Consolidation Worksheet at End of First Year of Ownership
Mill Corporation acquired 100 percent ownership of Roller Company on January 1, 20X8, for $128,000. At that date, the fair value of Roller’s buildings and equipment was $20,000 more than book value. Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, the management of Mill concluded at December 31, 20X8, that goodwill involved in its acquisition of Roller shares had been impaired and the correct carrying value was $2,500.
Trial balance data for Mill and Roller on December 31, 20X8, are as follows:
Item | Mill Corporation | Roller Company | ||
Debit | Credit | Debit | Credit | |
Cash | $ 19,500 |
| $ 21,000 |
|
Accounts Receivable | 70,000 |
| 12,000 |
|
Inventory | 90,000 |
| 25,000 |
|
Land | 30,000 |
| 15,000 |
|
Buildings and Equipment | 350,000 |
| 150,000 |
|
Investment in Roller Co. Stock | 128,500 |
|
|
|
Cost of Goods Sold | 125,000 |
| 110,000 |
|
Wage Expense | 42,000 |
| 27,000 |
|
Depreciation Expense | 25,000 |
| 10,000 |
|
Interest Expense | 12,000 |
| 4,000 |
|
Other Expenses | 13,500 |
| 5,000 |
|
Dividends Declared | 30,000 |
| 16,000 |
|
Accumulated Depreciation |
| $145,000 |
| $ 40,000 |
Accounts Payable |
| 45,000 |
| 16,000 |
Wages Payable |
| 17,000 |
| 9,000 |
Notes Payable |
| 150,000 |
| 50,000 |
Common Stock |
| 200,000 |
| 60,000 |
Retained Earnings |
| 102,000 |
| 40,000 |
Sales |
| 260,000 |
| 180,000 |
Income from Subsidiary |
| 16,500 |
|
|
| $935,500 | $935,500 | $395,000 | $395,000 |
Required
a.Give all eliminating entries needed to prepare a three-part consolidation worksheet as of December 31, 20X8.
b.Prepare a three-part consolidation worksheet for 20X8 in good form.
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