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 $920,000, additional paid-in capital of $1,270,000, and retained earnings of $540,000. 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 $ 37,500 52,500 60,000 $ 150,000 During 20X2, Prince sold a plot of land that it had purchased several years before to Sword at a gain of $21,000; 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 $94,000 per year for these services. At December 31, 20X8, Sword owed Prince $23,500 as the final 20X8 quarterly payment under the contract. 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: Item Cash Current Receivables Inventory Investment in Sword Distributors Land Buildings and Equipment Cost of Goods Sold MAR 4 M 80 F3 S 2 3 4 000 000 F4 F5 Prince Corporation Debit $ 52,700 103,800 302,000 2,848,125 414,000 2,410,000 2.179.000 Credit Sword Distributors Incorporated Debit $ 40,000 91,400 220,900 1,212,000 Credit 3,040,000 512.000 < Prev 5 of 6 Next > MacBook Pro % 5 6 tv A W AA DII DD F6 F7 F8 F9 F10 7 F11 Unfummulya, au mice puin 200,000 10 to purchase equipment to us are currying at you 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: Item Cash Current Receivables Inventory Investment in Sword Distributors Land Buildings and Equipment Cost of Goods Sold Depreciation and Amortization Dividends Declared S Other Expenses 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 Sword Distributors Incorporated Prince Corporation Debit Credit Debit $ 52,700 $ 40,000 91,400 103,800 302,000 2,848,125 414,000 2,410,000 2,179,000 198,000 1,368,000 46,000 $ 9,921,625 $ 1,087,000 95,200 970,000 100,000 1,266,000 1,462,800 4,682,375 94,000 164,250 $ 9,921,625 220,900 1,212,000 3,040,000 512,000 68,000 208,000 16,000 31,000 Credit $ 410,000 331,300 186,000 920,000 1,270,000 1,320,000 1,002,000 $ 5,439,300 $ 5,439,300 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. MAR 4 2 80 F3 000 000 F4 $ 2 3 4 % LO < Prev 5 of 6 Next > *********** T L MacBook Pro tv A DII F5 F7 F8 F9 F10 F11 7 0 Additional Paid-in Capital Retained Earnings, January 1 Sales Other Income or Loss Income from Sword Distributors Total 1,266,000 1,462,800 4,682,375 1,270,000 1,320,000 1,002,000 $ 9,921,625 94,000 164,250 $ 9,921,625 31,000 $ 5,439,300 $ 5,439,300 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 I b. Verify the balance in Prince's Investment in Sword Distributors account as of December 31, 20X8. 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. MAR 4 800 F3 000 COD F4 $ F5 < Prev 5 of 6 Next > tv A MacBook Pro AA F6 F7 % do LO 6 7 2 3 4 5 W E R T U DII F8 F10 F11 E es N Required: a. Compute the amount of the differential as of January 1, 20X8. Remaining differential b. Verify the balance in Prince's Investment in Sword Distributors account as of December 31, 20X8. 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. Note: 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 MAR 4 F2 80 F3 000 000 F4 $ % 2 3 4 5 F5 W E R T < Prev 5 of 6 Next > T tv A B MacBook Pro AA DII F6 F7 F8 DA F9 F10 F11 E & 7 9 5 pped c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. Note: 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 Book Print Consolidation Worksheet Entries A B C D E erences Mc Graw Hill Record the basic consolidation entry. Note: Enter debits before credits. Event 1 F2 MAR 4 # FL > G H Accounts Debit Credit 80 F3 000 F4 $ % 5 2 3 4 W E R < Prev 5 of 6 Next > MacBook Pro tv W M& C --- AA DII F5 F6 F7 F8 DA F9 F10 F11 & 7 8 pped c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. Note: 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 Book < A B C Print erences Graw Hill O D > E F G H Record the entry to eliminate the intercompany receivables/payables. Note: Enter debits before credits. Event 4 Accounts Debit Credit Record entry Clear entry view consolidation entries < Prev 5 of 6 Next > MAR 4 CALTS tv --- 2 3 80 F3 000 000 F4 4 % 5 Q W