Large Company purchased 95% of the common stock of Little Company on May 1, 2020, paying $515,000
Question:
Large Company purchased 95% of the common stock of Little Company on May 1, 2020, paying $515,000 in cash. December 31, 2020, trial balances for Large and Little were:
BALANCE SHEET | Large Company | Little Company | |
December 31, 2020 | December 31, 2020 | ||
Current Assets | 352,600 | 179,200 | |
Investment in Little | 549,845 | ||
Property and Equipment | 1,334,000 | 562,000 | |
Total Assets | 2,236,445 | 741,200 | |
Account and Notes Payable | (270,240) | (124,000) | |
Dividend Payable | (60,000) | ||
Common Stock ($ 10 par) | (1,000,000) | (200,000) | |
APIC | (364,000) | (90,000) | |
Treasury Stock at Cost, 500 shares | 32,000 | ||
R/E 1/1/2020 | (315,360) | (209,200) | |
Net Income | (286,845) | (150,000) | |
Dividend Declared | 0 | 60,000 | |
Total Liabilities + Equity | (2,236,445) | (741,200) |
INCOME STATEMENT | Large Company | Little Company | |
2020 | 2020 | ||
Sales Revenues | (1,940,000) | (976,000) | |
COGS | 1,261,000 | 584,000 | |
Other Expenses | 484,000 | 242,000 | |
Equity in Subsidiary Income | (91,845) | ||
Net Income | (286,845) | (150,000) |
Little Company declared a $60,000 cash dividend on December 20, 2020, payable on January 10, 2020, to stockholders of record on December 31, 2020. Large Company recognized the dividend on its declaration date. Any difference between book value and the value implied by the purchase price relates to subsidiary PPE with 5-year remaining useful life, included in “Property and Equipment.”
Revenues and expenses are distributed evenly through the year.
Required:
- Calculate the balance of NCI at December 31, 2020. Provide detailed calculations.
- Complete a consolidated worksheet (in proper form) for Large Company and its subsidiary Little Company as of December 31, 2020. Prepare supporting amortization schedules.
Accounting Principles
ISBN: 978-1119411482
13th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso