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 during 20X3. On December 31, 20X3, the trial balances of the two companies are as follows:

		Proud Corporation						Spirited Company
Item	Debit			Credit			Debit			Credit
Current Assets		$	184,000					$	123,000
Depreciable Assets			511,000						316,000
Investment in Spirited Company			118,560
Depreciation Expense			21,000						11,000
Other Expenses			100,000						71,000
Dividends Declared			46,000						18,800
Accumulated Depreciation					$	157,000				$	55,000
Current Liabilities						41,000					31,000
Long-Term Debt						127,760					204,800
Common Stock						195,000					88,000
Retained Earnings						225,000					38,000
Sales						202,000					123,000
Income from Spirited Company						32,800
		$	980,560		$	980,560		$	539,800	$	539,800

Required:
a. Prepare all consolidation entries required as of December 31, 20X3, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Prepare a three-part consolidation worksheet. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)

c. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X3. (Amounts to be deducted should be indicated with a minus sign.)

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ekkarill92 answered 1 year ago

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