Assume that on 1/1/xx, a parent company acquired 90% interest in a subsidiary. The total fair value of the controlling and noncontrolling interests was $480,000 over book value. The parent assigned the excess to: PPE with a fair value of $160,000 and useful life of 20 years, Patent with a fair value of $80,000 and useful life of 10 years, Customer list with a fair value of $40,000 and useful life of 10 years, and Goodwill with a fair value of 200,000.

90% of the Goodwill is assigned to the Parent.

Using the spreadsheet:

• Prepare the consolidated financial statements at 12/31/xx by placing the appropriate entries in their respective debit/credit column cells.
• Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is a [C], [E], [A]or [D] entry.
• Use Excel formulas to derive the Consolidated column amounts and totals.
• Using the “Home” key in Excel, go to the “Styles” area and highlight the [C], [E], [A], and [D] entry cells in different shades.

Spreadsheet:

 

Transcribed Image Text:

Consolidation Entries Parent Subsidiary Dr Cr Consolidated Income Statement: Sales 6,800,000 880,000 (5,200,000) 1,600,000 (528,000) 352,000 Cost of Goods sold Gross profit Income (loss) from subsidiary 82,800 Operating expenses (1,280,000) (240,000) Net Income 402,800 112,000 Consolidated NI attrib to NCI Consolidated NI attrib to CI Statement of Ret Earnings: BOY retained earnings 580,000 468,000 Net income 402,800 112,000 Dividends (16,000) (160,000) 822,800 EOY retained earnings 564,000 Balance Sheet: Cash 320,000 228,000 Accounts receivable 480,000 200,000 Inventory 720,000 264,000 Equity investment 982,800 PPE, net 1,600,000 600,000 Patent Customer List Goodwill 4,102,800 1,292,000 Current liabilities 720,000 200,000 Long-term liabilities 1,600,000 400,000 Common stock 320,000 56,000 APIC 640,000 72,000 Retained earnings 822,800 564,000 Noncontrolling interest 4,102,800 1,292,000 Consolidation Entries Parent Subsidiary Dr Cr Consolidated Income Statement: Sales 6,800,000 880,000 (5,200,000) 1,600,000 (528,000) 352,000 Cost of Goods sold Gross profit Income (loss) from subsidiary 82,800 Operating expenses (1,280,000) (240,000) Net Income 402,800 112,000 Consolidated NI attrib to NCI Consolidated NI attrib to CI Statement of Ret Earnings: BOY retained earnings 580,000 468,000 Net income 402,800 112,000 Dividends (16,000) (160,000) 822,800 EOY retained earnings 564,000 Balance Sheet: Cash 320,000 228,000 Accounts receivable 480,000 200,000 Inventory 720,000 264,000 Equity investment 982,800 PPE, net 1,600,000 600,000 Patent Customer List Goodwill 4,102,800 1,292,000 Current liabilities 720,000 200,000 Long-term liabilities 1,600,000 400,000 Common stock 320,000 56,000 APIC 640,000 72,000 Retained earnings 822,800 564,000 Noncontrolling interest 4,102,800 1,292,000

Answer rating: 100% (QA)

CONSOLIDATED FINANCIAL STATEMENTS AS AT YEAR ENDED 31ST DECEMBER XXXX INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER XXXX PARENT SUBSIDIARY ADJUSTMEN... View the full answer