E R F5 MacBook Pro 44 DII DA F6 F7 F8 F9 F10 F11 & 7 oped Book Print erences Mc raw c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. Note: 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. F1 view transaction list Consolidation Worksheet Entries A B 0 D E F G H Record the entry to eliminate the intercompany service revenue. Note: Enter debits before credits. Event 3 Accounts Debit Credit 7 Record entry Clear entry view consolidation entries < Prev 5 of 6 Next > MAR 4 tvNA 2 3 W 80 F3 DOD 000 F4 MacBook Pro DII F7 F8 $ % & 4 5 7 8 R AA F9 F10 FBD oped c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. Note: 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 Book Consolidation Worksheet Entries Print erences Mc Graw Hill O A B C D E F G H > Record the excess value (differential) reclassification entry. Note: Enter debits before credits. Event 2 Accounts Debit Credit Record entry Clear entry SON MAR 4 M 80 F3 000 000 F4 $ % 5 2 3 4 W R F5 view consolidation entries < Prev 5 of 6 Next > tv A MacBook Pro & 7 AA DII DA F7 F8 F9 F10 G F11 C ped c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. Note: 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 Cook < A B C D E F G H 7 rint rences C raw Record the entry to eliminate the intercompany dividend owed. Note: Enter debits before credits. @ 2 Event 5 Q W Accounts Debit Credit Record entry Clear entry view consolidation entries < Prev 5 of 6 Next > MAR 4 80 F3 DOD 000 F4 # 3 4 LU R % LO T MacBook Pro tv AA DII F5 F7 F8 BO 7 F9 F10 F11 E CH ped c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. Note: 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 ook < A B C D E rint rences C raw G H > Record the entry to eliminate the gain on the sale of land. Note: Enter debits before credits. Event 6 Accounts Debit Credit Record entry Clear entry view consolidation entries < Prev 5 of 6 Next > 2 MAR 14 80 000 DOO F3 F4 6 4 Q W E R % LO MacBook Pro tv AA DII F5 F6 F7 F8 F9 7 U 00 Ch A F10 F11 E P 7 Homework i oped Saved c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. Note: 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 Gook Print < A B C D E F G > erences c raw ill O Record the entry to adjust Accumulated Depreciation. Note: Enter debits before credits. @ 2 Event 8 Accounts Debit Credit Record entry Clear entry view consolidation entries < Prev $ 5 of 6 Next > MAR 4 # 3 80 F3 000 000 F4 $ 4 Q W E R % LO 5 F5 MacBook Pro F6 7 A dtv U Help Save & Exit DII F8 F10 Check my 1-- E ped c. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X8. Note: 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 Book < A B C DE rint erences c CPU raw O G H Record the entry to eliminate the gain on equipment and to correct the asset's basis. Note: Enter debits before credits. Event 7 Accounts Debit Credit Record entry Clear entry F2 MAR 4 2 3 V view consolidation entries > < Prev 5 of 6 Next > 80 F3 000 FA F5 $ 4 % 5 W E R MacBook Pro tv AA DII DA F6 F7 F8 F9 & 7 U F10 ave & L F11 GE Che pter 7 Homework i 5 XM_CON_CO&external_browser=0&launchUrl=https%253A%252F%252Flms.mheducation.com%252Fmgh... M Saved Help Save & Exit nts d. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20X8. 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. Skipped eBook Print References Mc Graw Hill Income Statement Sales Other income (loss) Prince CORPORATION AND SUBSIDIARY Consolidated Financial Statement Worksheet Less: COGS Less: Depreciation & amortization expense Less: Other expenses Income from Sword Distributors Consolidated net income NCI in net income Controlling Interest in Net Income Statement of Retained Earnings Beginning balance MAR 4 M 2 3 #3 80 F3 W E December 31, 20X8 + Consolidation Entries Prince Corporation Distributors Sword Consolidated Debit Credit 000 000 F4 0 0 0 $ 4 % LO 5 R 0 0 0 0 0 < Prev 5 of 6 Next > tv N MacBook Pro DII DA F5 F6 F7 F8 ga F10 Check my a --A F11 F12