Exhibit 7.34 presents the separate financial statements at December 31, 2011, of Prestige Resorts and its 80

Question:

Exhibit 7.34 presents the separate financial statements at December 31, 2011, of Prestige Resorts and its 80 percent-owned subsidiary Booking, Inc. Two years earlier on January 1, 2010, Prestige acquired 80 percent of the common shares of Booking for $1,170 million in cash. Booking’s 2010 net income was $105 million, and Booking paid no dividends in 2010. Booking’s 2011 income was $135 million, and it paid $75 million dividends on common stock during 2011. Booking’s pre- and post-acquisition stock prices do not support the existence of a control premium. Exhibit 7.35 shows the allocation of fair value at the date of acquisition, January 1, 2010. Exhibit 7.36 traces Prestige Resorts’ equity method accounting for Booking, Inc. Ignore deferred tax effects.

Required

a. Complete Exhibit 7.35 to show income effects and balance sheet adjustments to be reflected in the December 31, 2011 Eliminations column of the consolidated worksheet.

b. Complete Exhibit 7.36 to trace the noncontrolling interests in Booking, Inc.’s earnings and net assets.

c. Prepare a worksheet to consolidate Prestige and Booking at December 31, 2011.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...