Powell Corporation acquired 90% of the voting stock of Santer Corporation on January 1, 2014 for...

 

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Powell Corporation acquired 90% of the voting stock of Santer Corporation on January 1, 2014 for $11,700 when Santer had Capital Stock of $5,000 and Retained Earnings of $4,000. The amounts reported on the financial statements approximated fair value, with the exception of inventories, which were understated on the books by $500 and were sold in 2014, land which was undervalued by $1,000, and equipment with a remaining useful life of 5 years under the straight-line method, which was undervalued by $1,500. Any remainder was assigned to goodwill. Financial statements for Powell and Santer Corporations at the end of the fiscal year ended December 31, 2015 appear in the first two columns of the partially completed consolidation working papers. Powell has accounted for its investment in Santer using the equity method of accounting. Powell Corporation owed Santer Corporation $100 on open account at the end of the year. Dividends receivable in the amount of $450 payable from Santer to Powell is included in Powell's net receivables. Complete the consolidation working papers for Powell Corporation and Subsidiary for the year ended December 31, 2015. Eliminations Powell Santer Consolidated Debit Credit INCOME STATEMENT Sales $ 10,000 6,500 Income from Santer 1,080 Cost of Sales (4,000) (3,300) Depreciation Expense Other Expenses Noncontrolling Interest Share (1,000) (1,800) (1,000) (700) Net Income 4,280 1,500 Other Expenses (1,800) (700) Noncontrolling Interest Share Net Income 4,280 1,500 Retained Earnings 1/1 2,510 5,000 Add: Net Income 4,280 1,500 Less: Dividends (2,000) (1,000) Retained Earnings 12/31 BALANCE $ 4,790 5,500 SHEET 1,440 1,100 Cash 1,900 Receivables-net 600 Inventories 1,500 1,200 Land 1,000 1,600 Equipment and Buildings-net Investment in 7,500 6,700 Santer Corp. Goodwill 12,060 TOTAL ASSETS $ 24,600 12,000 LIAB. & EQUITY Accounts Payable $ 3,810 1,000 Dividends Payable Capital Stock Ret. Earnings Nonctl. Interest 2,000 500 14,000 4,790 5,000 5,500 1/1 Nonctl. Interest 12/31 TOTAL LIAB. & EQUITY $ 24,600 12,000 Powell Corporation acquired 90% of the voting stock of Santer Corporation on January 1, 2014 for $11,700 when Santer had Capital Stock of $5,000 and Retained Earnings of $4,000. The amounts reported on the financial statements approximated fair value, with the exception of inventories, which were understated on the books by $500 and were sold in 2014, land which was undervalued by $1,000, and equipment with a remaining useful life of 5 years under the straight-line method, which was undervalued by $1,500. Any remainder was assigned to goodwill. Financial statements for Powell and Santer Corporations at the end of the fiscal year ended December 31, 2015 appear in the first two columns of the partially completed consolidation working papers. Powell has accounted for its investment in Santer using the equity method of accounting. Powell Corporation owed Santer Corporation $100 on open account at the end of the year. Dividends receivable in the amount of $450 payable from Santer to Powell is included in Powell's net receivables. Complete the consolidation working papers for Powell Corporation and Subsidiary for the year ended December 31, 2015. Eliminations Powell Santer Consolidated Debit Credit INCOME STATEMENT Sales $ 10,000 6,500 Income from Santer 1,080 Cost of Sales (4,000) (3,300) Depreciation Expense Other Expenses Noncontrolling Interest Share (1,000) (1,800) (1,000) (700) Net Income 4,280 1,500 Other Expenses (1,800) (700) Noncontrolling Interest Share Net Income 4,280 1,500 Retained Earnings 1/1 2,510 5,000 Add: Net Income 4,280 1,500 Less: Dividends (2,000) (1,000) Retained Earnings 12/31 BALANCE $ 4,790 5,500 SHEET 1,440 1,100 Cash 1,900 Receivables-net 600 Inventories 1,500 1,200 Land 1,000 1,600 Equipment and Buildings-net Investment in 7,500 6,700 Santer Corp. Goodwill 12,060 TOTAL ASSETS $ 24,600 12,000 LIAB. & EQUITY Accounts Payable $ 3,810 1,000 Dividends Payable Capital Stock Ret. Earnings Nonctl. Interest 2,000 500 14,000 4,790 5,000 5,500 1/1 Nonctl. Interest 12/31 TOTAL LIAB. & EQUITY $ 24,600 12,000

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ANSWER Income statement Sales Income from santer Cost of sales Depreciation Expense Other expens... View the full answer