On January 1, 2015, Parson Company purchases 80% of the common stock of Salary Company for $450,000.

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On January 1, 2015, Parson Company purchases 80% of the common stock of Salary Company for $450,000. On this date, Salary has common stock, other paid-in capital in excess of par, and retained earnings of $50,000, $140,000, and $220,000, respectively.

Any excess of cost over book value is due to goodwill.

In both 2015 and 2016, Parson has accounted for the investment in Salary using the cost method. On January 1, 2016, Salary purchases 1,000 shares (10%) of the common stock of Parson Company from outside investors for $100,000 cash. It is expected that the shares may be resold later. Salary uses the cost method in accounting for the investment.

During the last quarter of 2016, Parson sells merchandise to Salary for $48,000, one-fourth of which is still held by Salary on December 31, 2016. Parson's usual gross profit on intercompany sales is 40%.

The trial balances for Parson and Salary on December 31, 2016, are as follows:

On January 1, 2015, Parson Company purchases 80% of the

Required
Complete the worksheet for consolidated financial statements for the year ended December 31, 2016. Shares of Parson owned by Salary are to be treated as treasury stock. Round all computations to the nearest dollar include a determination and distribution of excess schedule and income distribution schedule.

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...
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Advanced Accounting

ISBN: 978-1305084858

12th edition

Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng

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