Instructions: This is an independent assignment and you should not work with others to complete it....

 

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Instructions: This is an independent assignment and you should not work with others to complete it. A key component of understanding the consolidation process is preparing consolidation entries at the time of financial reporting. To summarize your foundational learning from chapters 1-5, please complete the first- and second-year consolidation worksheets below, showing all required consolidation entries and analyses. Partial credit will be given for showing your work and proper math. 1. (42.5 points) Pete Corporation acquired 100% ownership of Sue Company on January 1, 2021, for $128,000. At that date, the fair value of Sue's buildings and equipment was $22,000 more than the book value. Buildings and equipment are depreciated on a 10-year basis; the balance of Sue's accumulated depreciation was $50,000 on the date of acquisition. Pete's management concluded on December 31, 2021 that goodwill involved in its acquisition of Sue shares had been impaired and the correct carrying value was $2,500. Trial balance data for Pete and Sue on December 31, 2021 are as follows: Pete Corporation Sue Company Item Debit Credit Debit Credit Cash $19,000 $30,000 Accounts receivable 70,500 23,000 Inventory 90,000 25,000 Land 30,000 15,000 Buildings & Equipment 350,000 150,000 Investment in Sue Company 130,300 Cost of Goods Sold 125,000 110,000 Wage Expense 42,000 27,000 Depreciation Expense 25,000 10,000 Interest Expense 12,000 4,000 Other Expense 13,500 5,000 Dividends Declared 30,000 16,000 Accumulated Depreciation $145,000 $60,000 Accounts Payable 45,000 16,000 Wages Payable 17,000 9,000 Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 102,000 40,000 Sales 260,000 180,000 Income from Sue Company 18,300 $937,300 $937,300 $415.000 $415.000 a. Complete the consolidation worksheet below for 2021, including the Book Value and Excess Value tables. b. Prepare the all required consolidation entries for 2021. a. Book Value Analysis 1/1/21 +/- Net Income +/- Dividends 12/31/21 Excess Value Analysis 1/1/21 Amortization 12/31/21 = Consolidation Entries Pete Corp. 2021 Sue Co. 2021 DR Income Statement Sales 260,000 180,000 Less: COGS (125,000) (110,000) Less: Wage Expense (42,000) (27,000) Less: Depreciation Expense (25,000) (10,000) Less: Interest Expense (12,000) (4,000) Less: Other Expenses (13,500) (5,000) Less: Impairment Loss Income from Sue Co. 18,300 Net Income 60,800 24,000 Statement of Retained Earnings Beginning Balance 102,000 40,000 Net Income 60,800 24,000 Less: Dividends Declared (30,000) (16,000) Ending Balance 132,800 48,000 Balance Sheet Cash 19,000 30,000 Accounts Receivable 70,500 23,000 Inventory 90,000 25,000 Land 30,000 15,000 Buildings & Equipment 350,000 150,000 Less: Accumulated Depreciation (145,000) (60,000) Investment in Sue Co. 130,300 Goodwill Total Assets 544,800 183,000 Accounts Payable 45,000 16,000 Wages Payable 17,000 9,000 Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 132,800 48,000 Total Liabilities & Equity 544,800 183,000 CR Consolidated b. 2021 Consolidation Entries: 2. (42.5 points) Continuing with the scenario from above, the trial balance information for Pete and Sue for December 31, 2022 is below. No additional impairment occurred in 2022. Pete Corporation Sue Company Item Cash Debit Credit Debit Credit $45,500 $40,000 Accounts receivable 85,000 20,000 Inventory 97,000 30,000 Land 50,000 25,000 Buildings & Equipment 350,000 150,000 Investment in Sue Company 144,100 Cost of Goods Sold 145,000 114,000 Wage Expense 35,000 20,000 Depreciation Expense 25,000 10,000 Interest Expense 12,000 4,000 Other Expense 23,000 16,000 Dividends Declared 30,000 20,000 Accumulated Depreciation $170,000 $70,000 Accounts Payable 51,000 15,000 Wages Payable 14,000 6,000 Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 132,800 48,000 Sales 290,000 200,000 Income from Sue Company 33,800 $1.041.600 $1,041,600 $449.000 $449.000 a. Complete the consolidation worksheet below for 2022, including the Book Value and Excess Value tables. b. Prepare the consolidation entries for 2022. a. Book Value Analysis 1/1/22 12/31/22 Excess Value Analysis 1/1/22 Amortization 12/31/22 Pete Consolidation Entries Corp. Sue Co. 2022 2022 DR CR Consolidated Income Statement Sales 290,000 200,000 Less: COGS (145,000) (114,000) Less: Wage Expense (35,000) (20,000) Less: Depreciation Expense (25,000) (10,000) Less: Interest Expense (12,000) (4,000) Less: Other Expenses (23,000) (16,000) Income from Sue Co. 33,800 Net Income 83,800 36,000 Statement of Retained Earnings Beginning Balance 132,800 48,000 Net Income 83,800 36,000 Less: Dividends Declared (30,000) (20,000) Ending Balance 186,600 64,000 Balance Sheet Cash 45,500 40,000 Accounts Receivable 85,000 20,000 Inventory 97,000 30,000 Land 50,000 25,000 Buildings & Equipment 350,000 150,000 Less: Accumulated Depreciation (170,000) (70,000) Investment in Sue Co. 144,100 Goodwill Total Assets 601,600 195,000 Accounts Payable 51,000 15,000 Wages Payable 14,000 6,000 Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 186,600 64,000 Total