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Please answer all questions on a Microsoft Excel spreadsheet ONLY and show calculations. P 8-6 Midyear purchase of additional interest, preacquisition income Pot Corporation purchased
Please answer all questions on a Microsoft Excel spreadsheet ONLY and show calculations.
P 8-6 Midyear purchase of additional interest, preacquisition income Pot Corporation purchased a 70 percent interest in Sod Corporation on January 2, 2011, for $98,000, when Sod had capital stock of $100,000 and retained earnings of $20,000. On June 30, 2012, Potpur- chased an additional 20 percent interest for $37,000. Comparative financial statements for Pot and Sod Corporations at and for the year ended December 31, 2012, are as follows (in thousands): Pot Sod Combined Income and Retained Earnings Statement for the Year Ended December 31 Sales $400 $200 Income from Sod 24 Cost of sales (250) (150) Expenses (50) (20) Net income 124 30 Add: Beginning retained earnings 200 Less: Dividends, December 1 (64) (10) Retained earnings, December 31 $260 $ 70 Balance Sheet at December 31 Other assets $429 $200 Investment in Sod 171 Total assets $600 $200 Liabilities $ 40 $30 Common stock 300 100 Retained earnings 260 70 Total equities $600 $200 50 REQUIRED 1. Prepare a schedule explaining the $171,000 balance in Pot's Investment in Sod account at December 31, 2012. 2. Compute goodwill that will appear in the December 31, 2012, consolidated balance sheet. 3. Prepare a schedule computing consolidated net income for 2012. Consolidations-Changes in Ownership Interests 269 4. Compute consolidated retained earnings on December 31, 2012. 5. Compute noncontrolling interest on December 31, 2012
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