P5-38 Subsidiary with Other Comprehensive Income in Year Following Acquisition LO 5-4

Pirate Corporation acquired 60 percent ownership of Ship Company for $96,000 on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Ship Company. Accumulated depreciation on Buildings and Equipment was $75,000 on the acquisition date. Trial balance data at December 31, 20X9, for Pirate and Ship are as follows:

	Pirate Corporation									Ship Company
Item	Debit				Credit					Debit				Credit
Cash		$	18,000								$	11,000
Accounts Receivable			45,000									21,000
Inventory			40,000									30,000
Buildings & Equipment			585,000									257,000
Investment in Row Company												44,000
Investment in Ship Company			116,400
Cost of Goods Sold			170,000									97,000
Depreciation Expense			30,000									10,000
Interest Expenses			8,000									3,000
Dividends Declared			40,000									20,000
Accumulated Depreciation						$	170,000								$	95,000
Accounts Payable							75,000									24,000
Bonds Payable							100,000									50,000
Common Stock							200,000									100,000
Retained Earnings							231,000									70,000
Accumulated Other Comprehensive Income							6,000									10,000
Other Comprehensive Income from Ship Company (OCI)Unrealized Gain on Investments							2,400
Unrealized Gain on Investments (OCI)																4,000
Sales							250,000									140,000
Income from Ship Company							18,000
		$	1,052,400			$	1,052,400				$	493,000			$	493,000

Additional Information Ship purchased stock of Row Company on January 1, 20X8, for $30,000 and classified the investment as available-for-sale securities. The value of Rows securities increased to $40,000 and $44,000, respectively, at December 31, 20X8, and 20X9. Assume that depreciation expense was $10,000 for the previous year as well. Required: a. Record all consolidation entries needed to prepare a three-part consolidation worksheet as of December 31, 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare a three-part consolidation worksheet for 20X9 in good form. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)