Question

Price Corporation acquired 100 percent ownership of Saver Company on January 1, 20X8, for $109,600. At that date, the fair value of Saver's buildings and equipment was $15,000 more than the book value. Accumulated depreciation on this date was $15,000. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, Price’s management concluded at December 31, 20X8, that goodwill involved in its acquisition of Saver shares had been impaired and the correct carrying value was $2,600. No additional impairment occurred in 20X9.

Trial balance data for Price and Saver on December 31, 20X9, are as follows:

	Price Corporation								Saver Company
Item	Debit			Credit					Debit			Credit
Cash	$	51,500							$	33,000
Accounts Receivable		92,000								20,000
Inventory		104,000								30,000
Land		52,000								31,000
Buildings & Equipment		361,000								153,000
Investment in Saver Company		124,100
Cost of Goods Sold		138,000								106,000
Wage Expense		30,000								15,000
Depreciation Expense		20,000								10,000
Interest Expense		7,000								4,000
Other Expenses		18,000								11,000
Dividends Declared		32,000								45,500
Accumulated Depreciation					$	155,000							$	35,000
Accounts Payable						47,000								15,000
Wages Payable						14,000								4,000
Notes Payable						147,000								103,500
Common Stock						182,000								53,000
Retained Earnings						127,100								41,000
Sales						298,000								207,000
Income from Saver Company						59,500
	$	1,029,600			$	1,029,600			$	458,500			$	458,500

Required:
a. Prepare all consolidating entries needed to prepare a three-part consolidation worksheet as of December 31, 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1a) Record the basic consolidation entry.

2a) Record the amortized excess value reclassification entry.

3a) Record the excess value (differential) reclassification entry.

4a) Record the optional accumulated depreciation consolidation entry.

b. Prepare a three-part consolidation worksheet for 20X9. (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.)

PRICE CORPORATION AND SUBSIDIARY Consolidated Financial Statements Worksheet December 31, 20X9 Consolidation Entries DR CR Price Corp. Saver Co. Consolidated Income Statement Sales Less: COGS Less: Wage expense Less: Depreciation expense Less: Interest expense Less: Other expenses Income from Saver Co. Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Assets Cash Accounts receivable Inventory Land Buildings & equipment Less: Accumulated depreciation Investment in Saver Co. Goodwill Total Assets Liabilities & Stockholders' Equity Accounts payable Wages payable Notes payable Common stock Retained earnings Total Liabilities & Equity

c-1. Prepare a consolidated balance sheet for 20X9. (Amounts to be deducted should be indicated with a minus sign.)

PRICE CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X9 Assets Total Assets Liabilities and Stockholders' Equity Total Liabilities and Stockholders' Equity

c-2. Prepare a consolidated income statement for 20X9.

PRICE CORPORATION AND SUBSIDIARY Consolidated Income Statement Year Ended December 31, 20X9 Total Expenses Consolidated net income

c-3. Prepare a retained earnings statement for 20X9.

PRICE CORPORATION AND SUBSIDIARY Consolidated Retained Earnings Statement Year Ended December 31, 20X9 Retained Earnings, January 1, 20X9 Retained Earnings, December 31, 20X9

Answer 1

PRICE CORPORATION AND SUBSIDIARY
Consolidated Financial Statements Worksheet
December 31,20x9
			Consolidation Entries
	Pice Corp.	Saver Co.	Dr	Cr	Consolidated
Income Statement
Sales	298000	207000	505000		505000
Less: COGS	138000	106000	(-)244000
Less:Wage Expenses	30000	15000	(-)45000
Less: Depreciation expenses	20000	10000	(-)30000
Less: Interest expenses	7000	4000	(-)11000
Less: Other expenses	18000	11000	(-)29000
Income from Saver Co.	59500	-	59500		(-)272500
Net Income					232500
Statement of Retained Earnings
Beginning Balance	109600				109600
Net Income					342100
Less: Dividends declared	32000	45500	(-)77500		(-)77500
Ending Balance					264600
Assets
Cash	51500	33000	84500
Accounts receivable	92000	20000	112000
Inventory	104000	30000	134000
Land	52000	31000	83000
Buildings & Equipment	361000	153000	514000
Less: Accumulated depreciation	155000	35000	(-)190000
Investment in Saver Co.	124100		124100
Goodwill	2600		2600
Total Assets					733600
Liabilities & Stockholders' Equity
Accounts payable	47000	15000		62000
Wages payable	14000	4000		18000
Notes payable	147000	103500		250500
Common stock	182000	53000		235000
Retained earnings	127100	41000		168100
Total Liabilities & Equity					733600

PRICE CORPORATION AND SUBSIDIARY
Consolidated Balance Sheet
December 31,20x9
Assets
Cash	84500
Accounts receivable	112000
Inventory	134000
Investment in Saver Co.	124100
Land	83000
Buildings & Equipment	514000
Less: Depreciation	-190000
Total Assets	733600
Liabilities and owner's Equity
Accounts payables	62000
Wages payable	18000
Notes payables	250500
Common Stock	235000
Retained earnings	168100
Total Liabilities and stockholder's equity	733600

PRICE CORPORATION AND SUBSIDIARY
Consolidated Income Statement
Year Ended December 31,20x9
Sales	505000
Less: COGS	(-)244000
Less:Wage Expenses	(-)45000
Less: Depreciation expenses	(-)30000
Less: Interest expenses	(-)11000
Less: Other expenses	(-)29000
Income from Saver Co.	59500
Net Income	205500
Statement of Retained Earnings
Beginning Balance	109600
Net Income	315100
Less: Dividends declared	-77500
Ending Balance	237600
Total Expenses	205500
Consolidated Net Income	237600

PRICE CORPORATION AND SUBSIDIARY
Consolidated Retained Earnings Statement
Year Ended December 31,20x9
Retained Earnings ,January 1,20x9	109600
Add: Net Income	205500
	315100
Less: Cash dividends	-77500
Retained Earnings ,December 31,20x9	237600