Question

_{P4-33 Consolidation Worksheet at End of First Year of Ownership LO 4-5 Price Corporation acquired 100 percent ownership of Saver Company on January 1, 20X8, for $128,000. At that date, the fair value of Saver's buildings and equipment was $20,000 more than the book value. 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 $2,500. Trial balance data for Price and Saver on December 31, 20X8, are as follows: Saver Company Debit Credit $ 21,000 12,000 25,000 15,000 150,000 Item Cash Accounts Receivable Inventory Land Buildings & Equipment Investment in Saver Company Cost of Goods Sold Wage Expense Depreciation Expense Interest Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Wages Payable Notes Payable Common Stock Retained Earnings Sales Income from Saver Company Price Corporation Debit Credit $ 19,500 70,000 90,000 30,000 350,000 128,500 125,000 42,000 25,000 12,000 13,500 30,000 $145,000 45,000 17,000 150,000 200,000 102,000 260,000 16,500 $935,500 $935,500 110,000 27,000 10,000 4,000 5,000 16,000 $ 40,000 16,000 9,000 50,000 60,000 40,000 180,000 $395,000 $395,000}

Answer 1

Refer the below images for the above asked questions, in a detailed way of solution.

Solotion Requirement @ : Journal entries Equity method entries on prince Corporation Boolle : * 128000 Investment in Saver Co. Al ar & 128000 To cosh Alc (Being to record initial investment in Saver co. Investment in saver co Alc or To Income from Saver con (Bring to record prince corp's 100t- shave of Saver cons 2x8 income) 24000 24000 4 24DOD 16000 y 16000 Cash Alc To Invertment in (Bang to record prince of Saver co's Saver co. corp's 100% Share 20x8 dividend). &7500 * $7500 Income from Saver co To Investment in Saver co- (Being to record amortization of excess acquisition price) Book value calculations & Retained particolars Total Book Value Common Stock & Earnings $ 6oood Beginning Book value + Net in come $ 100000 24000 (1600o) $ 40000 24800 (1 6ooo) - Dividends $ 48000 Ending book value $ 66000 $ 108000

2/31x8 Goodwill -8000 $ 129000 Good will = 2500 l Identifiable ? excess 18000 $ 128500 Identifiable excess = 20000 100% Book value 100 000 investment in Saver Net investment en saver co. loot Book value 108000 f 40000 Basic elimination entry : Common Stock Alc $ 60000 Retained earnings Alc or Income from Sava co. Ale or To Dividends declared Too Investment an Saver co. 1 24000 $ 16000 9108000 Excess value (Differential) calculations : & Darticulars t bandwill Total Boildings g equipment 20000 Accomulated Depreciation 8000 (5500) (2000) Beginning balance changes Ending balance 24000 (7600) 20500 2 Sob (2000) 20000 reclassification entry : & Amortized excess value 12000 $9500 Depreciation expense Alc or Goodwill impairement loss Ar Dr to Income from Saver con 7500

* Excess value (differential ) reclassification Buildings g equipment Alc o r Good will alc Dr To Accomolated Depreciation To Investment in Saver co. entry: 9 20000 $ 2500 2000 420500 " optional accomutated depreciation elimination entry : $ 30000 Accumulated de precation ale or To Building & equipment $ 30000 Saver co- pr Investment in Acquisition price 129000! 100 Net Income 24000 16000 100k Dividends 7.500 Excess value Ending balance 128500 106000 Basic amo amortig anon - 20500 _Excess Reclasification Income from Saver co. G or 24000 1001 Net Income 7500 Excess value amortization 16500 Ending balance Basic 24000 7.500

Requirement 60 particolars Saner Elimning kon Prince Corp Entries CY Consolidated DY Income statement : Sales Less Cous Less wage expense Less; Depreciation experife Less & Interest expense less other expenses telli Impairment loss Income from Saver co. Net income 26000V (125000) (42000) (28000) (42000) (13500) 180000 Choooo) (27000) (0000) (4000) (5000) 2000 440000 (235600 (69000) (37000) (16000) (18500) (5560 16500 $500 24000 31500 7500 7600 59000 59000 24000 40000 31500 7500 02000 39000 (30000) 121000 Statement of Retained Earrings Beginning Balance Net income Less Dividends Declared Ending Balance Balance Sheet: cash Accoonts Receivable Inventory 40000 24600 (16ooo) 48000 12000 S9ooo (30000) 131000 + 6000 7 Joo 23.500 19900 70000 90000 10000 380000 (145000) 128500 21600 12000 26000 1 5000 150000 (41000) 40bo 82000 000 48000 49000 (157000) Land 20000 30000 30000 2000 2100 52100 108000 ఇంతంగా 160 Soo 2500 61 8000 543000 193000 Buildings is equipment Less Accomulated Dep. Investment in Saver co. Good will Tosial Assets Accounts payable wages payable Notes payable common Stock Retoned Earrings 46000 7000 SO000 200000 131000 16000 9000 S0000 60000 48000 81000 26000 200000 200 DOO 131000 60000 1500 131500 23500 23500 143000 618000 543000 Total diabitines is Excity -