CONSOLIDATION WORKSHEET PROBLEM Prepare the corresponding consolidating worksheets based on the following facts. Companies involved: Parent and Sub. Date of acquisition: Jan. 1, 20X3 Date of the worksheets you must prepare: December 31, 20X4 ” 20X5 ” 20X6 Percentage of common shares of S owned by P 75% Price paid by P $ 5,700,000 At the time of acquisition these were some values concerning S: Common stock $ 950,000 Aditional paid-in capital $ 950,000 Retained earnings $ 627,000 Years FMV-BV Inventories <1 $ 760,000 Other current assets <1 $ 285,000 Plant & equipment, remaining life: 8 $ 1,900,000 Land $ 1,330,000 Long term liabilities; remaining life: 5 $ 285,000 Intangibles amortization: 6 Intercompany transactions: 20X3 20X4 20X5 20X6 Upstream inventory sales – $ 142,500 $ 121,125 $ 129,604 % in ending inventory – 7.50% 9.00% 10.80% Gross profit rate on sales – 37.50% 45.00% 54.00% Upstream building sale, Dec. 31 Sold for $ 1,900,000 Book value at time of sale $ 760,000 Remaining life: 10 % of S bonds purchased by P, Jan. 1 55% Price paid $ 1,551,104 BV at that date $ 1,534,930 Remaining life: 5 Maturity value of acquired bonds $ 1,567,500
1. Complete the worksheets for 20X4-6.
2. Show how the Controlling and Non-controlling shares of Income from S were arrived at in X5 and X6.
3. In separate schedules for year ends X5 and X6, reconcile the Investment account with S’s stockholders’ equity.
4. In separate schedules for year ends X5 and X6, reconcile the ending Noncontrolling Interest with S’s stockholders’equity. .
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