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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 231,000 111,000
Buildings & Equipment (net) 275,000 191,000
Investment in Spark Filter Company 256,400
Cost of Goods Sold 173,000 138,000
Depreciation Expense 40,000 30,000
Current Liabilities $ 167,800 $ 62,000
Common Stock 199,000 78,000
Retained Earnings 459,000 213,000
Sales 261,000 211,000
Income from Spark Filter Company 39,600
Total $ 1,126,400 $ 1,126,400 $ 564,000 $ 564,000


On January 1, 20X8, Plug's inventory contained filters purchased for $68,000 from Spark Filter, which had produced the filters for $48,000. In 20X8, Spark Filter spent $108,000 to produce additional filters, which it sold to Plug for $153,000. By December 31, 20X8, Plug had sold all filters that had been on hand January 1, 20X8, but continued to hold in inventory $45,900 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.)

  • 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.

b. Compute consolidated net income and income assigned to the controlling interest in the 20X8 consolidated income statement.

c. Compute the balance assigned to the noncontrolling interest in the consolidated balance sheet as of December 31, 20X8.

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ekkarill92 answered 1 year ago
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