Proud Corporation acquired 80 percent of Stergis Company's voting stock on January 1, 20X3, at underlying...

 

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Proud Corporation acquired 80 percent of Stergis Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Stergis at that date. Proud uses the equity method in accounting for its ownership of Stergis. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets (net) Investment in Stergis Company Stock Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Subsidiary Required Proud Corporation Stergis Company Debit Credit Debit Credit $ 235,000 $150,000 500,000 300,000 152,000 25,000 15,000 150,000 90,000 50,000 15,000 $ 200,000 $ 90,000 70,000 50,000 100,000 120,000 200,000 100,000 284,000 70,000 230,000 140,000 28,000 $1,112,000 $1,112,000 $570,000 $570,000 a. Give all eliminating entries required on December 31, 20X4, to prepare consolidated financial statements. b. Prepare a three-part consolidation workpaper as of December 31, 20X4. Proud Corporation acquired 80 percent of Stergis Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Stergis at that date. Proud uses the equity method in accounting for its ownership of Stergis. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets (net) Investment in Stergis Company Stock Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Subsidiary Required Proud Corporation Stergis Company Debit Credit Debit Credit $ 235,000 $150,000 500,000 300,000 152,000 25,000 15,000 150,000 90,000 50,000 15,000 $ 200,000 $ 90,000 70,000 50,000 100,000 120,000 200,000 100,000 284,000 70,000 230,000 140,000 28,000 $1,112,000 $1,112,000 $570,000 $570,000 a. Give all eliminating entries required on December 31, 20X4, to prepare consolidated financial statements. b. Prepare a three-part consolidation workpaper as of December 31, 20X4.