Princess Company acquired a 90% interest in Sundown Company on January 1, 2011, for $675,000. Any excess
Question:
Princess Company acquired a 90% interest in Sundown Company on January 1, 2011, for $675,000. Any excess of cost over book value was due to goodwill.
Capital balances of Sundown Company on January 1, 2011, were as follows:
Common stock ($10 par) ....... $200,000
Paid-in capital in excess of par .... 100,000
Retained earnings ......... 300,000
Total equity ............. $600,000
Sundown Company sold a machine to Princess for $30,000 on January 1, 2014. It cost Sun-down $20,000 to build the machine, which had a 5-year remaining life on the date of the sale and is subject to straight-line depreciation.
Princess purchased one-half of the outstanding 9% bonds of Sundown for $89,186 (to yield 12%) on December 31, 2015. The bonds were sold originally by Sundown to yield 10% to out-side parties. The discount on the entire set of bonds was $7,582 on December 31, 2015. The effective interest method of amortization is used.
During 2016, Princess Company sold merchandise to Sundown for $50,000. Princess recorded a 30% gross profit on the sales price. $20,000 of the merchandise purchased from Princess remains unsold at the end of the year.
The trial balances of Princess and its subsidiary, Sundown, are as follows on December 31, 2016:
Required
Prepare the worksheet necessary to produce the consolidated financial statements of Princess Company and its subsidiary for the year ended December 31, 2016. Include the determination and distribution of excess and income distribution schedules.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Step by Step Answer:
Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng