Consolidation Worksheet for Majority-Owned Subsidiary for Second Year
Proud Corporation acquired 80 percent of Stergis Company’s voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Stergis at that date. Proud uses the equity method in accounting for its ownership of Stergis. On December 31, 20X4, the trial balances of the two companies are as follows:
Item | Proud Corporation | Stergis Company | ||
Debit | Credit | Debit | Credit | |
Current Assets | $ 235,000 |
| $150,000 |
|
Depreciable Assets | 500,000 |
| 300,000 |
|
Investment in Stergis Company Stock | 152,000 |
|
|
|
Depreciation Expense | 25,000 |
| 15,000 |
|
Other Expenses | 150,000 |
| 90,000 |
|
Dividends Declared | 50,000 |
| 15,000 |
|
Accumulated Depreciation |
| $ 200,000 |
| $ 90,000 |
Current Liabilities |
| 70,000 |
| 50,000 |
Long-Term Debt |
| 100,000 |
| 120,000 |
Common Stock |
| 200,000 |
| 100,000 |
Retained Earnings |
| 284,000 |
| 70,000 |
Sales |
| 230,000 |
| 140,000 |
Income from Subsidiary |
| 28,000 |
|
|
| $1,112,000 | $1,112,000 | $570,000 | $570,000 |
Required
a. Give all eliminating entries required on December 31, 20X4, to prepare consolidated financial statements.
b. Prepare a three-part consolidation worksheet as of December 31, 20X4.
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