Question

P5-33 Consolidation Worksheet at End of First Year of Ownership LO 5-2 Pie Corporation acquired 75 percent of Slice Company's ownership on January 1, 20X8, for $99,000. At that date, the fair value of the noncontrolling interest was $33,000. The book value of Slice's net assets at acquisition was $97,000. The book values and fair values of Slice's assets and liabilities were equal, except for Slice's buildings and equipment, which were worth $19,400 more than book value. Accumulated depreciation on the buildings and equipment was $27,000 on the acquisition date. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, the management of Pie concluded at December 31, 20X8, that goodwill from its purchase of Slice shares had been impaired and the correct carrying amount was $3,300. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders. Trial balance data for Pie and Slice on December 31, 20X8, are as follows: pie Corporation Debit Slice Compan Credit Debit Credit $ 22,000 13,000 26,000 16,000 154,000 Cash Accounts Receivable Inventory Land Buildings & Equipment Investment in Slice Company Cost of Goods Sold Wage Expense Depreciation Expense Interest Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Wages Payable Notes Payable Common Stochk Retained Earnings Sales Income from Slice Company $ 50,500 82,000 102,000 47,000 355,000 107,970 119,000 37,000 23,000 10,000 11,500 35,000 104,000 21,000 9,000 3,000 4,000 15,800 $127, 000 33,000 14,000 237,150 189,000 91,000 268,000 20,820 $979,970 36,000 13,000 9,000 49,800 60,000 37,000 183,000 $979,970 $387,800 $387,800

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you Consideration transferred for 75% Non controlling interest fair value Total fair value Less: Book value Excess fair value Allocation: Building and Equipment Goodwill $99,000 S 33.000 132,000 -97,000 35,000 Life Annual Depreciation 1,940 19,400 10 year S 15,600 12,300 Impairment Event Account Debit Credit Investment in Slice Co 31,500 Income from Slice Co (To record Pie share from Slice Co income) $31,500 Cash $11,850 $ 11,850 Investment in Slice Co (To record dividend income from slice Income from Slice Co 10,680 Investment in Slice Co 5 10,680 (To record amortization of exces acquisition price) Common Stock Retained Earning Income from Slice Co NCI in NI of Slice Co $ 60,000 $37,000 31,500 10,500 Dividends declared Investment in Slice Co NCI in NA of Slice co $ 15,800 $92,400 $ 30,800 (To record basic consolidation entry) $60,000 $ 37,000 Pie 5 97,000 72,750 5 5 42,000 31,500 5 5 -15,800 $ -11,850 $ Common Stock Retained earning NCI 24,250 10,500 3,950 30,800 Add Net Income Less Dividend 92,400 $ Depreciation Expense Goodwill Impairment Loss $ 1,940 12,300 Income from Slice Co s 10,680 S 3,560 NCI in NI of Slice Co (To record amortized excess value reclass) Building and Equipment Goodwill $ 19,400 $ 3,300 Accumultaed Depreciation Investment in Slice Co NCI in NA of Slice co $ 1,940 15,570 $ 5,190 (To record excess value reclass) Accumulated Depreciation (To record option dep elimination) $27,000 Building and Equipment 27,000