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On January 1,2014, Father Company acquired an 80 percent interest in Sun Company for 425,000. The...

On January 1,2014, Father Company acquired an 80 percent interest in Sun Company for 425,000. The acquisition-date fair value of the 20 percent non-controlling interest's ownership shares was $102,500. Also as of that date, Sun reported total stockholders' equity of $400,000: $100,000 in common stock and $300,000 in retained earnings. In setting the acquisition price, Father appraised four accounts at values different from the balances reported within Sun's financial records.

Problems

Buildings (8-year remaining life)..............undervalued by $20,000

Land,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,undervalued by $50,000

Equipment (5-year remaining life)...........undervalued by $12,500

Royalty agreement (20-year remaining life) not recorded, valued at $30,000

As of December 31, 2018, the trial balances of these two companies are as follows:

FATHER COMPANY SUN COMPANY

Debits

Current assets $605,000 $280,000

Investment in Sun C. 425,000 0

Land 200,000 300,000

Buildings(net) 640,000 290,000

Equipment(net) 380,000 160,000

Expenses 550,000 190,000

Dividends Declared 90,000 20,000

Total debits $2,890,000 $1,240,000

Credits

Liabilities $910,000 $300,000

Common Stock 480,000 100,000

Retained earnings 1/1/18 704,000 480,000

Revenues 780,000 360,000

Dividend Income 16,000 0

Total Credits $2,890,000 $1,240,000

Included in these figures is a $20,000 payable that sun owes to the parent company. No goodwill impairment have occurred since the Sun Company acquisition.

Assignment: Prepare a worksheet entries to consolidate the trial balances of Father Company and Sun Company for the year 2018

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Answoro * prepare a worksheet entries to consolidate the trial balances ds father company & Sun company for year 2018, EntryANon contidling interest in son company - 4100,000 + 480,000) X201.@ = $116,000 inditch Entry* s. - Particular Common-stock (sGood will & Estimated life annual acces Allocation. Il years). mortalion 5.527.500 $400,000 $12.1.500 acachsition - date forinvestment in sun company - $10.000450,000+ 2.500 +24,000 +15,000 -17,300 $841200 Entry I $16000 Dividend income Dividends pa

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