On January 1, 2020, Mona, Inc., acquired 80 percent of Lisa Company’s common stock as well as 60 percent of its preferred shares. Mona paid $76,000 in cash for the preferred stock, with a call value of 110 percent of the $50 per share par value. The remaining 40 percent of the preferred shares traded at a $45,000 fair value. Mona paid $588,000 for the common stock. At the acquisition date, the noncontrolling interest in the common stock had a fair value of $147,000. The excess fair value over Lisa’s book value was attributed to franchise contracts of $77,000. This intangible asset is being amortized over a 20-year period. Lisa pays all preferred stock dividends (a total of $19,000 per year) on an annual basis. During 2020, Lisa’s book value increased by $65,000. On January 2, 2020, Mona acquired one-half of Lisa's outstanding bonds payable to reduce the business combination's debt position. Lisa's bonds had a face value of $100,000 and paid cash interest of 8 percent per year. These bonds had been issued to the public to yield 10 percent. Interest is paid each December 31. On January 2, 2020, these bonds had a total $93,660 carrying amount. Mona paid $53,465, indicating an effective interest rate of 6 percent. On January 3, 2020, Mona sold Lisa fixed assets that had originally cost $111,000 but had accumulated depreciation of $70,000 when transferred. The transfer was made at a price of $142,000. These assets were estimated to have a remaining useful life of 10 years. The individual financial statements for these two companies for the year ending December 31, 2021, are as follows: Mona, Inc. Lisa Company Sales and other revenues $ (522,000 ) $ (222,000 ) Expenses 231,000 131,000 Dividend income—Lisa common stock (16,800 ) 0 Dividend income—Lisa preferred stock (11,400 ) 0 Net income $ (319,200 ) $ (91,000 ) Retained earnings, 1/1/21 $ (711,000 ) $ (522,000 ) Net income (above) (319,200 ) (91,000 ) Dividends declared—common stock 103,800 21,000 Dividends declared—preferred stock 0 19,000 Retained earnings, 12/31/21 $ (926,400 ) $ (573,000 ) Current assets $ 141,419 $ 511,000 Investment in Lisa—common stock 588,000 0 Investment in Lisa—preferred stock 76,000 0 Investment in Lisa—bonds 51,833 0 Fixed assets 1,111,000 811,000 Accumulated depreciation (311,000 ) (211,000 ) Total assets $ 1,657,252 $ 1,111,000 Accounts payable $ (419,852 ) $ (119,472 ) Bonds payable 0 (100,000 ) Discount on bonds payable 0 3,472 Common stock (311,000 ) (211,000 ) Preferred stock 0 (111,000 ) Retained earnings, 12/31/21 (926,400 ) (573,000 ) Total liabilities and equities $ (1,657,252 ) $ (1,111,000 ) Note: Credits are indicated by parentheses.

a. What consolidation worksheet adjustments would have been required as of January 1, 2020, to eliminate the subsidiary's common and preferred stocks? Prepare a combined entry for Consolidation Entries S and A.

b. What consolidation worksheet adjustments would have been required as of December 31, 2020, to account for Mona's purchase of Lisa's bonds? Prepare Entry B to account for Mona's purchase of Lisa's bonds.

c. What consolidation worksheet adjustments would have been required as of December 31, 2020, to account for the intra-entity sale of fixed assets? Prepare Entry TA to account for the intra-entity sale of fixed assets.

d. Assume that consolidated financial statements are being prepared for the year ending December 31, 2021. Calculate the consolidated balance for each of the following accounts:

Franchises

Fixed

Assets

Accumulated

Depreciation

Expenses

Answer rating: 100% (QA)

Part A Date Jan 1 2017 Part B Date Dec 31 2017 Part C Date Dec 31 2017 General journal Part D Prefer... View the full answer