Problem 1 On January 1, 2015, Parent Company acquired 80% of the common stock of Subsidiary Company for $400,000 Subsidiary Company has the following balance sheet on January 1, 2015: Subsidiary Company Accounts Receivable Inventory Land Buildings Accumulated depreciation Equipment Accumulated depreciation 82,000 40,000 60,000 200,000 50,000 100,000 30,000 402,000 Total assets Accounts Payable Bonds Payable Common Stock ($1 par) Other Contributed Capital Retained Eamings 90,000 100,000 10,000 90,000 112,000 402,000 Total liabilities & equity Appraisal values for identifiable assets and liabilities are as follows Accounts Receivable Inventory (sold during 2015) Land Buildings (20 year life) Equipment (5 year life) Accounts Payable Bonds Payable 82,000 38,000 150,000 280,000 100,000 90,000 100,000 Parent Company uses the cost method to account for its investment in Subsidiary Co Required: 1. Prepare the elimination entries necessary for the consolidated workpapers in 2015. 2. Prepare a consolidated financial statements workpapers for the year ended December 31, 2015 on the attached worksheet Problem 1 On January 1, 2015, Parent Company acquired 80% of the common stock of Subsidiary Company for $400,000 Subsidiary Company has the following balance sheet on January 1, 2015: Subsidiary Company Accounts Receivable Inventory Land Buildings Accumulated depreciation Equipment Accumulated depreciation 82,000 40,000 60,000 200,000 50,000 100,000 30,000 402,000 Total assets Accounts Payable Bonds Payable Common Stock ($1 par) Other Contributed Capital Retained Eamings 90,000 100,000 10,000 90,000 112,000 402,000 Total liabilities & equity Appraisal values for identifiable assets and liabilities are as follows Accounts Receivable Inventory (sold during 2015) Land Buildings (20 year life) Equipment (5 year life) Accounts Payable Bonds Payable 82,000 38,000 150,000 280,000 100,000 90,000 100,000 Parent Company uses the cost method to account for its investment in Subsidiary Co Required: 1. Prepare the elimination entries necessary for the consolidated workpapers in 2015. 2. Prepare a consolidated financial statements workpapers for the year ended December 31, 2015 on the attached worksheet