Consolidation Using Financial Statement Data
Bower Corporation acquired 60 percent of Concerto Company’s stock on January 1, 20X3, for $24,000 in excess of book value. On that date, the book values and fair values of Concerto’s assets and liabilities were equal and the fair value of the noncontrolling interest was $16,000 in excess of book value. The full amount of the differential at acquisition was assigned to goodwill. At December 31, 20X6, the management of Bower reviewed the amount assigned to goodwill and concluded it had been impaired. They concluded the correct carrying value at that date should be $30,000 and the impairment loss should be assigned proportionately between the controlling and noncontrolling interests.
Balance sheet data for January 1, 20X6, and December 31, 20X6, and income statement data for 20X6 for the two companies are as follows:
BOWER CORPORATION AND CONCERTO COMPANY Balance Sheet Data January 1, 20X6 | ||||
Item | Bower Corporation | Concerto Company | ||
Cash | $ 9,800 |
| $ 10,000 |
|
Accounts Receivable | 60,000 |
| 50,000 |
|
Inventory | 100,000 |
| 80,000 |
|
Total Current Assets |
| $169,800 |
| $140,000 |
Land |
| 70,000 |
| 20,000 |
Buildings and Equipment | $300,000 |
| $200,000 |
|
Less: Accumulated Depreciation | (140,000) | 160,000 | (70,000) | 130,000 |
Investment in Concerto Company Stock |
| 135,200 |
|
|
Total Assets |
| $535,000 |
| $290,000 |
Accounts Payable |
| $ 30,000 |
| $ 20,000 |
Bonds Payable |
| 120,000 |
| 70,000 |
Common Stock | $100,000 |
| $ 50,000 |
|
Retained Earnings | 285,000 | 385,000 | 150,000 | 200,000 |
Total Liabilities and Stockholders’ Equity |
| $535,000 |
| $290,000 |
BOWER CORPORATION AND CONCERTO COMPANY Balance Sheet Data December 31, 20X6 | ||||
Item | Bower Corporation | Concerto Company | ||
Cash | $ 26,800 |
| $ 35,000 |
|
Accounts Receivable | 80,000 |
| 40,000 |
|
Inventory | 120,000 |
| 90,000 |
|
Total Current Assets |
| $226,800 |
| $165,000 |
Land |
| 70,000 |
| 20,000 |
Buildings and Equipment | $340,000 |
| $200,000 |
|
Less: Accumulated Depreciation | (165,000) | 175,000 | (85,000) | 115,000 |
Investment in Concerto Company Stock |
| 139,600 |
|
|
Total Assets |
| $611,400 |
| $300,000 |
Accounts Payable |
| $ 80,000 |
| $ 15,000 |
Bonds Payable |
| 120,000 |
| 70,000 |
Common Stock | $100,000 |
| $ 50,000 |
|
Retained Earnings | 311,400 | 411,000 | 165,000 | 215,000 |
Total Liabilities and Stockholders’ Equity |
| $611,400 |
| $300,000 |
BOWER CORPORATION AND CONCERTO COMPANY Income Statement Data Year Ended December 31, 20X6 | |||
Item | Bower Corporation | Concerto Company | |
Sales | $400,000 |
| $200,000 |
Income from Subsidiary | 16,400 |
|
|
| $416,400 |
| $200,000 |
Cost of Goods Sold $280,000 |
| $120,000 |
|
Depreciation and Amortization Expense 25,000 |
| 15,000 |
|
Other Expenses 35,000 | (340,000) | 30,000 | (165,000) |
Net Income | 76,400 |
| $ 35,000 |
On January 1, 20X6, Bower held inventory purchased from Concerto for $48,000. During 20X6, Bower purchased an additional $90,000 of goods from Concerto and held $54,000 of its purchases on December 31, 20X6. Concerto sells inventory to the parent at 20 percent above cost.
Concerto also purchases inventory from Bower Corporation. On January 1, 20X6, Concerto held inventory purchased from Bower for $14,000, and on December 31, 20X6, it held inventory purchased from Bower for $7,000. Concerto’s total purchases from Bower Corporation were $22,000 in 20X6. Bower Corporation sells items to Concerto Company at 40 percent above cost.
During 20X6, Bower paid dividends of $50,000, and Concerto paid dividends of $20,000. Assume Bower uses the fully adjusted equity method.
Required
a. Prepare all eliminating entries needed to complete a consolidation worksheet as of December 31, 20X6.
b. Prepare a three-part consolidation worksheet as of December 31, 20X6.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.