ACCOUNTING ad-Park Corporation acquired 100 % of Safe Corporation

Park Corporation acquired 100 % of Safe Corporation on October 1, 2012 for $796,000. The
annual excess amortization as a result the overvaluation of buildings (with a 40-year life) was
calculated to be $1,200 each year, while the annual excess amortization as a result of the
undervaluation of a patent was calculated to be $4,000 each year (over the next 15 years). The
purchase was accounted for using the equity method.
Inventory records reveal that from 2014 to 2016 the Park transferred the following inventory to
Safe as follows:
Cost
Transfer Price
Unsold goods at Year-End*
50,000
80,000
10,000
80,000
100,000
20,000
100,000
125,000
30,000
*The ending inventories are at transfer price. 1. Prepare Consolidation Worksheet Entry E at December 31, 2016:
2. The unsold goods at 12/31/15 were sold in 2016. Prepare Consolidation Worksheet Entry *G
at December 31, 2016. (In order to receive credit, you must show your calculations):
3. Prepare Consolidation Worksheet Entry TI at December 31, 2016:
4. Prepare Consolidation Worksheet Entry G at December 31, 2016 (In order to receive credit,
you must show your calculations):
Continuing with the facts above, in addition to the inventory transactions, on January 1, 2015,
Park Corp. transferred equipment to Safe Corp for $100,000. The equipment had originally cost
$120,000 but had accumulated depreciation of $80,000 on the date of the transfer. The
equipment’s remaining estimated useful life was 4 years (straight-line depreciation and $0
salvage value).
5. Prepare Consolidation Worksheet Entry TA at December 31, 2016 (In order to receive credit,
you must show your calculations):
6. Prepare Consolidation Worksheet Entry ED at December 31, 2016 (In order to receive credit,
you must show your calculations): 7. Below is a worksheet at December 31, 2016 containing only specified accounts. Using the
book value totals provided below, post each of the worksheet entries for this problem for the
specific accounts and total. Be sure to label your worksheet entries below:
12/31/2016 12/31/2016 park corp. safe corp. cost of goods
sold 350,000 120,000 depreciation
expense
amortization
expense
equipment
accumulated
depreciation
equipment
inventory 140,000 115,000 84,000 68,000 540,000
(230,000) 285,000
(166,000) 216,000 185,000 DR. CR. Consolidated