Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the non-controlling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $60,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited. On December 31, 20X4, the trial balances of the two companies are as follows:

a. What are consolidation entries required on December 31, 20X4, to prepare consolidated financial statements?

b. What is three-part consolidation worksheet as of December 31, 20X4?

Proud Corporation Spirited Company

Item Debit Credit Debit Credit

Current Assets 243,000 150,000

Depreciable Assets 514,000 319,000

Investment in Spirited Company 153,280

Depreciation Expense 23,000 13,000

Other Expenses 140,000 81,000

Dividends Declared 56,000 29,400

Accumulated Depreciation 191,000 78,000

Current Liabilities 63,000 43,000

Long-Term Debt 128,880 156,400

Common Stock 195,000 99,000

Retained Earnings 279,000 69,000

Sales 230,000 147,000

Income from Spirited Company 42,400

1,129,280 1,29,280 592,400 592,400