Liabilities & Equity 601,600 195,000 b. 2022 Consolidation Entries: Instructions: This is an independent assignment and you should not work with others to complete it. A key component of understanding the consolidation process is preparing consolidation entries at the time of financial reporting. To summarize your foundational learning from chapters 1-5, please complete the first- and second-year consolidation worksheets below, showing all required consolidation entries and analyses. Partial credit will be given for showing your work and proper math. 1. (42.5 points) Pete Corporation acquired 100% ownership of Sue Company on January 1, 2021, for $128,000. At that date, the fair value of Sue's buildings and equipment was $22,000 more than the book value. Buildings and equipment are depreciated on a 10-year basis; the balance of Sue's accumulated depreciation was $50,000 on the date of acquisition. Pete's management concluded on December 31, 2021 that goodwill involved in its acquisition of Sue shares had been impaired and the correct carrying value was $2,500. Trial balance data for Pete and Sue on December 31, 2021 are as follows: Pete Corporation Sue Company Item Debit Credit Debit Credit Cash $19,000 $30,000 Accounts receivable 70,500 23,000 Inventory 90,000 25,000 Land 30,000 15,000 Buildings & Equipment 350,000 150,000 Investment in Sue Company 130,300 Cost of Goods Sold 125,000 110,000 Wage Expense 42,000 27,000 Depreciation Expense 25,000 10,000 Interest Expense 12,000 4,000 Other Expense 13,500 5,000 Dividends Declared 30,000 16,000 Accumulated Depreciation $145,000 $60,000 Accounts Payable 45,000 16,000 Wages Payable 17,000 9,000 Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 102,000 40,000 Sales 260,000 180,000 Income from Sue Company 18,300 $937,300 $937,300 $415.000 $415.000 a. Complete the consolidation worksheet below for 2021, including the Book Value and Excess Value tables. b. Prepare the all required consolidation entries for 2021. a. Book Value Analysis 1/1/21 +/- Net Income +/- Dividends 12/31/21 Excess Value Analysis 1/1/21 Amortization 12/31/21 = Consolidation Entries Pete Corp. 2021 Sue Co. 2021 DR Income Statement Sales 260,000 180,000 Less: COGS (125,000) (110,000) Less: Wage Expense (42,000) (27,000) Less: Depreciation Expense (25,000) (10,000) Less: Interest Expense (12,000) (4,000) Less: Other Expenses (13,500) (5,000) Less: Impairment Loss Income from Sue Co. 18,300 Net Income 60,800 24,000 Statement of Retained Earnings Beginning Balance 102,000 40,000 Net Income 60,800 24,000 Less: Dividends Declared (30,000) (16,000) Ending Balance 132,800 48,000 Balance Sheet Cash 19,000 30,000 Accounts Receivable 70,500 23,000 Inventory 90,000 25,000 Land 30,000 15,000 Buildings & Equipment 350,000 150,000 Less: Accumulated Depreciation (145,000) (60,000) Investment in Sue Co. 130,300 Goodwill Total Assets 544,800 183,000 Accounts Payable 45,000 16,000 Wages Payable 17,000 9,000 Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 132,800 48,000 Total Liabilities & Equity 544,800 183,000 CR Consolidated b. 2021 Consolidation Entries: 2. (42.5 points) Continuing with the scenario from above, the trial balance information for Pete and Sue for December 31, 2022 is below. No additional impairment occurred in 2022. Pete Corporation Sue Company Item Cash Debit Credit Debit Credit $45,500 $40,000 Accounts receivable 85,000 20,000 Inventory 97,000 30,000 Land 50,000 25,000 Buildings & Equipment 350,000 150,000 Investment in Sue Company 144,100 Cost of Goods Sold 145,000 114,000 Wage Expense 35,000 20,000 Depreciation Expense 25,000 10,000 Interest Expense 12,000 4,000 Other Expense 23,000 16,000 Dividends Declared 30,000 20,000 Accumulated Depreciation $170,000 $70,000 Accounts Payable 51,000 15,000 Wages Payable 14,000 6,000 Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 132,800 48,000 Sales 290,000 200,000 Income from Sue Company 33,800 $1.041.600 $1,041,600 $449.000 $449.000 a. Complete the consolidation worksheet below for 2022, including the Book Value and Excess Value tables. b. Prepare the consolidation entries for 2022. a. Book Value Analysis 1/1/22 12/31/22 Excess Value Analysis 1/1/22 Amortization 12/31/22 Pete Consolidation Entries Corp. Sue Co. 2022 2022 DR CR Consolidated Income Statement Sales 290,000 200,000 Less: COGS (145,000) (114,000) Less: Wage Expense (35,000) (20,000) Less: Depreciation Expense (25,000) (10,000) Less: Interest Expense (12,000) (4,000) Less: Other Expenses (23,000) (16,000) Income from Sue Co. 33,800 Net Income 83,800 36,000 Statement of Retained Earnings Beginning Balance 132,800 48,000 Net Income 83,800 36,000 Less: Dividends Declared (30,000) (20,000) Ending Balance 186,600 64,000 Balance Sheet Cash 45,500 40,000 Accounts Receivable 85,000 20,000 Inventory 97,000 30,000 Land 50,000 25,000 Buildings & Equipment 350,000 150,000 Less: Accumulated Depreciation (170,000) (70,000) Investment in Sue Co. 144,100 Goodwill Total Assets 601,600 195,000 Accounts Payable 51,000 15,000 Wages Payable 14,000 6,000 Notes Payable 150,000 50,000 Common Stock 200,000 60,000 Retained Earnings 186,600 64,000 Total Liabilities & Equity 601,600 195,000 b. 2022 Consolidation Entries: