Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20x1, for $153,000. On that date, the fair value of the noncontrolling interest was $38,250, and Slice reported retained earnings of $44,000 and had $99,000 of common stock outstanding. Pizza has used the equity method in accounting for its investment in Slice. Trial balance data for the two companies on December 31, 20x5, are as follows: Inventory Tand Buildings & Equipment Investment in Slice Products Company Cost of Goods Sold Depreciation Expense Inventory Losses Dividends Declared Accumulated Depreciation Accounts Payable Notes Payable Common Stock Retained Earnings Sales Income from Slice Products Pizza Slice Corporation Products Company Debit Credit 87.000 77,000 262.000 91.000 86,000 86.000 507.000 169,000 198,260 13,000 44,000 22,000 12.000 12,000 5,000 44.000 22,800 $ 185,000 $ 84,000 55,000 12.000 246, 320 115,800 292,000 99.000 306.000 89,000 204,000 107,000 32,940 $1,321,260 $1,321,260 $506,800 $506,800 Additional Information 1. On the date of combination, the fair value of Slice's depreciable assets was $48.250 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written Additional Information Additional Information 1. On the date of combination, the fair value of Slice's depreciable assets was $48,250 more than book value. The accumulated depreciation on these assets was $10,000 on the acquisition date. The differential assigned to depreciable assets should be written off over the following 10-year period. 2. There was $10,000 of intercorporate receivables and payables at the end of 20X5. Consolidation Worksheet Entries Record the excess value (differential) reclassification entry. Note: Enter debits before credits Event Credit Accounts Buildings and equipment Accumulated depreciation Debit 48,250 ENCI in NA of Slice Products Company Record entry Clear entry view consolidation entries Check my world (5,000) (17,000) (12,000) 32,940 89,940 3 $ $ 46,000 $ $ $ 36,800 36,800 9,200 46,000 ,860 3,860 965 4,825 103,000 (8,235) 94,765 $ 89,940 $ 46,000 $ $ $ $ $ $ $ 89,000 46,000 306,000 89,940 (44,000)| 351,940 89,000 46,000 (22,800)| 112,200 4,825 22,800 27,625 306,000 94,765 (44,000) 356,765 $ $ 135,000 $ $ $ 10,000 $ Less: Inventory losses Income from Slice Products Company Consolidated net income NCI in net income Controlling Interest in Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Cash and receivables Inventory Land Buildings and equipment Less: Accumulated depreciation Investment in Slice Products Company Total Assets Accounts payable Notes payable Common stock Retained earnings NCI in NA of Slice Products Company Total Liabilities and Equity 87,000 262,000 86,000 507,000 (185,000) 77,000 91,000 86,000 169,000 (84,000) 48.250f 154,000 353,000 172,000 724,250 (269,000) 48,250 $ 48,250 $ 10,000 $ $ $ $ 757,000 55,000 246,320 292.000 351,940 339,000 12,000 115,800 99.000 12,200 1,134,250 67,000 362,120 292,000 356,765 1 99,000 135,000 27,625 945,260 $ 339,000 $ 234,000 $ 27,625 $ 1,077,885 1 of 2 !!! Next >
