Could somebody help with the following eliminating entries and a consolidating w
ID: 2455399 • Letter: C
Question
Could somebody help with the following eliminating entries and a consolidating worksheet. Thank you!
Company A acquired 75% of Company B ownership on January 1, 2015 for $96,000. At that date, the fair value of the non-controlling interest was $32,000. The book value of Company B’s net assets at acquisition was $100,000. The book values and fair values of Company B’s assets were equal except for Company B’s Building and Equipment, which was worth $20,000 more than the book value. Buildings and equipment are depreciated on a 10 year basis.
Using the equity method, prepare the necessary eliminating entries and a consolidating worksheet that Company A will make if Company B retains separate legal incorporation and maintain its own accounting systems.
Following are the account balances of the Acquisition Company and Acquiree Compnay as of Dec. 31.
Company A
Book Value
12/31
Company B
Book Value
12/31
Cash
47,500
21,000
Receivable
70,000
9,000
Inventory
90,000
28,000
Investment in Acquiree
96,375
-
Land
30,000
15,000
Building & Equipment, Net
350,000
150,000
Cost of Goods Sole
125,000
110,000
Depreciation expense
25,000
10,000
Operation expense
42,000
27,000
Interest expense
12,000
4,000
Other expense
13,500
5,000
Dividends declared
30,000
16,000
Accumulated depreciation
145,000
40,000
Accounts payable
40,000
16,000
Wages payable
22,000
9,000
Notes payable
150,000
50,000
Common stock
200,000
60,000
Retained earnings
102,000
40,000
Sales
260,000
180,000
Income from subsidiary
12,375
-
Company A
Book Value
12/31
Company B
Book Value
12/31
Cash
47,500
21,000
Receivable
70,000
9,000
Inventory
90,000
28,000
Investment in Acquiree
96,375
-
Land
30,000
15,000
Building & Equipment, Net
350,000
150,000
Cost of Goods Sole
125,000
110,000
Depreciation expense
25,000
10,000
Operation expense
42,000
27,000
Interest expense
12,000
4,000
Other expense
13,500
5,000
Dividends declared
30,000
16,000
Accumulated depreciation
145,000
40,000
Accounts payable
40,000
16,000
Wages payable
22,000
9,000
Notes payable
150,000
50,000
Common stock
200,000
60,000
Retained earnings
102,000
40,000
Sales
260,000
180,000
Income from subsidiary
12,375
-
Explanation / Answer
1. Elimination of Parents investment account
Common Stock - from books of Company B 45000 Retained earnings (Company B) 39000 Equity in Earnings of company B - from books of company A 12375 Investment in Stock of company S - from books of company A 96375