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Prince Corporation holds 75 percent of the common stock of Sword Distributors Incorporated, purchased on December 31, 20X1, for $2,160,000. At the date of acquisition,

image text in transcribedimage text in transcribed Prince Corporation holds 75 percent of the common stock of Sword Distributors Incorporated, purchased on December 31, 20X1, for $2,160,000. At the date of acquisition, Sword reported common stock with a par value of $950,000, additional paid-in capital of $1,300,000, 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: During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of \$11,200; 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 $86,000 per year for these services. At December 31, 20X8, Sword owed Prince $21,500 as the final 208 quarterly payment under the contract. On January 2, 208, Prince paid $240,000 to Sword to purchase equipment that Sword was then carrying at $280,000. Sword had purchased that equipment on December 27,202, for $420,000. 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: As of Vecember 31,2UX8, sword had declared but not yet pad its tourth-quarter dividend ot $ b,UUU. both companies use straight-line depreciation and amortization. Prince uses the fully adjusted equity method to account for its investment in Sword. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 208. Note: 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

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