Tyler Manufacturing purchased 60 percent of the ownership of Brown Corporation stock on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Brown Corporation. Tyler also purchased $50,000 of Brown bonds at par value on December 31, 20X3. Brown sold the bonds on January 1, 20X1, at 120; they have a stated interest rate of 12 percent. Interest is paid semiannually on June 30 and
December 31. Assume Tyler uses the fully adjusted equity method.
On December 31, 20X1, Brown sold a building with a remaining life of 15 years to Tyler for$30,000. Brown had purchased the building 10 years earlier for $40,000. It is being depreciatedbased on a 25-year expected life.
Trial balances for the two companies on December 31 20X3, are as follows:

a. Prepare a consolidation worksheet for 20X3 in good form.
b. Prepare a consolidated balance sheet, income statement, and statement of changes in retained earnings for20X3.

  • CreatedMay 23, 2014
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