Question

Pie Corporation acquired 75 percent of Slice Company’s ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncontrolling interest was $32,000. The book value of Slice’s net assets at acquisition was $91,000. The book values and fair values of Slice’s assets and liabilities were equal, except for Slice’s buildings and equipment, which were worth $18,200 more than book value. Accumulated depreciation on the buildings and equipment was $27,000 on the acquisition date. Buildings and equipment are depreciated on a 10-year basis.

Although goodwill is not amortized, the management of Pie concluded at December 31, 20X8, that goodwill from its purchase of Slice shares had been impaired and the correct carrying amount was $2,800. Goodwill and goodwill impairment were assigned proportionately to the controlling and noncontrolling shareholders.

Trial balance data for Pie and Slice on December 31, 20X8, are as follows:

	Pie Corporation									Slice Company
Item	Debit				Credit					Debit				Credit
Cash		$	55,500								$	22,000
Accounts Receivable			90,000									13,000
Inventory			110,000									26,000
Land			48,000									16,000
Buildings & Equipment			351,000									156,000
Investment in Slice Company			100,635
Cost of Goods Sold			116,000									101,000
Wage Expense			33,000									24,000
Depreciation Expense			25,000									9,000
Interest Expense			12,000									3,000
Other Expenses			13,500									4,000
Dividends Declared			30,000									16,000
Accumulated Depreciation						$	136,000								$	36,000
Accounts Payable							34,000									14,000
Wages Payable							15,000									10,000
Notes Payable							252,000									58,000
Common Stock							183,000									54,000
Retained Earnings							85,000									37,000
Sales							263,000									181,000
Income from Slice Company							16,635
		$	984,635			$	984,635				$	390,000			$	390,000

  
Required:
a. Record all consolidation entries needed to prepare a three-part consolidation worksheet as of December 31, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
  

b. Prepare a three-part consolidation worksheet for 20X8. (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.)
  

Answer 1