Powder Corporation acquired 70 percent of Solid Company’s stock on December 31, 20X7, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 30 percent of Solid Company’s book value. The two companies’ balance sheets on December 31, 20X9, are as follows:

On December 31, 20X9, Powder holds inventory purchased from Solid for $70,000. Solid’s cost of producing the merchandise was $50,000. Solid also had purchased inventory from Powder. Solid’s ending inventory contains $85,000 of purchases that had cost Powder $60,000 to produce.

On December 30, 20X9, Solid sells equipment to Powder for $90,000. Solid had purchased the equipment for $120,000 several years earlier. At the time of sale to Powder, the equipment had a book value of $40,000. The two companies file separate tax returns and are subject to a 40 percent tax rate. Powder does not record tax expense on its share of Solid’s undistributed earnings.

Required

a. Complete a consolidated balance sheet worksheet as of December 31, 20X9.

b. Prepare a consolidated balance sheet as of December 31, 20X9.

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POWDER CORPORATION AND SOLID COMPANY Balance Sheets