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Prime Company holds 80 percent of Lane Companys stock, acquired on January 1, 20X2, for $174,000. On the acquisition date, the fair value of the

Prime Company holds 80 percent of Lane Companys stock, acquired on January 1, 20X2, for $174,000. On the acquisition date, the fair value of the noncontrolling interest was $43,500. Lane reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Prime uses the fully adjusted equity method in accounting for its investment in Lane.

Trial balance data for the two companies on December 31, 20X6, are as follows:
Prime Company Lane Company
Item Debit Credit Debit Credit
Cash & Accounts Receivable $ 111,000 $ 33,000
Inventory 251,000 91,000
Land 75,000 60,000
Buildings & Equipment 500,000 140,000
Investment in Lane Company Stock 207,640
Cost of Goods Sold 133,400 82,800
Depreciation & Amortization 25,000 14,000
Other Expenses 13,000 5,000
Dividends Declared 30,000 5,000
Accumulated Depreciation $ 205,000 $ 42,000
Accounts Payable 57,000 16,000
Bonds Payable 160,000 30,000
Common Stock 300,000 100,000
Retained Earnings 345,640 62,800
Sales 230,000 180,000
Gain on Sale of Equipment 15,000
Income from Subsidiary 33,400
Total $ 1,346,040 $ 1,346,040 $ 430,800 $ 430,800
Additional Information
1.

At the date of combination, the book values and fair values of all separately identifiable assets and liabilities of Lane were the same. At December 31, 20X6, the management of Prime reviewed the amount attributed to goodwill as a result of its purchase of Lane stock and concluded an impairment loss of $19,575 should be recognized in 20X6 and shared proportionately between the controlling and noncontrolling shareholders.

2. On January 1, 20X5, Lane sold land that had cost $6,000 to Prime for $13,500.
3.

On January 1, 20X6, Prime sold to Lane equipment that it had purchased for $82,500 on January 1, 20X1. The equipment has a total economic life of 15 years and was sold to Lane for $70,000. Both companies use straight-line depreciation.

4.

There was $4,000 of intercompany receivables and payables on December 31, 20X6.

Give all consolidation entries needed to prepare a consolidation worksheet for 20X6

Give all consolidation entries needed to prepare a consolidation worksheet for 20X6

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