Parent Company obtains 100 percent of Subsidiary Company's stock on January 1, 2020. As of that...
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Parent Company obtains 100 percent of Subsidiary Company's stock on January 1, 2020. As of that date, Subsidiary has the following trial balance: Accounts payable Accounts receivable Additional paid-in capital Debit Credit $ 51,900 $ 43,100 50,000 Buildings (net) (4-year remaining life) 175,000 Cash and short-term investments 75,500 Common stock 250,000 Equipment (net) (5-year remaining life) 439,500 Inventory 127,000 Land 116,500 Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies 170,500 464,900 10,700 Totals $987,300 $987,300 During 2020, Subsidiary reported net income of $87,000 while declaring and paying dividends of $11,000. During 2021, Subsidiary reported net income of $122,500 while declaring and paying dividends of $55,000. Assume that Parent Company acquired Subsidiary's common stock for $873,250 in cash. As of January 1, 2020, Subsidiary's land had a fair value of $129,800, buildings had a fair value of $243,800, and its equipment had a fair value of $403,750. Parent uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. No Date Accounts 1 December 31 Common stock-Subsidiary Debit Credit 250,000 Additional paid-in capital 50,000 Retained earnings-1/1/20 464,900 Investment in Subsidiary 764,900 2 December 31 Land 133,300X Buildings 68,800 Goodwill 62,000 Equipment 35,750 Investment in Subsidiary 108,350 3 December 31 Equity in subsidiary earnings 76,950 Investment in Subsidiary 76,950 4 December 31 Investment in Subsidiary 11,000 Dividends declared 11,000 5 December 31 Depreciation expense 10,050 Equipment 7,150 Buildings 17,200 6 December 31 Common stock-Subsidiary 250,000 Additional paid-in capital 50,000 Retained earnings-1/1/21 540,900 Investment in Subsidiary 840,900 7 December 31 Land 13,300 Buildings 62,000X Equipment Investment in Subsidiary 28,600X 98,300 8 December 31 Equity in subsidiary earnings Investment in Subsidiary 9 December 31 Investment in Subsidiary Dividends declared 112.450 112,450 55,000 55,000 10 December 31 Depreciation evnence 10.050 Parent Company obtains 100 percent of Subsidiary Company's stock on January 1, 2020. As of that date, Subsidiary has the following trial balance: Accounts payable Accounts receivable Additional paid-in capital Debit Credit $ 51,900 $ 43,100 50,000 Buildings (net) (4-year remaining life) 175,000 Cash and short-term investments 75,500 Common stock 250,000 Equipment (net) (5-year remaining life) 439,500 Inventory 127,000 Land 116,500 Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies 170,500 464,900 10,700 Totals $987,300 $987,300 During 2020, Subsidiary reported net income of $87,000 while declaring and paying dividends of $11,000. During 2021, Subsidiary reported net income of $122,500 while declaring and paying dividends of $55,000. Assume that Parent Company acquired Subsidiary's common stock for $873,250 in cash. As of January 1, 2020, Subsidiary's land had a fair value of $129,800, buildings had a fair value of $243,800, and its equipment had a fair value of $403,750. Parent uses the equity method for this investment. Prepare consolidation worksheet entries for December 31, 2020, and December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. No Date Accounts 1 December 31 Common stock-Subsidiary Debit Credit 250,000 Additional paid-in capital 50,000 Retained earnings-1/1/20 464,900 Investment in Subsidiary 764,900 2 December 31 Land 133,300X Buildings 68,800 Goodwill 62,000 Equipment 35,750 Investment in Subsidiary 108,350 3 December 31 Equity in subsidiary earnings 76,950 Investment in Subsidiary 76,950 4 December 31 Investment in Subsidiary 11,000 Dividends declared 11,000 5 December 31 Depreciation expense 10,050 Equipment 7,150 Buildings 17,200 6 December 31 Common stock-Subsidiary 250,000 Additional paid-in capital 50,000 Retained earnings-1/1/21 540,900 Investment in Subsidiary 840,900 7 December 31 Land 13,300 Buildings 62,000X Equipment Investment in Subsidiary 28,600X 98,300 8 December 31 Equity in subsidiary earnings Investment in Subsidiary 9 December 31 Investment in Subsidiary Dividends declared 112.450 112,450 55,000 55,000 10 December 31 Depreciation evnence 10.050
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Related Book For
Fundamentals of Advanced Accounting
ISBN: 978-0077667061
5th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
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