Question
Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $118,300. At that date, the noncontrolling interest had a
Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $118,300. At that date, the noncontrolling interest had a fair value of $50,700 and Soda reported $70,000 of common stock outstanding and retained earnings of $31,000. The differential is assigned to buildings and equipment, which had a fair value $24,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $44,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows:
Pop Corporation | Soda Company | |||||||||||||||
Item | Debit | Credit | Debit | Credit | ||||||||||||
Cash & Accounts Receivable | $ | 19,400 | $ | 25,600 | ||||||||||||
Inventory | 169,000 | 39,000 | ||||||||||||||
Land | 84,000 | 44,000 | ||||||||||||||
Buildings & Equipment | 380,000 | 264,000 | ||||||||||||||
Investment in Soda Company | 119,280 | |||||||||||||||
Cost of Goods Sold | 190,000 | 83,800 | ||||||||||||||
Depreciation Expense | 25,000 | 20,000 | ||||||||||||||
Interest Expense | 20,000 | 9,200 | ||||||||||||||
Dividends Declared | 34,000 | 19,000 | ||||||||||||||
Accumulated Depreciation | $ | 144,000 | $ | 85,000 | ||||||||||||
Accounts Payable | 96,400 | 39,000 | ||||||||||||||
Bonds Payable | 255,160 | 99,000 | ||||||||||||||
Bond Premium | 2,600 | |||||||||||||||
Common Stock | 124,000 | 70,000 | ||||||||||||||
Retained Earnings | 131,900 | 64,000 | ||||||||||||||
Sales | 264,000 | 145,000 | ||||||||||||||
Other Income | 13,600 | |||||||||||||||
Income from Soda Company | 11,620 | |||||||||||||||
$ | 1,040,680 | $ | 1,040,680 | $ | 504,600 | $ | 504,600 | |||||||||
On December 31, 20X2, Soda purchased inventory for $27,000 and sold it to Pop for $45,000. Pop resold $28,000 of the inventory (i.e., $28,000 of the $45,000 acquired from Soda) during 20X3 and had the remaining balance in inventory at December 31, 20X3. During 20X3, Soda sold inventory purchased for $54,000 to Pop for $90,000, and Pop resold all but $26,000 of its purchase. On March 10, 20X3, Pop sold inventory purchased for $14,000 to Soda for $28,000. Soda sold all but $7,000 of the inventory prior to December 31, 20X3. Assume Pop uses the fully adjusted equity method, that both companies use straight-line depreciation, and that no property, plant, and equipment has been purchased since the acquisition. Required: a. Prepare all consolidation entries needed to prepare a full set of consolidated financial statements at December 31, 20X3, for Pop and Soda
A: record the basic consolidation entry
Please explain #1 how to calculate Income from Soda company$ NCI in NI
Also please explain how to #3,5,6,7. Thank you
B Record the amortized excess value reclassification entry. Record the excess value (differential) reclassification entry. D Record the optional accumulated depreciation consolidation entry. Record the entry to reverse last year's deferral. Record the deferral of the unrealized profit on inventory transfers from 20x2. G Record the deferral of this year's unrealized profits on inventory transfers. 1 Common stock Retained earnings Income from Soda Company NCI in NI of Soda Company Dividends declared Investment in Soda Company NCI in NA of Soda Company 70,000 64,000 19,460 9,840 19,000 99,960 44,340 2 8,800 2,400 Amortization expense Depreciation expense Income from Soda Company NCI in NI of Soda Company 7,840 3,360 3 22,000 17,600 Buildings and equipment Patents Accumulated depreciation Income from Soda Company NCI in NI of Soda Company 4,800 24,360 10,440 4 45,000 Accumulated depreciation Buildings and equipment 45,000 5 5 NCI in NA of Soda Company Investment in Soda Company Cost of goods sold 3,360 7,840 11,200 6 NCI in NA of Soda Company Investment in Soda Company Inventory 2,040 4,760 6,800 7 118,000 Sales Cost of goods sold Inventory 104,100 13,900Step by Step Solution
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