Problem 1 Consolidation Workpapers Refer to this data to answer questions 21 23 Parent Corporation acquired an 80 interest in Sub Corporation for $380,000 on January 1, 20X4 when Sub's stockholders' equity consisted of $200,000 capital stock and $75,000 retained earnings The excess cost over book value acquired was allocated to inventory that was overvalued by $50,000 and sold in 20X4, to equipment that was undervalued by $100,000 and to goodwill The undervalued equipment had an 8 year remaining useful life Parent regularly sells inventory to Sub at 125 of cost Intercompany sales were $200,000 in 20X5 and $100,000 in 20X6 Sub's inventory included $35,000 of this merchandise at 12 31 20X5 and $20,000 of this merchandise at 12 31 20X6 On October 1, 20X4 Sub sold Parent a building for $110,000 Sub had originally paid $150,000 for the building and had accumulated depreciation as of the date of sale of $90,000 Parent is depreciating the building at a rate of $22,000 per 12 month period During 20X4 Sub sold land for which it had paid $50,000 to Parent for $65,000 Parent resold the land to outsiders during 20X6 for $75,000 Prepare the Realization and Amortization Schedule, as demonstrated in class, for years 20X4 20X6 Click Here to Download the Excel File here a Using this schedule,do a visual comparison to prove the calculation of Income from Sub for 20X6 Investment in Sub at 12 31 20X6 b Using this schedule, calculate the NCI share of income for 20X6 and the NCI share of equity at 12 31 20X6

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 15, 2024

Problem 1 - Consolidation Workpapers Refer to this data to answer questions 21-23. Parent Corporation acquired an 80% interest in Sub Corporation for $380,000 on

Problem 1 - Consolidation Workpapers

Refer to this data to answer questions 21-23.

Parent Corporation acquired an 80% interest in Sub Corporation for $380,000 on January 1, 20X4 when Sub's stockholders' equity consisted of $200,000 capital stock and $75,000 retained earnings. The excess cost over book value acquired was allocated to inventory that was overvalued by $50,000 and sold in 20X4, to equipment that was undervalued by $100,000 and to goodwill. The undervalued equipment had an 8-year remaining useful life.

Parent regularly sells inventory to Sub at 125% of cost. Intercompany sales were $200,000 in 20X5 and $100,000 in 20X6. Sub's inventory included $35,000 of this merchandise at 12/31/20X5 and $20,000 of this merchandise at 12/31/20X6.
On October 1, 20X4 Sub sold Parent a building for $110,000. Sub had originally paid $150,000 for the building and had accumulated depreciation as of the date of sale of $90,000. Parent is depreciating the building at a rate of $22,000 per 12-month period.
During 20X4 Sub sold land for which it had paid $50,000 to Parent for $65,000. Parent resold the land to outsiders during 20X6 for $75,000.

Prepare the Realization and Amortization Schedule, as demonstrated in class, for years 20X4-20X6. Click Here to Download the Excel File here.

a. Using this schedule,do a visual comparison to prove the calculation of :

Income from Sub for 20X6

Investment in Sub at 12/31/20X6

b. Using this schedule, calculate the NCI share of income for 20X6 and the NCI share of equity at 12/31/20X6.