Prime Corporation acquired 80 percent of Steak Company's voting shares on January 1, 20X4, for $280,000 in cash and marketable securities. At that date, the noncontrolling Interest had a fair value of $70,000 and Steak reported net assets of $300,000. Assume Prime uses the fully adjusted equity method. Trial balances for the two companies on December 31, 20X7, are as follows: Steak Company Debit Credit $ 19,00 70,000 118, eee 4e8,eee Prime Corporation Debit Credit $ 130,300 80,000 178, eee 680,00 293,000 416,80 30,000 24,000 50,000 $ 310,000 1e8,eee 3e8,eee Item Cash Accounts Receivable Inventory Buildings & Equipment Investment in Steak Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Bond Premium Common Stock Additional Paid-in Capital Retained Earnings Sales Other Income Income from Steak Company Total 202, eee 29, eee 18,888 25,00 200, eee $120,000 15, 200 100,000 4,880 1e8,eee 28,888 215,000 258,888 30,000 337,500 5e8,eee 28,489 25,400 $1,793,300 $1,793,308 $855,000 $855,000 Additional Information 1. The full amount of the differential at acquisition was assigned to buildings and equipment with a remaining 10-year economic life. 2. Prime and Steak regularly purchase Inventory from each other. During 20X6, Steak Company sold Inventory costing $40,000 to Prime Corporation for $60,000, and Prime resold 60 percent of the inventory In 20x6 and 40 percent In 20x7. Also in 20X6, Prime sold Inventory costing $20,000 to Steak for $26,000. Steak resold two-thirds of the Inventory in 20x6 and one-third in 20x7. 3. During 20x7, Steak sold Inventory costing $30,000 to Prime for $45,000, and Prime sold items purchased for $9,000 to Steak for $12,000. Before the end of the year, Prime resold one-third of the inventory It purchased from Steak in 20x7. Steak continues to hold all the units purchased from Prime during 20x7. 4. Steak owes Prime $10,000 on account on December 31, 20x7. 5. Assume that both companies use stralght-line depreciation and that no property, plant, and equipment has been purchased since the acquisition. C. Prepare a three-part consolidation worksheet as of December 31, 20x7. (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 deblt 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.) PRIME CORPORATION & SUBSIDIARY Consolidated Financial Statement Worksheet For 20x7 Consolidation Entries Prime Corp. Steak Co. DR CR Consolidated Income Statement Sales Other Income Less: COGS Less: Depreciation expense Less: Other Expenses Income from Steak 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 Accounts Receivable Inventory Buildings & Equipment Less: Accumulated Depreciation Investment in Steak Company Total Assets Accounts Payable Bonds Payable Bond Premium Common Stock Additional Paid-in Capital Retained Earnings NCI in NA of Steak Company Total Liabilities & Equity Prime Corporation acquired 80 percent of Steak Company's voting shares on January 1, 20X4, for $280,000 in cash and marketable securities. At that date, the noncontrolling Interest had a fair value of $70,000 and Steak reported net assets of $300,000. Assume Prime uses the fully adjusted equity method. Trial balances for the two companies on December 31, 20X7, are as follows: Steak Company Debit Credit $ 19,00 70,000 118, eee 4e8,eee Prime Corporation Debit Credit $ 130,300 80,000 178, eee 680,00 293,000 416,80 30,000 24,000 50,000 $ 310,000 1e8,eee 3e8,eee Item Cash Accounts Receivable Inventory Buildings & Equipment Investment in Steak Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Bond Premium Common Stock Additional Paid-in Capital Retained Earnings Sales Other Income Income from Steak Company Total 202, eee 29, eee 18,888 25,00 200, eee $120,000 15, 200 100,000 4,880 1e8,eee 28,888 215,000 258,888 30,000 337,500 5e8,eee 28,489 25,400 $1,793,300 $1,793,308 $855,000 $855,000 Additional Information 1. The full amount of the differential at acquisition was assigned to buildings and equipment with a remaining 10-year economic life. 2. Prime and Steak regularly purchase Inventory from each other. During 20X6, Steak Company sold Inventory costing $40,000 to Prime Corporation for $60,000, and Prime resold 60 percent of the inventory In 20x6 and 40 percent In 20x7. Also in 20X6, Prime sold Inventory costing $20,000 to Steak for $26,000. Steak resold two-thirds of the Inventory in 20x6 and one-third in 20x7. 3. During 20x7, Steak sold Inventory costing $30,000 to Prime for $45,000, and Prime sold items purchased for $9,000 to Steak for $12,000. Before the end of the year, Prime resold one-third of the inventory It purchased from Steak in 20x7. Steak continues to hold all the units purchased from Prime during 20x7. 4. Steak owes Prime $10,000 on account on December 31, 20x7. 5. Assume that both companies use stralght-line depreciation and that no property, plant, and equipment has been purchased since the acquisition. C. Prepare a three-part consolidation worksheet as of December 31, 20x7. (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 deblt 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.) PRIME CORPORATION & SUBSIDIARY Consolidated Financial Statement Worksheet For 20x7 Consolidation Entries Prime Corp. Steak Co. DR CR Consolidated Income Statement Sales Other Income Less: COGS Less: Depreciation expense Less: Other Expenses Income from Steak 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 Accounts Receivable Inventory Buildings & Equipment Less: Accumulated Depreciation Investment in Steak Company Total Assets Accounts Payable Bonds Payable Bond Premium Common Stock Additional Paid-in Capital Retained Earnings NCI in NA of Steak Company Total Liabilities & Equity