Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $199,000. The trial balances

Fantastic news! We've Found the answer you've been seeking!

Question:

Prince Corporation acquired 100 percent of Sword Company on January 1, 20X7, for $199,000. The trial balances for the two companies on December 31, 20X7, included the following amounts:

	Prince Corporation						Sword Company
Item	Debit			Credit			Debit			Credit
Cash		$	88,000					$	43,000
Accounts Receivable			69,000						74,000
Inventory			180,000						118,000
Land			86,000						38,000
Buildings and Equipment			497,000						154,000
Investment in Sword Company			258,000
Cost of Goods Sold			497,000						254,000
Depreciation Expense			24,000						14,000
Other Expenses			66,000						66,000
Dividends Declared			59,000						24,000
Accumulated Depreciation					$	137,000					$	70,000
Accounts Payable						68,000						28,000
Mortgages Payable						198,000						125,000
Common Stock						282,000						47,000
Retained Earnings						374,000						95,000
Sales						682,000						420,000
Income from Sword Company						83,000
		$	1,824,000		$	1,824,000		$	785,000		$	785,000
On January 1, 20X7, Sword reported net assets with a book value of $142,000. A total of $24,000 of the acquisition price is applied to goodwill, which was not impaired in 20X7. Sword’s depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. Prince used the equity method in accounting for its investment in Sword. Detailed analysis of receivables and payables showed that Sword owed Prince $23,000 on December 31, 20X7. Prepare all consolidating entries needed to prepare a full set of consolidated financial statements for 20X7. Questions 1. Record the basic consolidation entry. 2. Record the amortized excess value reclassification entry. 3. Record the excess value (differential) reclassification entry. 4. Record the entry to eliminate the intercompany accounts. 5. Record the optional accumulated depreciation consolidation entry.