Problem 5-34 (Static) Consolidation Worksheet at End of Second Year of Ownership LO 5-2

Pie Corporation acquired 75 percent of Slice Companys ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncontrolling interest was $32,000. The book value of Slices net assets at acquisition was $100,000. The book values and fair values of Slices assets and liabilities were equal, except for Slices buildings and equipment, which were worth $20,000 more than book value. Accumulated depreciation on the buildings and equipment was $30,000 on the acquisition date. Buildings and equipment are depreciated on a 10-year basis.

Although goodwill is not amortized, the management of Pie concluded at December 31, 20X8, that goodwill from its purchase of Slice shares had been impaired and the correct carrying amount was $2,500. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders. No additional impairment occurred in 20X9.

Trial balance data for Pie and Slice on December 31, 20X9, are as follows:

Item	Pie Corporation		Slice Company
	Debit	Credit	Debit	Credit
Cash	$ 68,500		$ 32,000
Accounts Receivable	85,000		14,000
Inventory	97,000		24,000
Land	50,000		25,000
Buildings and Equipment	350,000		150,000
Investment in Slice Company	106,875
Cost of Goods Sold	145,000		114,000
Wage Expense	35,000		20,000
Depreciation Expense	25,000		10,000
Interest Expense	12,000		4,000
Other Expenses	23,000		16,000
Dividends Declared	30,000		20,000
Accumulated Depreciation		$ 170,000		$ 50,000
Accounts Payable		51,000		15,000
Wages Payable		14,000		6,000
Notes Payable		150,000		50,000
Common Stock		200,000		60,000
Retained Earnings		126,875		48,000
Sales		290,000		200,000
Income from Slice Company		25,500
	$ 1,027,375	$ 1,027,375	$ 429,000	$ 429,000

Required:

1. Record all consolidation entries needed to prepare a three-part consolidation worksheet as of December 31, 20X9.

A. Record the basic consolidation entry.

B. Record the amortized excess value reclassification entry.

C. Record the excess value (differential) reclassification entry.

D. Record the optional accumulated depreciation consolidation entry.

2. Prepare a three-part consolidation worksheet for 20X9.

3. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X9.

PIE CORPORATION AND SUBSIDIARY Worksheet for Consolidated Financial Statements