On January 1, 20X5, Pond Corporation purchased 75 percent of Skate Companys stock at underlying book value.

On January 1, 20X5, Pond Corporation purchased 75 percent of Skate Company’s stock at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of Skate’s book value. The balance sheets for Pond and Skate at January 1, 20X8, and December 31, 20X8, and income statements for 20X8 were reported as follows:

Additional Information
1. Pond sold a building to Skate for $65,000 on December 31, 20X7. Pond had purchased the building for $125,000 and was depreciating it on a straight-line basis over 25 years. At the time of sale, Pond reported accumulated depreciation of $75,000 and a remaining life of 10 years.
2. On July 1, 20X6, Skate sold land that it had purchased for $22,000 to Pond for $35,000. Pond is planning to build a new warehouse on the property prior to the end of 20X9.
3. Skate issued $100,000 par value, 10-year bonds with a coupon rate of 10 percent on January 1, 20X5, at $95,000. On December 31, 20X7, Pond purchased $40,000 par value of Skate’s bonds for $42,800. Interest payments are made on July 1 and January 1.
4. Pond and Skate paid dividends of $30,000 and $10,000, respectively, in 20X8.

Required
a. Prepare all elimination entries needed at December 31, 20X8, to complete a three-part consolidation worksheet.
b. Prepare a three-part worksheet for 20X8 in goodform.

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20X8 Balance Sheets Pond Corporation Skate Company January 1 December 31 53,100 176,000 45,000 140,000 50,000 400,000 (185,000) January 1 $ 10,000 60,000 December 31 57,600 130,000 47,000 65,000 Accounts Receivable Interest & Other Receivables 50,000 22,000 240,000 50,000 22,000 Buildings & Equipment Accumulated Depreciation Investment in Skate Company: 2 (150,000) 122,327 135,000 (94,000) Stock 139,248 42,494 134,000 $994,842 Investment in Tin Co. Bonds Total Assets $927,727 $320.000 340,000 20X8 Balance Sheets Pond Corporation Skate Company January 1 December 31 January 1 December 31 S 11,000 100,000 Accounts Payable Interest & Other Payables Bonds Payable Bond Discount Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities 65,000 16,500 40,000 300,000 150,000 155,000 222,727 927,727 150,000 155,000 279,842 5994.842 100,000 (4,005) 30,000 20,000 150,505 $320,000 30,000 20,000 170,597 $340,000 20X8 Income Statements Pond Corporation Skate Company Sales Income from Subsidiary Interest Income Total Revenue Cost of Goods Sold Other Operating Expenses 50,000 Depreciation Expense Interest Expense Miscellaneous Expenses Net Income $450,000 24,421 18,594 $493,015 250,000 $250,000 $136,000 40,000 24,000 10,408 $285,000 35,000 24,000 11,900 $405,900 9,500 219,908 S 30,092 87,115