Part $1.$ Consolidations with worksheets. ARTHUR COMPANY AND CONSOLIDATED SUBSIDIARY

Consolidation Worksheet

December $31,2021$

Arthur Co$.$ acquired $80\%$ of Bryant Co$.$ common stock on $01/01/2020.$ There is no difference

between book value and market value for Bryant's assets and no goodwill when Arthur acquired

Bryant. During $2021,$ Bryant Co$.$ sold to Arthur inventory that costs $$200,000$ for $$240,000.$ By the end of

$2021,$ Arthur sold $60\%$ of those inventory to outside customers. In addition, during $2021,$ Arthur sold to

outside customers all of the inventory that was carried from $2020.$ The inventory carried from $2020$ was

originally sold by Bryant to Arthur for $$50,000.$ The cost of the inventory for Bryant was $$40,000.$ Also

$$20,000.$ The equipment was originally purchased by Bryant for $30,000$ and has accumulated depreciation

of $$15,000$ on $\frac{01}{01}\frac{?}{{2020}_{?}}.$ The equipment is depreciated by Arthur with straight$-$line method based on a $5$

year useful life $($i$.$e$.2020-2024,$ inclusive$).$ Assume that Bryant would depreciate the equipment by $$3,000$

per year if it had not sold the equipment. Bryant made net income of $$60,000$ and paid $$40,000$ dividend

in $2021.$ There are no other intercompany transactions in $2021$ other than the sales of inventory and

equipment.

Using the above information, please use the acquisition method to consolidate the books of Arthur

and Bryant Co$.$ on $12/31/2021,$ assuming that Arthur records its investment in subsidiary with the

equity method.

Arthur's accounting entries on its investment accounts under equity method at end of $2021$

Investment in Bryant

adjustment for subsidiary's net income

Equity in Bryant's earnings

Cash

adjustment for subsidiary's dividend

Investment in Bryant

Equity in subisidiary earnings

adjustment for unrealized gain from sale of inventory in $2021$

Investment in Bryant

Investment in Bryant

adjustment for gain in sale of inventory carried from $2020$

Equity in subisidiary earnings

Equity in subisidiary earnings

adjustment for unrealized gain from sale of equipment in $2020$

Investment in Bryant

Investment in Bryant

Equity in subisidiary earnings

adjustment for $2021$ depreciation expense for the

equipment sold in $2020$

$1/1/2021$ balance $164800$

$12/31/2021$ balance

Equity in Subsidiary earnings

Bryant $2021$ earnings

realized gain from sale of inventory carried over from $2020$

unrealized gain from $2021$ inventory sale

gain from tranfer of equipment in $2020$

adjustment to depreciation exp. for transferred equipment

total $2021$ Equity in subsidiary earnings