P

S

Eliminations

Noncontrolling

Consolidated

Case I

Company

Company

Dr.

Cr.

Interest

Balance

Current Assets

Investment in S Company

Difference between Implied and Book Value

Long-term Assets

Other Assets Total Assets

Current Liabilities

Long-term Liabilities

Common Stock:

P Company

S Company

Retained Earnings P Company S Company

Noncontrolling Interest

Total Liabilities and Equity

Case II

Current Assets

Investment in S Company

Difference between Implied & Book Value

Long-term Assets

Other Assets

Total Assets

Current Liabilities

Long-term Liabilities

Common Stock:

P Company

S Company

Retained Earnings

P Company

S Company

Noncontrolling Interest

Total Liabilities and Equity

Wholly Owned Subsidiary Parry Corporation acquired a 70% interest in Sent Company on January 1, 2016, paying $140,000. Financial statement data for the two companies for the year ended December 31, 2016 follow: Parry Sent 500,000 150,000 100,000 300,000 50,000 20,000 3,500 0 50,000 5,000 153,500 30,000 25,000 5,000 178,500 30,000 Income Statement Sales Cost of goods sold Other expense Dividend income Retained Earnings Statement Balance, 1/1 Net income Dividends declared Balance, 12/31 Balance Sheet (12/31/2016) Cash Accounts receivable Inventory Investment in Sent Company Land Total Assets Accounts payable Long term Debt Common stock Retained earnings Total Liab and Equity 85,000 27.500 75,000 30,000 50,000 35,000 0 140,000 50,000 5,000 400,000 97.500 1,000 1,500 100,000 120,000 178,500 400,000 16,500 50,000 30,000 97,500 A. What method is being used by Parry to account for its investment in Sent Company? How can you tell? B. Prepare a workpaper for the preparation of consolidated financial statements on December 31, 2016. Any difference between the book value of equity acquired and the value implied by the purchase price relates to subsidiary land. Use the workpaper on google sheet. (tab HW4 Wholly Owned Subsidiary Parry Corporation acquired a 70% interest in Sent Company on January 1, 2016, paying $140,000. Financial statement data for the two companies for the year ended December 31, 2016 follow: Parry Sent 500,000 150,000 100,000 300,000 50,000 20,000 3,500 0 50,000 5,000 153,500 30,000 25,000 5,000 178,500 30,000 Income Statement Sales Cost of goods sold Other expense Dividend income Retained Earnings Statement Balance, 1/1 Net income Dividends declared Balance, 12/31 Balance Sheet (12/31/2016) Cash Accounts receivable Inventory Investment in Sent Company Land Total Assets Accounts payable Long term Debt Common stock Retained earnings Total Liab and Equity 85,000 27.500 75,000 30,000 50,000 35,000 0 140,000 50,000 5,000 400,000 97.500 1,000 1,500 100,000 120,000 178,500 400,000 16,500 50,000 30,000 97,500 A. What method is being used by Parry to account for its investment in Sent Company? How can you tell? B. Prepare a workpaper for the preparation of consolidated financial statements on December 31, 2016. Any difference between the book value of equity acquired and the value implied by the purchase price relates to subsidiary land. Use the workpaper on google sheet. (tab HW4