Answered step by step
Verified Expert Solution
Question
1 Approved Answer
P7 - 32 Consolidation Worksheet in Year of Intercompany Transfer LO 7-4, 7-5 Prime Company holds 80 percent of Suspect Company's stock, acquired on January
P7 - 32 Consolidation Worksheet in Year of Intercompany Transfer LO 7-4, 7-5 Prime Company holds 80 percent of Suspect Company's stock, acquired on January 1, 20X2, for $160,000. On the acquisition date, the fair value of the noncontrolling interest was $40.000. Suspect reported retained eamings of $50,000 and had $100,000 of common stock outstanding. Prime uses the fully adjusted equity method in accounting for its investment in Suspect. I Advanced Study Guide Com Trial balance data for the two companies on December 31, 20X6, are as follows: Prime Company Suspect Company Credit Debit Debit Credit Item $ 35,000 90.000 80.000 150.000 Cash & Accounts Receivable Inventory Land Buildings & Equipment Investment in Suspect Company Stock Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings $ 13.000 260.000 80.000 500.000 191.600 140.000 25,000 15.000 30.000 60,000 15,000 5.000 5.000 $ 205.000 60.000 200 000 B00.000 322.000 240.000 20.000 $ 45.000 20,000 50.000 100.000 95.000 180.000 Gam on Sale of Equipment wcome from Suspect Total $254.600 $1.354.600 $440.000 page 366 Additional Information 1. At the date of combination, the book values and fair values of all separately identifiable assets and liabilities of Suspect were the same. At December 31, 20X6, the management of Prime reviewed the amount attributed to goodwill as a result of its purchase of Suspect stock and concluded an impairment loss of $18,000 should be recognized in 20X6 and shared proportionately between the controlling and noncontrolling shareholders. 2. On January 1, 20X5, Suspect sold land that had cost $8,000 to Prime for $18.000. 3. On January 1, 20X6, Prime sold to Suspect equipment that it had purchased for $75,000 on January 1, 20X1. The equipment has a total economic life of 15 years and was sold to Suspect for $70,000. Both companies use straight-line depreciation. 4. There was $7,000 of intercompany receivables and payables on December 31, 20X6. Required 2. Give all consolidation entries needed to prepare a consolidation worksheet for 20X6. 3. Prepare a three-part worksheet for 20x6 in good fom. 7. Prepare a consolidated balance sheet, income statement, and retained camings statement for 20X6
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started