Tom Corporation acquired 70 percent of the outstanding voting shares of Jerry Company for $455,000 on January 1, 2009, when Jerry’s stockholders’ equity at book value was $650,000. Note that the acquisition price implies that the total fair value of Jerry is $650,000 ($455,000, 70%). All of the assets and liabilities of Son were stated at fair values (equal to book values) when Tom acquired its 70 percent interest.

 

Instructions 

Prepare consolidation working papers for Tom Corporation and Subsidiary for the year ended December 31, 2009.

Problem 1 Tom Corporation and Subsidiary Finantial Statements December 31, 2009 Income Statement Sales Income from Jerry Cost of goods sold Operating expenses Noncontrolling interest share ($150,000) Controlling Share of net income Retained Earnings Retained earnings, January 1 Add: Controlling share of net income Deduct: Dividends Retained E amings - December 31 Balance Sheet Cash Accounts receivable - net Inventories Plant and equipment - net Investment in Jerry Total assets Liabkilites and Stockholder' Equity Accounts payable Other liabilities Capital stock, $10 par Other paid-in capital Retained earnings Total liabilities and stockholders's equity Tom 70% Jerry $3,100,000 $1,000,000 105,000 2,000,000 650,000 770,000 200,000 $ 435,000 $ 150,000 $ 650,000 $ 110,000 435,000 150,000 300,000 100,000 $ 785,000 $ 160,000 $ 455,000 $ 150,000 600,000 300,000 240,000 200,000 1,200,000 350,000 490,000 $2,985,000 $1,000,000 $ 300,000 $ 180,000 200,000 120,000 1,500,000 500,000 40,000 160,000 $2,985,000 $1,000,000 200,000 785,000