Patio Corporation owns 60 percent of the stock of Stone Container Company, which it acquired at book
Question:
Patio Corporation owns 60 percent of the stock of Stone Container Company, which it acquired at book value in 20X1. At that date, the fair value of the noncontrolling interest was equal to 40 percent of Stone’s book value. On December 31, 20X3, Patio purchased $100,000 par value bonds of Stone for $107,000. Stone originally issued the 10-year bonds at par value on January 1, 20X1. The bonds’ coupon rate is 9 percent. Interest is paid semiannually on June 30 and December 31. Trial balances for the two companies on December 31, 20X4, are as follows:
All interest income recognized by Patio is related to its investment in Stone bonds.
Required
a. Prepare a consolidation worksheet for 20X4 in good form.
b. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X4.
Step by Step Answer:
Advanced Financial Accounting
ISBN: 9781260772135
13th Edition
Authors: Theodore Christensen, David Cottrell, Cassy Budd