Proud Corporation acquired 80 percent of Spirited Company's 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 $44,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited during 20X3. On December 31, 20X3, the trial balances of the two companies are as follows: Spirited Company Proud Corporation Debit Credit Debit Credit Item $105,000 302,000 $ 182,000 519,000 139,040 21,000 99,000 46,000 Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses 11,000 70,000 25,200 Dividends Declared Accumulated Depreciation $ 55,000 32,000 146,200 100,000 $ 165,000 42,000 155,840 182,000 212,000 210,000 39,200 Current Liabilities Long-Term Debt Common Stock Retained Earnings 50,000 130,000 Sales Income from Spirited Company $1,006,040 $1,006,040 $513,200 $513,200 b. Prepare a three-part consolidation worksheet. (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.) XAnswer is not complete. PROUD CORPORATION AND SUBSIDIARY Worksheet for Consolidated Financial Statements December 31, 20X3 Consolidation Entries Spirited Co. Proud DR CR Consolidated Corp. Income Statement $ 210,000$ 130,000 $ Sales 340,000 (21,000) (99,000) 39,200 (11,000) (70,000) Less: Depreciation expense (32,000) Less: Other expenses (169,000) 39,200 Income from Spirited Co. 0 $ 129,200 $ $ 139,000 Consolidated Net Income 49,000 39,200 NCI in Net income Controlling Interest in Net Income Statement of Retained Earnings $ $ 39,200 129,200 49,000 139,000 Beginning balance Net income 39,200 129,200 49,000 139,000 Less: Dividends declared $ $ 49,000 Ending Balance 129,200 39,200 0 139,000 Balance Sheet 182,000 S 19,000 X 105,000 302,000 (55,000) $ Current assets 287,000 Depreciable assets 321,000 (165,000) Less: Accumulated depreciation (220,000) Investment in Spirited Co. $ 352,000 $ 36,000 $ $ Total Assets 0 388,000 Liabilities and Equity 32,000 146,200 42,000 $ Current liabilities 74,000 155,840 146,200X 100,000 Long-term debt 155,840 100,000 182,000 182,000 Common stock Retained earnings 49,000 39,200 129,200 0 139,000 NCI in NA of Spirited Co. $ 285,400 $ $ 327,200 Total Liabilities and Equity 509,040 0 550,840 c. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X3. (Amounts to be deducted should be indicated with a minus sign.) XAnswer is not complete. PROUD CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X3 Assets Current assets Depreciable assets Accumulated depreciation 0 $ 0 Total Assets Liabilities Current liabilities Long-term debt Stockholders' Equity: Controlling Interest: Common stock Retained earnings Total Controlling Interest 0 Total Stockholder's equity Total Liabilities and Stockholders' $ 0 Equity XAnswer is not complete. PROUD CORPORATION AND SUBSIDIARY Consolidated Income Statement Year Ended December 31, 20X3 Total expenses 0 Consolidated net income 0 $ 0 Income to controlling interest X Answer is not complete. PROUD CORPORATION AND SUBSIDIARY Consolidated Retained Earnings Statement Year Ended December 31, 20X3 Retained Earnings, January 1, 20X3 Income to Controlling Interest, 20X3 $ 0 Dividends Declared, 20X3 Retained Earnings, December 31, 20X3 Proud Corporation acquired 80 percent of Spirited Company's 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 $44,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited during 20X3. On December 31, 20X3, the trial balances of the two companies are as follows: Spirited Company Proud Corporation Debit Credit Debit Credit Item $105,000 302,000 $ 182,000 519,000 139,040 21,000 99,000 46,000 Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses 11,000 70,000 25,200 Dividends Declared Accumulated Depreciation $ 55,000 32,000 146,200 100,000 $ 165,000 42,000 155,840 182,000 212,000 210,000 39,200 Current Liabilities Long-Term Debt Common Stock Retained Earnings 50,000 130,000 Sales Income from Spirited Company $1,006,040 $1,006,040 $513,200 $513,200 b. Prepare a three-part consolidation worksheet. (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.) XAnswer is not complete. PROUD CORPORATION AND SUBSIDIARY Worksheet for Consolidated Financial Statements December 31, 20X3 Consolidation Entries Spirited Co. Proud DR CR Consolidated Corp. Income Statement $ 210,000$ 130,000 $ Sales 340,000 (21,000) (99,000) 39,200 (11,000) (70,000) Less: Depreciation expense (32,000) Less: Other expenses (169,000) 39,200 Income from Spirited Co. 0 $ 129,200 $ $ 139,000 Consolidated Net Income 49,000 39,200 NCI in Net income Controlling Interest in Net Income Statement of Retained Earnings $ $ 39,200 129,200 49,000 139,000 Beginning balance Net income 39,200 129,200 49,000 139,000 Less: Dividends declared $ $ 49,000 Ending Balance 129,200 39,200 0 139,000 Balance Sheet 182,000 S 19,000 X 105,000 302,000 (55,000) $ Current assets 287,000 Depreciable assets 321,000 (165,000) Less: Accumulated depreciation (220,000) Investment in Spirited Co. $ 352,000 $ 36,000 $ $ Total Assets 0 388,000 Liabilities and Equity 32,000 146,200 42,000 $ Current liabilities 74,000 155,840 146,200X 100,000 Long-term debt 155,840 100,000 182,000 182,000 Common stock Retained earnings 49,000 39,200 129,200 0 139,000 NCI in NA of Spirited Co. $ 285,400 $ $ 327,200 Total Liabilities and Equity 509,040 0 550,840 c. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X3. (Amounts to be deducted should be indicated with a minus sign.) XAnswer is not complete. PROUD CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X3 Assets Current assets Depreciable assets Accumulated depreciation 0 $ 0 Total Assets Liabilities Current liabilities Long-term debt Stockholders' Equity: Controlling Interest: Common stock Retained earnings Total Controlling Interest 0 Total Stockholder's equity Total Liabilities and Stockholders' $ 0 Equity XAnswer is not complete. PROUD CORPORATION AND SUBSIDIARY Consolidated Income Statement Year Ended December 31, 20X3 Total expenses 0 Consolidated net income 0 $ 0 Income to controlling interest X Answer is not complete. PROUD CORPORATION AND SUBSIDIARY Consolidated Retained Earnings Statement Year Ended December 31, 20X3 Retained Earnings, January 1, 20X3 Income to Controlling Interest, 20X3 $ 0 Dividends Declared, 20X3 Retained Earnings, December 31, 20X3