Prather Company owns 80% of the common stock of Stone Company. The stock was purchased for $960,000

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Prather Company owns 80% of the common stock of Stone Company. The stock was purchased for $960,000 on January 1, 2022, when Stone Company’s retained earnings were $675,000. On January 1, 2024, Stone Company sold fixed assets to Prather Company for $960,000; Stone Company had purchased these assets for $1,350,000 on January 1, 2014, at which time their estimated useful life was 25 years. The estimated remaining useful life to Prather Company on 1/1/24 is 10 years. Both companies employ the straight- line method of depreciation. The financial data for 2025 are presented here:imageimage


Required:
A. Prepare a consolidated statements workpaper for the year ended December 31, 2025.
B. Calculate consolidated retained earnings on December 31, 2025, using an analytical or t- account approach.

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Advanced Accounting

ISBN: 9781119794653

8th Edition

Authors: Debra C. Jeter, Paul K. Chaney

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