The individual financial statements for Abbey Company and Bellstar Company for the year ending December 3 1
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Question:
The individual financial statements for Abbey Company and Bellstar Company for the year ending December follow. Abbey acquired a percent interest in Bellstar on January in exchange for various considerations totaling $ At the acquisition date, the fair value of the noncontrolling interest was $ and Bellstars book value was $ Bellstar had developed internally a trademark that was not recorded on its books but had an acquisitiondate fair value of $ This intangible asset is being amortized over years. Abbey uses the partial equity method to account for its investment in Bellstar.
Abbey sold Bellstar land with a book value of $ on January for $ Bellstar still holds this land at the end of the current year.
Bellstar regularly transfers inventory to Abbey. In it shipped inventory costing $ to Abbey at a price of $ During intraentity shipments totaled $ although the original cost to Bellstar was only $ In each of these years, percent of the merchandise was not resold to outside parties until the period following the transfer. Abbey owes Bellstar $ at the end of
Items Abbey Company Bellstar Company
Sales $ $
Cost of goods sold
Operating expenses
Equity in earnings of Bellstar
Net income $ $
Retained earnings, $ $
Net income above
Dividends declared
Retained earnings, $ $
Cash $ $
Accounts receivable
Inventory
Investment in Bellstar
Land
Buildings and equipment net
Total assets $ $
Liabilities $ $
Common stock
Additional paidin capital
Retained earnings,
Total liabilities and equities $ $
Note: Parentheses indicate a credit balance.
Required:
Prepare a worksheet to consolidate the separate financial statements for Abbey and Bellstar.
How would the consolidation entries in requirement a have differed if Abbey had sold a building on January with a $ book value cost of $ to Bellstar for $ instead of land, as the problem reports? Assume that the building had a year remaining life at the date of transfer.
ABBEY AND BELLSTAR
Consolidation Worksheet
For the Year Ending December
Consolidation Entries
Accounts Abbey Bellstar Debit Credit Noncontrolling Interest Consolidated Totals
Sales $ $
Cost of goods sold
Operating expenses
Equity in earnings of Bellstar
Separate company net income $ $
Consolidated net income
To noncontrolling interest
To Abbey Company
Retained earnings, Abbey, $
Retained earnings, Bellstar,
Net income
Dividends declared
Retained earnings, $ $
Cash $ $
Accounts receivable
Inventory
Investment in Bellstar
Land
Buildings and equipment net
Trademark
Total assets $ $
Liabilities $ $
Common stock
Additional paidin capital
Retained earnings,
Noncontrolling interest
Noncontrolling interest
Total liabilities and equity $ $
Related Book For
Fundamentals Of Advanced Accounting
ISBN: 9781266268533
9th International Edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
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