Question
In: Accounting
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at...
Plug Products owns 80 percent of the stock of Spark Filter
Company, which it acquired at underlying book value on August 30,
20X6. At that date, the fair value of the noncontrolling interest
was equal to 20 percent of the book value of Spark Filter.
Summarized trial balance data for the two companies as of December
31, 20X8, are as follows:
| Plug Products | Spark Filter Company | ||||||||||||||||
| Debit | Credit | Debit | Credit | ||||||||||||||
| Cash and Accounts Receivable | $ | 160,000 | $ | 95,000 | |||||||||||||
| Inventory | 232,000 | 121,000 | |||||||||||||||
| Buildings & Equipment (net) | 272,000 | 193,000 | |||||||||||||||
| Investment in Spark Filter Company | 267,628 | ||||||||||||||||
| Cost of Goods Sold | 166,000 | 131,000 | |||||||||||||||
| Depreciation Expense | 40,000 | 30,000 | |||||||||||||||
| Current Liabilities | $ | 186,893 | $ | 60,093 | |||||||||||||
| Common Stock | 187,000 | 88,000 | |||||||||||||||
| Retained Earnings | 471,000 | 218,000 | |||||||||||||||
| Sales | 253,907 | 203,907 | |||||||||||||||
| Income from Spark Filter Company | 38,828 | ||||||||||||||||
| Total | $ | 1,137,628 | $ | 1,137,628 | $ | 570,000 | $ | 570,000 | |||||||||
On January 1, 20X8, Plug's inventory contained filters purchased
for $63,000 from Spark Filter, which had produced the filters for
$43,000. In 20X8, Spark Filter spent $103,000 to produce additional
filters, which it sold to Plug for $150,907. By December 31, 20X8,
Plug had sold all filters that had been on hand January 1, 20X8,
but continued to hold in inventory $45,272 of the 20X8 purchase
from Spark Filter.
Required:
a. Prepare all consolidation entries needed to complete a
consolidation worksheet for 20X8. (If no entry is required
for a transaction/event, select "No journal entry required" in the
first account field.)
Consolidation Worksheet Entries
- Record the basic consolidation entry.
- Record the entry to reverse last year's deferral.
- Record the entry to defer the current year's unrealized profits on inventory transfers.
Note: Enter debits before credits.
|
b. Compute consolidated net income and income assigned to the
controlling interest in the 20X8 consolidated income
statement.
Consolidated net income
Income assigned to the controlling interest
c. Compute the balance assigned to the noncontrolling interest in
the consolidated balance sheet as of December 31, 20X8.
|
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at...
Plug Products owns 80 percent of the stock of Spark Filter
Company, which it acquired at underlying book value on August 30,
20X6. At that date, the fair value of the noncontrolling interest
was equal to 20 percent of the book value of Spark Filter.
Summarized trial balance data for the two companies as of December
31, 20X8, are as follows:
Plug Products
Spark Filter Company
Debit
Credit
Debit
Credit
Cash and Accounts Receivable
$
158,000
$
104,000
Inventory
221,000...
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at...
Plug Products owns 80 percent of the stock of Spark Filter
Company, which it acquired at underlying book value on August 30,
20X6. At that date, the fair value of the noncontrolling interest
was equal to 20 percent of the book value of Spark Filter.
Summarized trial balance data for the two companies as of December
31, 20X8, are as follows: Plug Products Spark Filter Company Debit
Credit Debit Credit Cash and Accounts Receivable $ 164,000 $ 91,000
Inventory 227,000...
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at...
Plug Products owns 80 percent of the stock of Spark Filter
Company, which it acquired at underlying book value on August 30,
20X6. At that date, the fair value of the noncontrolling interest
was equal to 20 percent of the book value of Spark Filter.
Summarized trial balance data for the two companies as of December
31, 20X8, are as follows:
Plug Products
Spark Filter Company
Debit
Credit
Debit
Credit
Cash and Accounts Receivable
$
151,000
$
94,000
Inventory
231,000...
