Palermo Inc. purchased 80 percent of the outstanding stock of Salina Ranching Company, located in Australia, on January 1, 20X3. The purchase price in Australian dollars (A$) was A$200,000, and A$40,000 of the differential was allocated to plant and equipment, which is amortized over a 10-year period. The remainder of the differential was attributable to a patent. Palermo Inc. amortizes the patent over 10 years. Salina Ranchings trial balance on December 31, 20X3, in Australian dollars is as follows:

Assume that the Australian dollar (A$) is the functional currency and that Palermo uses the fully adjusted equity method for accounting for its investment in Salina Ranching. A December 31, 20X3, trial balance for Palermo Inc. follows.

Additional Information:

1. Salina Ranching uses average cost for cost of goods sold. Inventory increased by A$20,000 during the year. Purchases were made uniformly during 20X3. The ending inventory was acquired at the average exchange rate for the year.
2. Plant and equipment were acquired as follows:

3. Plant and equipment are depreciated using the straight-line method and a 10-year life with no residual value.
4. The payable to Palermo is in Australian dollars. Palermos books show a receivable from Salina Ranching of $6,480.
5. The 10-year bonds were issued on July 1, 20X3, for A$106,000. The premium is amortized on a straight-line basis. The interest is paid on April 1 and October 1.
6. The dividends were declared and paid on April 1.
7. Exchange rates were as follows:

Required: a. Prepare a set of consolidating entries, in general journal form, for the entries required to prepare a comprehensive consolidation worksheet (including other comprehensive income) as of December 31, 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare a comprehensive consolidation worksheet as of December 31, 20X3. (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.)

