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Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $151,000. On that date, the fair value of the noncontrolling

Pizza Corporation acquired 80 percent ownership of Slice Products Company on January 1, 20X1, for $151,000. On that date, the fair value of the noncontrolling interest was $37,750, and Slice reported retained earnings of $49,000 and had $92,000 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:

Pizza Corporation Slice Products Company
Item Debit Credit Debit Credit
Cash & Receivables $ 84,000 $ 76,000
Inventory 273,000 101,000
Land 89,000 89,000
Buildings & Equipment 517,000 161,000
Investment in Slice Products Company 174,940
Cost of Goods Sold 113,000 49,000
Depreciation Expense 23,000 13,000
Inventory Losses 13,000 5,000
Dividends Declared 46,000 13,200
Accumulated Depreciation $ 198,000 $ 91,000
Accounts Payable 41,000 18,000
Notes Payable 273,560 123,200
Common Stock 291,000 92,000
Retained Earnings 305,000 82,000
Sales 201,000 101,000
Income from Slice Products Company 23,380
$ 1,332,940 $ 1,332,940 $ 507,200 $ 507,200

Additional Information

  1. On the date of combination, the fair value of Slice's depreciable assets was $47,750 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 $12,000 of intercorporate receivables and payables at the end of 20X5.

Required: a. Prepare all journal entries that Pizza recorded during 20X5 related to its investment in Slice. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record Pizza Corporation.'s 80% share of Slice Wood Company's 20X5 income.

2. Record Pizza Corporation's 80% share of Slice Company's 20X5 dividend.

3. Record the amortization of the excess acquisition price.

b. Prepare all consolidation entries needed to prepare consolidated statements for 20X5. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record basic consolidation entry.

2. Record the amortized excess value reclassification entry.

3. Record the excess value (differential) reclassification entry.

4. Record the entry to eliminate the intercompany accounts.

c. Prepare a three-part worksheet as of December 31, 20X5. (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.)

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