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Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest
Pillow Corporation acquired 80 percent ownership of Sheet Company on January 1, 20X7, for $173,000. At that date, the fair value of the noncontrolling interest was $43,250. The trial balances for the two companies on December 31, 20X7, included the following amounts:
Pillow Corporation | Sheet Company | ||||||||||||||||
Item | Debit | Credit | Debit | Credit | |||||||||||||
Cash | $ | 38,000 | $ | 25,000 | |||||||||||||
Accounts Receivable | 50,000 | 55,000 | |||||||||||||||
Inventory | 240,000 | 100,000 | |||||||||||||||
Land | 80,000 | 20,000 | |||||||||||||||
Buildings & Equipment | 500,000 | 150,000 | |||||||||||||||
Investment in Sheet Company | 202,000 | ||||||||||||||||
Cost of Goods Sold | 500,000 | 250,000 | |||||||||||||||
Depreciation Expense | 25,000 | 15,000 | |||||||||||||||
Other Expenses | 75,000 | 75,000 | |||||||||||||||
Dividends Declared | 50,000 | 20,000 | |||||||||||||||
Accumulated Depreciation | $ | 155,000 | $ | 75,000 | |||||||||||||
Accounts Payable | 70,000 | 35,000 | |||||||||||||||
Mortgages Payable | 200,000 | 50,000 | |||||||||||||||
Common Stock | 300,000 | 50,000 | |||||||||||||||
Retained Earnings | 290,000 | 100,000 | |||||||||||||||
Sales | 700,000 | 400,000 | |||||||||||||||
Income from Sheet Company | 45,000 | ||||||||||||||||
$ | 1,760,000 | $ | 1,760,000 | $ | 710,000 | $ | 710,000 | ||||||||||
Additional Information
- On January 1, 20X7, Sheet reported net assets with a book value of $150,000 and a fair value of $191,250. Accumulated depreciation on Buildings and Equipment was $60,000 on the acquisition date.
- Sheets depreciable assets had an estimated economic life of 11 years on the date of combination. Goodwill of $25,000 was recorded at the acquisition.
- Pillow used the equity method in accounting for its investment in Sheet.
- Detailed analysis of receivables and payables showed that Sheet owed Pillow $16,000 on December 31, 20X7.
Prepare a three-part consolidation worksheet as of December 31, 20X7.
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