Please answer the questions. Thanks pany on NMd used by the parent, Mast Curpul
ID: 2589490 • Letter: P
Question
Please answer the questions.
Thanks
pany on NMd used by the parent, Mast Curpul ise 3 (1O 2) Equity method, first year, eliminations, statements. Parker ures an 80% interest in Sargent Company for $300,000 in cash on January 1, Company acqui when Sargent Company has the following balance sheet: Liabilities and Equity Assets $ 50,000 100,000 150,000 $300,000 $100,000 Current liabilities Current assets Depreciable fixed assets (net) Common stock ($10 par). Retained earnings . 200,000 $300,000 Total liabilities and equity olal assets The excess of the price paid over book value is attributable to the fixed assets, which have a fair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parker Company uses the simple equity method to record its investment in Sargent Company The following trial balances of the two companies are prepared on December 31, 2015 Parker 10,000 400,000 Sargent 130,000 200,000 Current Assets Depreciable Fixed Assets Accumulated Depreciation .. Investment in Sargent Company Current Liabilities Common Stock ($10 par] Retained Earnings, January 1, 2015 Sales Expenses Subsidiary Income.. (106,000)(20,000) 316,000 (60,000(40,000 (300,000(100,000 (200,000(150,000 75,000 (150,000 (100,000) 110,000 (20,000 5,000 0 Totals 0 1. Prepare a determination and distribution of excess schedule (a value analysis is not needed) for the investment. epare all worksheet. the eliminations and adjustments that would be made on the 2015 consolidated e the 2015 consolidated income statement and its related income distribution schedules. . Prepare the 2015 statement of retained earnings. 5. Prepare the 2015 consolidated balance sheet. Exercise a OExplanation / Answer
1 Determination and distribution of excess Schedule
Preice paid for Investment
$300,000
Less: Book value of Interest acquired
Common Stock
100000
Retained Earnings
150000
Total Equity
250000
Interest acquired
80%
$200,000
Excess of cost over book value
$100,000
Adjustments:
Depreciable Fixed assets
$50,000
Goodwill
$50,000
Total Adjustment
$100,000
2. Elimination and adjustments for consolidated worksheet
Common Stock
80000
Retained Earning
120000
Depreciable Fixed assets
50000
Goodwill
50000
Investment in Sargent Company
300000
To eliminate shares at the beginning of the year and
to distribute excess as per excess schedule
Current year adjustement
Subsidiary Income
20000
Investment in Sargent Company
20000
To eliminate parent's share of current year income
Investment in Sargent Company
4000
Dividend Declared
4000
To eliminate parent's share of current year dividend declared
Depreciation expenses
5000
Accumulated Depreciation
5000
To adjust excess fixed asset cost over remaining life
3. Consolidated Income Statement
Sales
250000
Less: Expenses
185000
Excess Depreciation expenses (adjustment)
5000
Consolidated net Income
60000
Distributed to non controlling interest
5000
Distributed to controlling interest
55000
Subsidiary Sargent Company Income distribution
Net Income
25000
Noncontrolling interest - 20%
5000
Controlling interest - 80%
20000
Parent Parker company Income Distribution
Net Income
40000
Subsidiary Share
20000
Total
60000
Adjustment for Depreciable fixed assets
5000
Controlling interest
55000
4. Statement of Retained Earnings
Retained Earnings, January 1 2015
200000
Net Income for 2015
55000
Retained Earnings, December 31 2015
255000
5. Consolidated Balance Sheet
Parker & Sargent Company
for the year ended on 31 December 2015
Current Assets
190000
Depreciable Fixed Assets
650000
Accumulated Depreciation
-131000
519000
Total Assets
709000
Current Liabilities
100000
Equity
Noncontrolling interest
54000
Controlling
Common stock
300000
Retained Earnings
255000
555000
Total Liabilities
709000
Notes:
Current assets include $50000 for goodwill
Depreciable Fixed asset include excess adjustment for $50000
Accumulated Depreciation include excess adjustment for 5000
1 Determination and distribution of excess Schedule
Preice paid for Investment
$300,000
Less: Book value of Interest acquired
Common Stock
100000
Retained Earnings
150000
Total Equity
250000
Interest acquired
80%
$200,000
Excess of cost over book value
$100,000
Adjustments:
Depreciable Fixed assets
$50,000
Goodwill
$50,000
Total Adjustment
$100,000
2. Elimination and adjustments for consolidated worksheet
Common Stock
80000
Retained Earning
120000
Depreciable Fixed assets
50000
Goodwill
50000
Investment in Sargent Company
300000
To eliminate shares at the beginning of the year and
to distribute excess as per excess schedule
Current year adjustement
Subsidiary Income
20000
Investment in Sargent Company
20000
To eliminate parent's share of current year income
Investment in Sargent Company
4000
Dividend Declared
4000
To eliminate parent's share of current year dividend declared
Depreciation expenses
5000
Accumulated Depreciation
5000
To adjust excess fixed asset cost over remaining life
3. Consolidated Income Statement
Sales
250000
Less: Expenses
185000
Excess Depreciation expenses (adjustment)
5000
Consolidated net Income
60000
Distributed to non controlling interest
5000
Distributed to controlling interest
55000
Subsidiary Sargent Company Income distribution
Net Income
25000
Noncontrolling interest - 20%
5000
Controlling interest - 80%
20000
Parent Parker company Income Distribution
Net Income
40000
Subsidiary Share
20000
Total
60000
Adjustment for Depreciable fixed assets
5000
Controlling interest
55000
4. Statement of Retained Earnings
Retained Earnings, January 1 2015
200000
Net Income for 2015
55000
Retained Earnings, December 31 2015
255000
5. Consolidated Balance Sheet
Parker & Sargent Company
for the year ended on 31 December 2015
Current Assets
190000
Depreciable Fixed Assets
650000
Accumulated Depreciation
-131000
519000
Total Assets
709000
Current Liabilities
100000
Equity
Noncontrolling interest
54000
Controlling
Common stock
300000
Retained Earnings
255000
555000
Total Liabilities
709000
Notes:
Current assets include $50000 for goodwill
Depreciable Fixed asset include excess adjustment for $50000
Accumulated Depreciation include excess adjustment for 5000