Proud Corporation acquired 80 percent of Spirited Companys voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $52,000 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:

		Proud Corporation								Spirited Company
Item	Debit				Credit				Debit					Credit
Current Assets		$	238,000							$	155,000
Depreciable Assets			517,000								310,000
Investment in Spirited Company			151,680
Depreciation Expense			23,000								13,000
Other Expenses			146,000								82,000
Dividends Declared			57,000								29,400
Accumulated Depreciation						$	199,000							$	78,000
Current Liabilities							67,000								47,000
Long-Term Debt							121,280								150,400
Common Stock							193,000								98,000
Retained Earnings							277,000								68,000
Sales							233,000								148,000
Income from Spirited Company							42,400
		$	1,132,680			$	1,132,680			$	589,400			$	589,400

Required: a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Record the basic consolidation entry.

Note: Enter debits before credits.

Event	Accounts	Debit	Credit
1

• Record the optional accumulated depreciation consolidation entry.

Note: Enter debits before credits.

Event	Accounts	Debit	Credit
2

b. Prepare a three-part consolidation worksheet as of December 31, 20X4. (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.)

PROUD CORPORATION AND SUBSIDIARYWorksheet for Consolidated Financial StatementsDecember 31, 20X4Consolidation EntriesProud Corp.Spirited Co.DRCRConsolidatedIncome StatementSalesLess: Depreciation expenseLess: Other expensesIncome from Spirited Co.Consolidated Net IncomeNCI in net incomeControlling Interest in Net IncomeStatement of Retained EarningsBeginning balanceNet incomeLess: Dividends declaredEnding BalanceBalance SheetCurrent assetsDepreciable assetsLess: Accumulated depreciationInvestment in Spirited Co.Total AssetsLiabilities and EquityCurrent liabilitiesLong-term debtCommon stockRetained earningsNCI in NA of Spirited Co.Total Liabilities and Equity