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Proud Corporation acquired 80 percent of Spirited Company’s voting stock on January 1, 20X3, at underlying...

Proud Corporation acquired 80 percent of Spirited 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 Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $44,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited. On December 31, 20X4, the trial balances of the two companies are as follows: Proud Corporation Spirited Company Item Debit Credit Debit Credit Current Assets $ 248,000 $ 158,000 Depreciable Assets 500,000 308,000 Investment in Spirited Company 133,760 Depreciation Expense 21,000 11,000 Other Expenses 142,000 82,000 Dividends Declared 50,000 27,800 Accumulated Depreciation $ 195,000 $ 66,000 Current Liabilities 66,000 46,000 Long-Term Debt 113,960 186,800 Common Stock 182,000 87,000 Retained Earnings 266,000 57,000 Sales 231,000 144,000 Income from Spirited Company 40,800 $ 1,094,760 $ 1,094,760 $ 586,800 $ 586,800 Required: a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)


No Event Accounts Debit Credit
A 1 Common stock
Retained earnings
Income from Spirited Company
NCI in NI of Spirited Company
Dividends declared
Investment in Spirited Company
NCI in NA of Spirited Company
B 2 Accumulated depreciation
Depreciable assets
PROUD CORPORATION AND SUBSIDIARY
Worksheet for Consolidated Financial Statements
December 31, 20X4
Consolidation Entries
Proud Corp. Spirited Co. DR CR Consolidated
Income Statement
Sales
Less: Depreciation expense
Less: Other expenses
Income from Spirited Co.
Consolidated Net Income $0 $0 $0 $0 $0
NCI in net income
Controlling Interest in Net Income $0 $0 $0 $0 $0
Statement of Retained Earnings
Beginning balance
Net income 0 0 0 0
Less: Dividends declared
Ending Balance $0 $0 $0 $0 $0
Balance Sheet
Current assets
Depreciable assets
Less: Accumulated depreciation
Investment in Spirited Co.
Total Assets $0 $0 $0 $0 $0
Liabilities and Equity
Current liabilities
Long-term debt
Common stock
Retained earnings
NCI in NA of Spirited Co.
Total Liabilities and Equity $0 $0 $0 $0 $0

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ekkarill92 answered 8 months ago
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