Question

From the following information, prepare a worksheet to prepare consolidated balance sheet for parents and its subs using cost method.

Parent
Investment in Sub1	$20,000
Investment in sub2	$400,000
Investment in Sub 3	$1,000,000
Investment in sub 4	$2,000,000
Investment in Sub 5	$5,000,000
Parent’s other assets	$30,000,000
Parent’s Liabilities	$1,000,000
Common Stock Parent	$20,000,000
Parent’s Ret Earnings	$17,600,000
Common Stock Sub 1	$100,000
Retained earnings of Sub 1	$100,000
Common Stock sub 2	$50,000
Retained earnings sub 2	$550,000
Common Stock sub 3	$700,000
Retained earnings sub 3	$700,000
Common Stock Sub 4	$100,000
Retained Earnings Sub 4	$1,900,000
Common Stock Sub 5	$1,000,000
Retained Earnings sub 5	$3,000,000

Dates of purchase, sub’s RE balance on that date, and the percentage purchased on that date:

	1	2	3	4	5
1/1	$40,000-90%	$100,000-10%	$300,000-30%	$1,000,000-10%	$1,000,000-50%
3/1		$200,000-30%	$400,000-10$
6/1		$300,000-30%	$100,000-5%		$3,000,000-50%
9/1			$400,000-20%	$1,500,000-60%
12/1			$900,000-35%
Total Assets	$200,000	$600,000	$800,000	$2,000,000	$4,000,000

Answer 1

Consolidated Financial Statements
Liabilities	Amount in $	Assets	Amount in $
Parent's Capital	39,820,000	Parent's Other Assets	30,000,000
Retained Earnigs	18,374,000	Common Stock	21,950,000
Minority Interest	800,000	Other Assets	5,650,000
Parent's Liabilities	1,000,000	Goodwill	2,394,000
	59,994,000		59,994,000

Financial Statement working to analyse assets & capital for Parent & Subsi.

Partent's Balance Sheet
Liabilities	Amount in $	Assets	Amount in $
Parent's Liabilities	1,000,000	Parent's Other Assets	30,000,000
Parent’s Ret Earnings	17,600,000	Common Stock Parent	20,000,000
Parent's Capital	39,820,000	Investment in Subsidairies	8,420,000
	58,420,000		58,420,000
Sub 1 Balance Sheet
Liabilities	Amount in $	Assets	Amount in $
Capital	100,000	Common Stock	100,000
Retained Earnings	100,000	Other Assets	100,000
	200,000		200,000
Sub 2 Balance Sheet
Liabilities	Amount in $	Assets	Amount in $
Capital	50,000	Common Stock	50,000
Retained Earnings	550,000	Other Assets	550,000
	600,000		600,000
Sub 3 Balance Sheet
Liabilities	Amount in $	Assets	Amount in $
Capital	100,000	Common Stock	700,000
Retained Earnings	700,000	Other Assets	100,000
	800,000		800,000
Sub 4 Balance Sheet
Liabilities	Amount in $	Assets	Amount in $
Capital	100,000	Common Stock	100,000
Retained Earnings	1,900,000	Other Assets	1,900,000
	2,000,000		2,000,000
Sub 5 Balance Sheet
Liabilities	Amount in $	Assets	Amount in $
Capital	1,000,000	Common Stock	1,000,000
Retained Earnings	3,000,000	Other Assets	3,000,000
	4,000,000		4,000,000
Working for cost of control: Investment in Sub1 20,000 Investment in Sub2 400,000 Investment in Sub3 1,000,000 Investment in Sub4 2,000,000 Investment in Sub5 5,000,000 Total (A) 8,420,000 Less: Sub 1 share capital 90% 90,000 Sub 2 share capital 70% 35,000 Sub 3 share capital 100% 100,000 Sub 4 share capital 70% 70,000 Sub 5 share capital 100% 1,000,000 Sub 1 Pre Acquisition Profit 36,000 Sub 2 Pre Acquisition Profit 210,000 Sub 3 Pre Acquisition Profit 435,000 Sub 4 Pre Acquisition Profit 10,50,000 Sub 5 Pre Acquisition Profit 3,000,000 Total (B) 6,026,000 Goodwill (A-B) 2,394,000 Minority Interest: Sub 1 share capital 10% 10,000 Sub 2 share capital 30% 15,000 Sub 4 share capital 30% 30,000 Sub1 retained earnings 10,000 Sub 2 retained earnings 165,000 Sub 4 retained earnings 570,000 Total 800,000 Retained earnings Parent 7,600,000 Sub1 retained earnings 54000 Sub 2 retained earnings 175000 Sub 3 retained earnings 265000 Sub 4 retained earnings 280000 Total 18,374,000