On January 1, 2021, Peanut Company acquired 90% of Snickers Corporation's common shares at underlying book...
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On January 1, 2021, Peanut Company acquired 90% of Snickers Corporation's common shares at underlying book value. The fair value of the noncontrolling interest was equal to 10% of the book value of Snickers at that date. Peanut uses the equity method with consolidation in accounting for its ownership of Snickers. On December 31, 2021, the trial balances of the two companies are as follows: Peanut Co. Snickers Corp. Item Debit Credit Debit Credit Current Assets $200,000 $120,000 Depreciable Assets 300,000 225,000 Investment in Snickers Co. 139,500 Other Expenses 100,000 60,000 Depreciation Expense 30,000 25,000 Dividends Declared 30,000 10,000 Accumulated Depreciation $120,000 $ 75,000 Current Liabilities 62,000 25,000 Long-Term Debt 75,000 90,000 Common Stock 100,000 75,000 Retained Earnings 120,000 65,000 Sales 300,000 110,000 Income from Snickers Co. 22,500 $799,500 $799,500 $440,000 $440,000 Required: Prepare an Excel document with one tab for each of the following. 1. Prepare the journal entries on Peanut's books for the acquisition of Snickers on January 1, 2021, as well as any normal equity-method entry(ies) related to the investment in Snickers during 2021. 2. Prepare a three-part consolidation worksheet (as reviewed in our text, page 111, Figure 3-3) as of December 31, 2021 in good form. On January 1, 2021, Peanut Company acquired 90% of Snickers Corporation's common shares at underlying book value. The fair value of the noncontrolling interest was equal to 10% of the book value of Snickers at that date. Peanut uses the equity method with consolidation in accounting for its ownership of Snickers. On December 31, 2021, the trial balances of the two companies are as follows: Peanut Co. Snickers Corp. Item Debit Credit Debit Credit Current Assets $200,000 $120,000 Depreciable Assets 300,000 225,000 Investment in Snickers Co. 139,500 Other Expenses 100,000 60,000 Depreciation Expense 30,000 25,000 Dividends Declared 30,000 10,000 Accumulated Depreciation $120,000 $ 75,000 Current Liabilities 62,000 25,000 Long-Term Debt 75,000 90,000 Common Stock 100,000 75,000 Retained Earnings 120,000 65,000 Sales 300,000 110,000 Income from Snickers Co. 22,500 $799,500 $799,500 $440,000 $440,000 Required: Prepare an Excel document with one tab for each of the following. 1. Prepare the journal entries on Peanut's books for the acquisition of Snickers on January 1, 2021, as well as any normal equity-method entry(ies) related to the investment in Snickers during 2021. 2. Prepare a three-part consolidation worksheet (as reviewed in our text, page 111, Figure 3-3) as of December 31, 2021 in good form.
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Solution No A B No A Requirement 1 Journal Entries during the Year 2... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
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