Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31, 20x1, for $2,160,000. At the date of acquisition, Sword reported common stock with a par value of $900,000, additional paid-in capital of $1,250,000, and retained earnings of $550,000. The fair value of the noncontrolling interest at acquisition was $720,000. The differential at acquisition was attributable to the following items: Inventory (sold in 20x2) Land Goodwill Total Differential $ 45,000 63,000 72,000 $180,000 During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $25,200: Sword continues to hold the land. In 20X6, Prince and Sword entered into a five-year contract under which Prince provides management consulting services to Sword on a continuing basis, Sword pays Prince a fixed fee of $93,000 per year for these services. At December 31, 20X8, Sword owed Prince $23,250 as the final 20X8 quarterly payment under the contract. nces On January 2, 20X8, Prince paid $260,000 to Sword to purchase equipment that Sword was then carrying at $300,000. Sword had purchased that equipment on December 27, 20X2, for $450,000. The equipment is expected to have a total 15-year life and no salvage value. The amount of the differential assigned to goodwill has not been impaired. At December 31, 20X8, trial balances for Prince and Sword appeared as follows: Sword Distributors Inc. Debit Credit $ 41,000 94,400 231,900 Item Cash Current Receivables Inventory Investment in Sword Distributors Land Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Common Stock Additional Paid-in Capital Retained Earnings, January 1 Sales Other Income or LOSS Income from Sword Distributors Total Prince Corporation Debit Credit $ 53,700 106,800 298,000 2,782,050 400,000 2,590,000 2,187,000 189,000 1,378,000 45,000 $ 1,101,000 92,200 911,000 91,000 1, 262,000 1,458,800 4,893,800 90,000 129,750 $19,029,550 $10,029,550 1,215,000 3,130,000 524,000 88,000 213,000 15,000 $ 414,000 528,300 198,000 900,000 1,250,000 1,300,000 993,000 31,000 $5,583,300 $5,583,300 mofonombor 1 ovo Club dibut tet Quarter dividend of Both As of December 31, 20X8, Sword had declared but not yet paid its fourth-quarter dividend of $5,000. Both companies use straight-line depreciation and amortization. Prince uses the fully adjusted equity method to account for its investment in Sword Required: a. Compute the amount of the differential as of January 1, 20X8. Remaining differential ok EK b. Verify the balance in Prince's Investment in Sword Distributors account as of December 31, 20X8. ences Balance in Investment in Sword Account c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar amount.) view transaction list Consolidation Worksheet Entries > E F G H MC sraw required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar amount.) view transaction list Consolidation Worksheet Entries B D E F G H Record the basic consolidation entry. ES Note: Enter debits before credits. Event Accounts Debit Credit 1 Record entry Clear entry view consolidation entries le d. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20X8. (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.) Consolidated ces Prince CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X8 Consolidation Entries Prince Corp. Sword DR CR Dist. Income Statement Sales Other income (loss) Less. COGS Less: Depreciation & amort. expense Less: Other expenses Income from Sword Dist: Consolidated net income NCI in net income Controlling Interest in NI Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Cash Current receivables Inventory Land Buildings & equipment Less: Accumulated depr Investment in Sword Dist Goodwill Tatal ponto Prey 2 of 3 HH Next > Sales Other income (loss) Less: COGS Less: Depreciation & amort expense Less: Other expenses Income from Sword Dist Consolidated net income NCI in net income Controlling Interest in NI Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Cash Current receivables Inventory Land Buildings & equipment Less: Accumulated depr. Investment in Sword Dist Goodwill ces Total Assets Current payables Bonds payable Common stock Additional Paid-in capital Retained earnings NCI in NA of Sword Dist. Total Liabilities & Equity Prince Corporation holds 75 percent of the common stock of Sword Distributors Inc., purchased on December 31, 20x1, for $2,160,000. At the date of acquisition, Sword reported common stock with a par value of $900,000, additional paid-in capital of $1,250,000, and retained earnings of $550,000. The fair value of the noncontrolling interest at acquisition was $720,000. The differential at acquisition was attributable to the following items: Inventory (sold in 20x2) Land Goodwill Total Differential $ 45,000 63,000 72,000 $180,000 During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $25,200: Sword continues to hold the land. In 20X6, Prince and Sword entered into a five-year contract under which Prince provides management consulting services to Sword on a continuing basis, Sword pays Prince a fixed fee of $93,000 per year for these services. At December 31, 20X8, Sword owed Prince $23,250 as the final 20X8 quarterly payment under the contract. nces On January 2, 20X8, Prince paid $260,000 to Sword to purchase equipment that Sword was then carrying at $300,000. Sword had purchased that equipment on December 27, 20X2, for $450,000. The equipment is expected to have a total 15-year life and no salvage value. The amount of the differential assigned to goodwill has not been impaired. At December 31, 20X8, trial balances for Prince and Sword appeared as follows: Sword Distributors Inc. Debit Credit $ 41,000 94,400 231,900 Item Cash Current Receivables Inventory Investment in Sword Distributors Land Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared Accumulated Depreciation Current Payables Bonds Payable Common Stock Additional Paid-in Capital Retained Earnings, January 1 Sales Other Income or LOSS Income from Sword Distributors Total Prince Corporation Debit Credit $ 53,700 106,800 298,000 2,782,050 400,000 2,590,000 2,187,000 189,000 1,378,000 45,000 $ 1,101,000 92,200 911,000 91,000 1, 262,000 1,458,800 4,893,800 90,000 129,750 $19,029,550 $10,029,550 1,215,000 3,130,000 524,000 88,000 213,000 15,000 $ 414,000 528,300 198,000 900,000 1,250,000 1,300,000 993,000 31,000 $5,583,300 $5,583,300 mofonombor 1 ovo Club dibut tet Quarter dividend of Both As of December 31, 20X8, Sword had declared but not yet paid its fourth-quarter dividend of $5,000. Both companies use straight-line depreciation and amortization. Prince uses the fully adjusted equity method to account for its investment in Sword Required: a. Compute the amount of the differential as of January 1, 20X8. Remaining differential ok EK b. Verify the balance in Prince's Investment in Sword Distributors account as of December 31, 20X8. ences Balance in Investment in Sword Account c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar amount.) view transaction list Consolidation Worksheet Entries > E F G H MC sraw required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar amount.) view transaction list Consolidation Worksheet Entries B D E F G H Record the basic consolidation entry. ES Note: Enter debits before credits. Event Accounts Debit Credit 1 Record entry Clear entry view consolidation entries le d. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20X8. (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.) Consolidated ces Prince CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X8 Consolidation Entries Prince Corp. Sword DR CR Dist. Income Statement Sales Other income (loss) Less. COGS Less: Depreciation & amort. expense Less: Other expenses Income from Sword Dist: Consolidated net income NCI in net income Controlling Interest in NI Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Cash Current receivables Inventory Land Buildings & equipment Less: Accumulated depr Investment in Sword Dist Goodwill Tatal ponto Prey 2 of 3 HH Next > Sales Other income (loss) Less: COGS Less: Depreciation & amort expense Less: Other expenses Income from Sword Dist Consolidated net income NCI in net income Controlling Interest in NI Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet Cash Current receivables Inventory Land Buildings & equipment Less: Accumulated depr. Investment in Sword Dist Goodwill ces Total Assets Current payables Bonds payable Common stock Additional Paid-in capital Retained earnings NCI in NA of Sword Dist. Total Liabilities & Equity