Credits Debits A$ 44,100 72,899 86,00 240,000 Cash Accounts Receivable (net) Inventory Plant and Equipment Accumulated Depreciation Accounts Payable Payable to Palermo Inc. Interest Payable 12% Bonds Payable Premium on Bonds Common Stock Retained Earnings Sales Cost of Goods Sold Depreciation Expense Operating Expenses Interest Expense Dividends Paid Total A$ 60, ese 53,800 10,800 3,000 180,000 5,700 99,800 40,000 579,00 330, eee 24,00 131,500 5,700 9, eee A$942, 300 A$942, 300 Credits Debits A$ 44,100 72,899 86,00 240,000 Cash Accounts Receivable (net) Inventory Plant and Equipment Accumulated Depreciation Accounts Payable Payable to Palermo Inc. Interest Payable 12% Bonds Payable Premium on Bonds Common Stock Retained Earnings Sales Cost of Goods Sold Depreciation Expense Operating Expenses Interest Expense Dividends Paid Total A$ 60, ese 53,800 10,800 3,000 180,000 5,700 99,800 40,000 579,00 330, eee 24,00 131,500 5,700 9, eee A$942, 300 A$942, 300 Date January 29x1 January 1, 20x3 Cost A$ 180,000 60, eee January 28x1 August 2exi January 1, 20x3 April 1, 20x3 July 1, 20x3 December 31, 20x3 20x3 average A$ 1 = 9.93 1 = 0.88 1 = 0.70 i = 0.67 i = 0.64 1 = 0.60 1 8.65 view transaction list X A Record the basic consolidation entry. B Record the other comprehensive income entry. Record the amortized excess value reclassification entry. Record the excess value (differential) reclassification entry. E Record the entry to eliminate the intercompany accounts. Answer is not complete. No Entry Accounts Debit Credit 1 63.000 Common stock Retained earnings Income from Salina Ranching NCI in Nl of Salina Ranching Dividends declared Investment in Salina Ranching NCI in NA of Salina Ranching 28,000 45,658 11,414 6.030 113.632 28,408 C 5,600 X 2,800 Amortization expense Depreciation expense Income from Salina Ranching NCI in Nl of Salina Ranching OOO D 4 28,000 X 50.400 OOO Plant and equipment Patent Accumulated depreciation Investment in Salina Ranching NCI in NA of Salina Ranching x x 2.800 X 60.480 X 15,120 X E 5 6.480 > Payable to Palermo Receivable from Salina Ranching SIS 8.480 Consolidated $ 0 $ 0 0 5 0 PALERMO INC. AND SUBSIDIARY Consolidation Financial Statement Worksheet December 31, 20X3 Consolidation Entries Palermo Salina DR CR Ranching Income Statement Sales Less: COGS Less: Depreciation Expense Less: Amortization Expense Less: Operating Expense Less: Interest Expense Income from Salina Ranching Consolidated Net Income IS s 0 IS 0 IS NCI in Net Income Controlling Interest in Net Income S 0 $ 0 S $ Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance 0 $ 0 S 0 S Balance Sheet Assets Cash Accounts receivable Receivable from Salina Ranching Inventory Plant & Equipment Less: Accumulated Depreciation Patent Investment in Salina Ranching Total Assets $ 0 S 0 $ 0 Liabilities & Stockholders' Equity Accounts payable Payable to Palermo Interest Payable Bonds Payable Premium on Bonds Common Stock Retained Earnings Accumulated OCI NCI in NA of Salina Ranching Total Liabilities & Equity $ S 0 5 0 S Other Comprehensive Income Accumulated Other Comprehensive Income, 1/1/20X3 Other Comp. Income - Translation Adjustment Other Comprehensive Income to NCI Accumulated Other Comprehensive 5 0 5 0 S 0 $ Income, 12/31/20X3 0 0 S 0 0 0 $ 0 0 0 Credits Debits A$ 44,100 72,899 86,00 240,000 Cash Accounts Receivable (net) Inventory Plant and Equipment Accumulated Depreciation Accounts Payable Payable to Palermo Inc. Interest Payable 12% Bonds Payable Premium on Bonds Common Stock Retained Earnings Sales Cost of Goods Sold Depreciation Expense Operating Expenses Interest Expense Dividends Paid Total A$ 60, ese 53,800 10,800 3,000 180,000 5,700 99,800 40,000 579,00 330, eee 24,00 131,500 5,700 9, eee A$942, 300 A$942, 300 Credits Debits A$ 44,100 72,899 86,00 240,000 Cash Accounts Receivable (net) Inventory Plant and Equipment Accumulated Depreciation Accounts Payable Payable to Palermo Inc. Interest Payable 12% Bonds Payable Premium on Bonds Common Stock Retained Earnings Sales Cost of Goods Sold Depreciation Expense Operating Expenses Interest Expense Dividends Paid Total A$ 60, ese 53,800 10,800 3,000 180,000 5,700 99,800 40,000 579,00 330, eee 24,00 131,500 5,700 9, eee A$942, 300 A$942, 300 Date January 29x1 January 1, 20x3 Cost A$ 180,000 60, eee January 28x1 August 2exi January 1, 20x3 April 1, 20x3 July 1, 20x3 December 31, 20x3 20x3 average A$ 1 = 9.93 1 = 0.88 1 = 0.70 i = 0.67 i = 0.64 1 = 0.60 1 8.65 view transaction list X A Record the basic consolidation entry. B Record the other comprehensive income entry. Record the amortized excess value reclassification entry. Record the excess value (differential) reclassification entry. E Record the entry to eliminate the intercompany accounts. Answer is not complete. No Entry Accounts Debit Credit 1 63.000 Common stock Retained earnings Income from Salina Ranching NCI in Nl of Salina Ranching Dividends declared Investment in Salina Ranching NCI in NA of Salina Ranching 28,000 45,658 11,414 6.030 113.632 28,408 C 5,600 X 2,800 Amortization expense Depreciation expense Income from Salina Ranching NCI in Nl of Salina Ranching OOO D 4 28,000 X 50.400 OOO Plant and equipment Patent Accumulated depreciation Investment in Salina Ranching NCI in NA of Salina Ranching x x 2.800 X 60.480 X 15,120 X E 5 6.480 > Payable to Palermo Receivable from Salina Ranching SIS 8.480 Consolidated $ 0 $ 0 0 5 0 PALERMO INC. AND SUBSIDIARY Consolidation Financial Statement Worksheet December 31, 20X3 Consolidation Entries Palermo Salina DR CR Ranching Income Statement Sales Less: COGS Less: Depreciation Expense Less: Amortization Expense Less: Operating Expense Less: Interest Expense Income from Salina Ranching Consolidated Net Income IS s 0 IS 0 IS NCI in Net Income Controlling Interest in Net Income S 0 $ 0 S $ Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance 0 $ 0 S 0 S Balance Sheet Assets Cash Accounts receivable Receivable from Salina Ranching Inventory Plant & Equipment Less: Accumulated Depreciation Patent Investment in Salina Ranching Total Assets $ 0 S 0 $ 0 Liabilities & Stockholders' Equity Accounts payable Payable to Palermo Interest Payable Bonds Payable Premium on Bonds Common Stock Retained Earnings Accumulated OCI NCI in NA of Salina Ranching Total Liabilities & Equity $ S 0 5 0 S Other Comprehensive Income Accumulated Other Comprehensive Income, 1/1/20X3 Other Comp. Income - Translation Adjustment Other Comprehensive Income to NCI Accumulated Other Comprehensive 5 0 5 0 S 0 $ Income, 12/31/20X3 0 0 S 0 0 0 $ 0 0 0