Problem 3-4 (LO 3) Cost method, consolidated statements.The trial balances of Chango Company and its subsidiary, Lhasa Inc., are as follows on December 31, 20X3:

Chango Lhasa Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530,000 130,000 Depreciable Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,805,000 440,000 Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (405,000) (70,000)

Investment in Lhasa Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460,000 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (900,000) (225,000)

Common Stock ($1 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (220,000)

Common Stock ($5 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50,000)

1. Prepare a determination and distribution of excess schedule for the investment.
2. Prepare the 20X3 consolidated statements, including the income statement, retained earnings statement, and balance sheet. (A worksheet is not required.)
Problem 3-5 (LO 3) Cost method, 80% interest, worksheet, statements. Bell Corporation purchased all of the outstanding stock of Stockdon Corporation for $220,000 in cash on January 1, 20X7. On the purchase date, Stockdon Corporation had the following condensed balance sheet:

Any excess of book value over cost was attributable to the building, which is currently overstated on Stockdon’s books. All other assets and liabilities have book values equal to fair values.
The building has an estimated 10-year life with no salvage value.
The trial balances of the two companies on December 31, 20X7, appear as follows:
Bell Stockdon Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000 143,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 30,000 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 120,000 Buildings (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 162,000 Investment in Stockdon Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (405,000) (210,000)
Common Stock ($3 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300,000)
Common Stock ($10 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (100,000)
Paid-In Capital in Excess of Par . . . . . . . . . . . . . . . . . . . . . . . . . . . . (180,000) (50,000)