Plug Products owns 80 percent of the stock of Spark Filter Company, which it acquired at...
Plug Products owns 80 percent of the stock of Spark Filter
Company, which it acquired at underlying book value on August 30,
20X6. At that date, the fair value of the noncontrolling interest
was equal to 20 percent of the book value of Spark Filter.
Summarized trial balance data for the two companies as of December
31, 20X8, are as follows:
Plug Products
Spark Filter Company
Debit
Credit
Debit
Credit
Cash and Accounts Receivable
$
165,000
$
91,000
Inventory
239,000...
Clean Air Products owns 80 percent of the stock of Superior Filter Company, which it acquired...
Clean Air Products owns 80 percent of the stock of Superior Filter
Company, which it acquired at underlying book value on August 30,
20X6. At that date, the fair value of the noncontrolling interest
was equal to 20 percent of the book value of Superior Filter.
Summarized trial balance data for the two companies as of December
31, 20X8, are as follows:
Clean Air Products
Superior Filter Company
Debit
Credit
Debit
Credit
Cash and Accounts
Receivable
$
148,000
$
94,000...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The
parent’s interest was acquired several years ago on the date that
the subsidiary was formed. Consequently, no goodwill or other
allocation was recorded in connection with the acquisition. Cairns
uses the equity method in its internal records to account for its
investment in Hamilton.
On January 1, 2017, Hamilton sold $1,500,000 in 10-year bonds to
the public at 105. The bonds had a cash interest rate of 8...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The
parent’s interest was acquired several years ago on the date that
the subsidiary was formed. Consequently, no goodwill or other
allocation was recorded in connection with the acquisition. Cairns
uses the equity method in its internal records to account for its
investment in Hamilton.
On January 1, 2011, Hamilton sold
$1,500,000 in 10-year bonds to the public at 105. The bonds had a
cash interest rate of 8...
Cairns owns 80 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired...
Cairns owns 80 percent of the voting stock of Hamilton, Inc.
The parent's interest was acquired several years ago on the date
that the subsidiary was formed.
Consequently, no goodwill or other allocation was recorded in
connection with the acquisition.
Cairns uses the equity method in its internal records to account
for its investment in Hamilton.
On January 1, 2011, Hamilton sold $1,300,000 in 10-year bonds to
the public at 105.
The bonds had a cash interest rate of 8...
Plug Corporation holds 80 percent of Socket Company’s common stock. The following balance sheet data are...
Plug Corporation holds 80 percent of Socket Company’s common
stock. The following balance sheet data are presented for December
31, 20X7:
Plug
Corporation
Socket
Company
Assets
Cash
$
103,000
$
93,000
Accounts Receivable
155,000
225,000
Inventory
300,000
300,000
Land
95,000
305,000
Buildings and Equipment
2,240,000
920,000
Less: Accumulated Depreciation
(830,000
)
(270,000
)
Investment in Socket Company
616,000
Total Assets
$
2,679,000
$
1,573,000
Liabilities and Equities
Accounts Payable
$
239,000
$
103,000
Bonds Payable
780,000
500,000
Preferred Stock ($100...
Plug Corporation holds 80 percent of Socket Company’s common stock. The following balance sheet data are...
Plug Corporation holds 80 percent of Socket Company’s common
stock. The following balance sheet data are presented for December
31, 20X7:
Plug
Corporation
Socket
Company
Assets
Cash
$
103,000
$
93,000
Accounts Receivable
158,000
228,000
Inventory
310,000
310,000
Land
97,000
320,000
Buildings and Equipment
2,250,000
930,000
Less: Accumulated Depreciation
(830,000
)
(260,000
)
Investment in Socket Company
632,000
Total Assets
$
2,720,000
$
1,621,000
Liabilities and Equities
Accounts Payable
$
290,000
$
151,000
Bonds Payable
760,000
500,000
Preferred Stock ($100...
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