Plaza Corporation purchased 70 percent of Square Company's voting common stock on January 1, 2005, for $291,900. On that date, the noncontrolling interest had a fair value of $125,100 and the book value of Square's net assets was $381,000. The book values and fair values of Square's assets and liabilities were equal except for land that had a fair value $14,000 higher than book value. The amount attributed to goodwill as a result of the acquisition is not amortized and has not been impaired. Square Company Debit Credit $ 88,000 112,000 260,000 PLAZA CORPORATION AND SQUARE COMPANY Trial Balance Data December 31, 20X9 Plaza Corporation Item Debit Credit Cash and Receivables $ 84,300 Inventory 217,000 Land, Buildings, & Equipment (net) 280,000 Investment in Square Company 299,456 Cost of Goods & Services 189,000 Depreciation Expense 25,000 Dividends Declared 20,000 Sales & Service Revenue $ 309,000 Income from Square Company 48,456 Accounts Payable 58,000 Common Stock 200,000 Retained Earnings 499, 300 Total $1,114,756 $1,114,756 139,000 15,000 5,000 $209,000 23,000 151,000 236,000 $619,000 $619,000 On January 1, 20X9, Plaza's inventory contained $38,000 of unrealized intercompany profits recorded by Square. Square's inventory on that date contained $15,000 of unrealized intercompany profits recorded on Plaza's books. Both companies sold their ending 20X8 inventories to unrelated companies in 20X9. During 20X9, Square sold inventory costing $37,000 to Plaza for $62,000. Plaza held all inventory purchased from Square during 20X9 on December 31, 20X9. Also during 20X9, Plaza sold goods costing $62,400 to Square for $104,000. Square continues to hold $35,360 of its purchase from Plaza on December 31, 20X9. Assume Plaza uses the fully adjusted equity method. Required: a. Prepare all consolidation entries needed to complete a consolidation worksheet as of December 31, 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) A Record the basic consolidation entry. B Record the excess value (differential) reclassification entry. Record the entry to reverse last year's deferral. D Record the deferral of this year's unrealized profits on inventory transfers. b. Prepare a consolidation worksheet as of December 31, 20X9. (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.) PLAZA CORPORATION & SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X9 Consolidation Entries Plaza Corp. Square Co. DR CR Consolidated Income Statement Sales Less: COGS 0 0 0 0 0 0 $ 0 S s 0 $ $ 0 $ 0 0 $ 0 $ $ 0 S 0 $ $ 0 $ 0 $ 0 $ 0 Less: Depreciation Expense Income from Square 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 Receivable Inventory Land, Buildings, & Equipment (net) Investment in Square Company Goodwill Total Assets Accounts Payable Common Stock Retained Earnings NCI in NA of Square Company Total Liabilities & Equity $ $ 0 0 S 0 0 $ 0 0 $ $ 0 0 $ 0 $ 0 S S 0 $ 0 $ 0 $ 0
