Company 4,500 (93,000) 50,000 (181,000) (93,000) Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 (181.000) (93,000) 40,000 (234,000) (50,000) S (24,000) 10,000 (64,000) D 8,000 2,000 40,000 (234,000) 85,000 Current assets Land Fixed Assets (net) Investment in Sub 240,000 150.000 150,000 144,800 50.000 114,000 A D 325,000 200,000 276,000 -0 1,500 13,500 E 8,000 S 1 A 5,000 120,000 18.000 14,800 Goodwill Total assets -OA 249,000 5,000 806,000 684,800 Accounts Payable Wages Payable Notes Payable NCI in Sub 1/1 (90,000) (30,800) (180,000) (26,000) (9,000) (50,000) (116,000) (39,800) (230,000) S A 30,000 3.700 (33,700) (36,200) NCI in Sub 12/31 (36,200)
