Question

Pop Corporation acquired 70 percent of the outstanding voting stock of Son Corporation for $182,000 cash on January 1, 2016, when Son’s stockholders’ equity was $260,000. All the assets and liabilities of Son were stated at fair values (equal to book values) when Pop acquired its 70 percent interest.

Financial statements of the two corporations at and for the year ended December 31, 2016, are summarized as follows (in thousands):

	Pop	Son
Combined Income and Retained Earnings Statements for the Year Ended Dec 31
Sales	12040	400
Income from Son	42
Cost of goods sold	-800	-260
Operating expenses	-308	-80
Net income	174	60
Add: Retained earnings Jan 1	260	44
Deduct: Dividends	-120	-40
Retained earnings Dec 31	314	64
Ballannce Sheet at Dec 31
Cash	182	60
Receivables-net	240	120
Inventories	96	80
Plant and equipment-net	480	140
Investment in Son	196
Total assets	1194	400
Accounts payable	120	72
other liabilities	80	48
Capital stock $10 par	600	200
Other pain-in capital	80	16
Total equities	314	64
Total equities	1194	400

Required
1. Prepare consolidation workpapers for Pop Corporation and Subsidiary for 2016.
2. Prepare a consolidated income statement and a consolidated balance sheet for Pop Corporation and Subsidiar

Answer 1

enoVO Table Tools Holding company Subsidiary company Pop corporation Son corporation Controlling interest Non-controlling interest 70.0% 30.0% Common stock (2007096) Otherpaidin capital (167096) Beginning retained earnings (4470%) Fair value of investment on date of acquisition Income from son (60*70%) Dividend (40*70%) Investment in son as per balanced of pop 140 11.2 30.8 182 42 -28 196 Non-controlling interest Common stock (200*30%) Otherpaid in capital (16-30%) Retained earnings ending for non-controlling interest@ 6430% Non-controlling interest 60 4.8 19.2 84 258 English (india)

enoVO Table Tools All amount in thousand Pop Son Total Eliminated Consolidated Particulars ncome statements Sales Income from son Cost of goods sold Operating expenses Net income 1240 400 1640 42 -800 -260 -1060 308 -80 388 174 60 234 260 44 304 120 -40 -160 314 64 378 1640 0 1060 -388 192 273.2 -132 333.2 19.2 314 42 -42 Add retained earning beginning Less dividend Retained earnings ending -42 30.8 28 44.8 Retained earnings ending for non-controlling interest@ 64°30%. Retained earnings ending for controlling interest 44.8 64° 70%

enoVO Table Tools Balance sheet Cash Receivable net Inventories Plant and equipment net Investment in son Total assets 182 60 242 240 120 360 96 80 176 480 140 620 196 242 360 176 620 196 1398 1194 400 1594-196 192 128 600 80 314 84 1398 Account payable 120 72 192 80 48 128 Other liabilities Common stock at $ 10 par Other paid in capital Retained earning Non-controlling interest 200 -16 64 600 200 800 96 314 64 378 00 1594 80 16 Total liabilities & equity -280 99%