Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please answer the following question and show you Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book
Please answer the following question and show you
Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $44,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited during 20X3. On December 31, 20X3, the trial balances of the two companies are as follows: Spirited Company Debit Credit $111,000 314,000 Proud Corporation Debit Credit $ 181,000 503,000 111,200 21,000 104,000 58,000 $ 166,000 38,000 114, 200 194,000 224,000 206,000 36,000 $978, 200 $978, 200 Item Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Spirited Company 11,000 70,000 22,000 $ 55,000 28,000 203,000 83,000 33,000 126,000 $528,000 $528,000 Required: a. Prepare all consolidation entries required as of December 31, 20X3, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list X A Record the basic consolidation entry. > B Record the optional accumulated depreciation consolidation entry. Credit b. Prepare a three-part consolidation worksheet. (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.) PROUD CORPORATION AND SUBSIDIARY Worksheet for Consolidated Financial Statements December 31, 20X3 Consolidation Entries Proud Corp. Spirited Co. DR CR Consolidated Income Statement Sales Less: Depreciation expense Less: Other expenses Income from Spirited Co. Consolidated Net Income NCI in Net income Controlling Interest in Net Income c. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X3. (Amounts to be deducted should be indicated with a minus sign.) PROUD CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X3 Assets Total Assets Liabilities Stockholders' Equity: Controlling InterestStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started