Using the Equity method

Exercise 5-11 On January 1 2013, Piper Company acquired an 80% interest in Sand Company or $2 336 600 At that time the common stock and retained earningsof Sand Company were $1,737,300 and $730,300, respectively. Differences between the fair value and the book value of the identifiable assets of Sand Company were as follows: Fair Value in Exc of Book Value Inventory Equipment (net) $44,200 48,200 The book values of all other assets and liabilities of Sand Company were equal to their fair values on January 1, 2013. The equipment had a remaining useful life of eight years. Inventory is accounted for on a FIFO basis. Sand Company's reported net income and declared dividends for 2013 through 2015 are shown here 2013 2014 2015 Net Income $102,000 $157,000 $77,300 Dividends20,700 31,000 14,700 Prepare the eliminating/adjusting entries needed on the consolidated worksheet for the years ended 2013, 2014, and 2015. Goodwll 360750 Difference between Implied and Book Value 453150 (To allocate and depreciate the difference between implied and book value) 2014 Equity in Subsidiary Income 125600 Investment in Subsidiary 100800 Dividends Declared Subsidiary Company 24800 (To eliminate intercompany dividends and income) Common Stock 1737300 Retained Earnings 811600 Difference between Implied and Book Value 453150 Investment in Subsidiary 2401640 Noncontrolling Interest (To eliminate investment account and create noncontrolling interest account) Depreciation Expense Equipment Investment in Subsidiary Noncontrolling Interest 600410 6025 36150 40180 10045 Goodwill 360750 Difference between Implied and Book Value 453150 (To allocate and depreciate the difference between implied and book value) 2015 Equity in Subsidiary Income 61840 Investment in Subsidiary 50080 Dividends Declared - Subsidiary Company 11760 (To eliminate intercompany dividends and income) Common Stock 1737300 Retained Earnings 937600 Difference between Implied and Book Value 453150 Investment in Subsidiary 2502440 Noncontrolling Interest (To eliminate investment account and create noncontrolling interest account) Depreciation Expense Equipment Investment in Subsidiary Noncontrolling Interest 625610 6025 30125 45000 11250 Goodwill 360750 Difference between Implied and Book Value 453150 (To allocate and depreciate the difference between implied and book value) Exercise 5-11 On January 1 2013, Piper Company acquired an 80% interest in Sand Company or $2 336 600 At that time the common stock and retained earningsof Sand Company were $1,737,300 and $730,300, respectively. Differences between the fair value and the book value of the identifiable assets of Sand Company were as follows: Fair Value in Exc of Book Value Inventory Equipment (net) $44,200 48,200 The book values of all other assets and liabilities of Sand Company were equal to their fair values on January 1, 2013. The equipment had a remaining useful life of eight years. Inventory is accounted for on a FIFO basis. Sand Company's reported net income and declared dividends for 2013 through 2015 are shown here 2013 2014 2015 Net Income $102,000 $157,000 $77,300 Dividends20,700 31,000 14,700 Prepare the eliminating/adjusting entries needed on the consolidated worksheet for the years ended 2013, 2014, and 2015. Goodwll 360750 Difference between Implied and Book Value 453150 (To allocate and depreciate the difference between implied and book value) 2014 Equity in Subsidiary Income 125600 Investment in Subsidiary 100800 Dividends Declared Subsidiary Company 24800 (To eliminate intercompany dividends and income) Common Stock 1737300 Retained Earnings 811600 Difference between Implied and Book Value 453150 Investment in Subsidiary 2401640 Noncontrolling Interest (To eliminate investment account and create noncontrolling interest account) Depreciation Expense Equipment Investment in Subsidiary Noncontrolling Interest 600410 6025 36150 40180 10045 Goodwill 360750 Difference between Implied and Book Value 453150 (To allocate and depreciate the difference between implied and book value) 2015 Equity in Subsidiary Income 61840 Investment in Subsidiary 50080 Dividends Declared - Subsidiary Company 11760 (To eliminate intercompany dividends and income) Common Stock 1737300 Retained Earnings 937600 Difference between Implied and Book Value 453150 Investment in Subsidiary 2502440 Noncontrolling Interest (To eliminate investment account and create noncontrolling interest account) Depreciation Expense Equipment Investment in Subsidiary Noncontrolling Interest 625610 6025 30125 45000 11250 Goodwill 360750 Difference between Implied and Book Value 453150 (To allocate and depreciate the difference between implied and book value)