Pirate Corporation acquired 60 percent ownership of Ship Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Ship Company. Accumulated depreciation on Buildings and Equipment was $69,000 on the acquisition date. Trial balance data at December 31, 20X8, for Pirate and Ship are as follows:

	Pirate Corporation									Ship Company
Item	Debit				Credit					Debit				Credit
Cash		$	32,000								$	17,000
Accounts Receivable			69,000									27,000
Inventory			45,000									35,000
Buildings & Equipment			509,000									254,000
Investment in Row Company												45,000
Investment in Ship Company			101,760
Cost of Goods Sold			142,000									102,000
Depreciation Expense			29,000									9,000
Interest Expense			6,000									3,000
Dividends Declared			28,000									26,400
Accumulated Depreciation						$	132,000								$	78,000
Accounts Payable							61,000									18,000
Bonds Payable							117,360									112,400
Common Stock							195,000									91,000
Retained Earnings							203,000									51,000
Other Comprehensive Income from Ship Company (OCI)—Unrealized Gain on Investments							6,000
Unrealized Gain on Investments (OCI)																10,000
Sales							221,000									158,000
Income from Ship Company							26,400
		$	961,760			$	961,760				$	518,400			$	518,400

Additional Information
Ship purchased stock of Row Company on January 1, 20X8, for $30,000 and classified the investment as available-for-sale securities. The value of Row’s securities increased to $40,000 at December 31, 20X8.

Required:
a. Record all consolidation entries needed to prepare a three-part consolidation worksheet as of December 31, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

a1. Record the basic consolidation entry.

a2.Record the entry for Other Comprehensive Income.

a3. Record the optional accumulated depreciation consolidation entry.

b. Prepare a three-part consolidation worksheet for 20X8 in good form. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)



c. Prepare a consolidated balance sheet, income statement, and statement of comprehensive income for 20X8. (Amounts to be deducted should be indicated with a minus sign.)

Answer rating: 100% (QA)

Sheet1 Sheet2 Sheet3 Sheet4 Sheet5 Exit Full Screen A B D E F G 1 Pirate S... View the full answer