Subsidiary with Other Comprehensive Income in Year of Acquisition
Amber Corporation acquired 60 percent ownership of Sparta Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Sparta Company. Trial balance data at December 31, 20X8, for Amber and Sparta are as follows:
Item | Amber Corporation | Sparta Company | ||
Debit | Credit | Debit | Credit | |
Cash | $ 27,000 |
| $ 8,000 |
|
Accounts Receivable | 65,000 |
| 22,000 |
|
Inventory | 40,000 |
| 30,000 |
|
Buildings and Equipment | 500,000 |
| 235,000 |
|
Investment in Row Company Securities |
|
| 40,000 |
|
Investment in Sparta Company | 108,000 |
|
|
|
Cost of Goods Sold | 150,000 |
| 110,000 |
|
Depreciation Expense | 30,000 |
| 10,000 |
|
Interest Expense | 8,000 |
| 3,000 |
|
Dividends Declared | 24,000 |
| 15,000 |
|
Accumulated Depreciation |
| $140,000 |
| $ 85,000 |
Accounts Payable |
| 63,000 |
| 20,000 |
Bonds Payable |
| 100,000 |
| 50,000 |
Common Stock |
| 200,000 |
| 100,000 |
Retained Earnings |
| 208,000 |
| 60,000 |
Other Comprehensive Income from |
|
|
|
|
Subsidiary (OCI)—Unrealized Gain |
|
|
|
|
on Investments |
| 6,000 |
|
|
Unrealized Gain on Investments (OCI) |
|
|
| 10,000 |
Sales |
| 220,000 |
| 148,000 |
Income from Subsidiary |
| 15,000 |
|
|
| $952,000 | $952,000 | $473,000 | $473,000 |
Additional Information
Sparta purchased stock of Row Company on January 1, 20X8, for $30,000 and classified the investment as available-for-sale securities. The value of Row’s securities increased to $40,000 at December 31, 20X8.
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.
c. Prepare a consolidated balance sheet, income statement, and statement of comprehensive income for 20X8.
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