Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2021, for $791,520 cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $989,400 although Sierra's book value was only $638,000. Also, several individual items on Sierra's financial records had fair values that differed from their book values as follows: Land Buildings and equipment (10-year remaining life) Copyright (20-year remaining life) Notes payable (due in 8 years) Book value $ 65,280 295,000 184, eee (187,000) Fair value $ 307,200 276, eee 218,888 (172,600) For internal reporting purposes, Padre, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. $ Padre $ (1,401,180) 770,000 264,280 Sierra (647,280) 426,000 15,500 5,200 5,300 $ $ Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Current assets Investment in Sierra Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities 50,700 (151,520) $ (468,000) $(1,492,500) (468,000) 260,000 $ (1,708,500) $ 998,460 891, 040 349,000 944, eee (195,000) (478,eee) (195,000) 65,000 (608,000) 681,500 $ $ 3,182,500 $ (285, eee) (527,000) (380,000) (450, 088) (1,700, 500) $ (3,182,500) 65,200 279,500 98,888 $ 1,125,000 $ (170,000) (187, e80) (180,000) (60,000) (688, 288) $(1,125, eee) At year-end, there were no intra-entity receivables or payables. Prepare a worksheet to consolidate the financial statements of these two companies. (For accounts where multiple consolidation 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. Input all amounts as positive values.) PADRE INC., AND SIERRA CORPORATION Consolidated Worksheet For Year Ending December 31, 2021 Consolidation Entries Padre Sierra Debit Credit Accounts Noncontrolling Consolidated Interest Totals $ 2.048,180) 1,196,000 277,600 10,900 57,800 $(1.401,180) $ (647,000) 770.000 426,000 284.000 15,500 0 5,200 50,700 5,300 (151,520) 0 $ (488,000) $ (195,000) 1.900 5,700 1,800 151,520 (663,000) (185,000) 478,000 52,000 13,000 Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sierra Separate company net income Consolidated net income NI to noncontrolling interest NI to Padre Company Retained earnings, 1/1/21 Net income Dividends declared Retained earnings. 12/31/21 Current assets Investment in Sierra Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable NCI in Sierra 1/1 NCI in Sierra 12/31 Common stock Additional paid-in capital Retained earnings (above) Total liabilities and equities (185,000) S (488,000) $ (1.492,500) (468,000) 280,000 $ (1.700,500) 1,679,960 0 658.2001 1,208,400 207,100 3,749,680 $ (375,000) (701,400) $(1.492,500) $ (478,000) (468,000) (195,000) 260.000 85,000 $(1.700,500) $ (608,000) 998.460 $ 681,500 891,040 0 349,000 65,200 944,000 279,500 0 98,800 $ 3,182,500 $ 1,125,000 $ (205,000) $ (170,000) (527,000) (187.000) 891,040 242,000 1,900 114,000 19,000 5,700 14,400 1,800 127,600 $ 28,000) 100,000 80,000 (300,000) (450,000) (1.700,500) $(3.182,500) (100,000) (60,000) (608,000) $ (1.125,000) (222,780) (300,000) (450,000) (1.700,500) $ 1,169,320 $ 1.099,040 $ (3.749,680)
