ACCTG 5130 - On January 1, 20X9, Zigma Company

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On January 1, 20X9, Zigma Company acquired 90 percent of Standard Company's common shares at the underlying book value. Zigma paid $76,500 for the 90% ownership. Zigma uses the equity method in accounting for its ownership of Standard. On December 31, 20X9, the financials of the two companies are attached as part of the Consolidated Worksheet. During the year, Standard sold to Zigma land for $40K. Standard had purchased the land for $20K. Zigma still held the land at the end of of 20X10. In 20X11, Zigma sold the land for $70K.

1. Prepare all the eliminating entries needed as of December 31, 20X9, 20X10 and 20X11 and complete the consolidated worksheet. (Hint: I suggest that you reconcile the “Investment in Standard “and “Income from Standard” accounts by determining the equity entries that were made during the year).

December 31, 20X10

Zigma

Standard

Income Statement

Sales

200,000

100,000

Gain on Land Sale

-

Other Expenses

(90,000)

(70,000)

Depreciation

(30,000)

(20,000)

Income from Standard

9,000

Net Income

89,000

10,000

NCI Net Income

CI Net Income

Statement of Retained Earnings

Beginning RE

268,000

75,000

Net Income

89,000

10,000

Less Dividends Declared

-

-

Ending Retained Earnings

357,000

85,000

Balance Sheet

Current Assets

302,500

130,000

Depreicable Assets

300,000

170,000

Accumulated Depreciation

(120,000)

(85,000)

Land

50,000

Investment in Standard

94,500

Total Assets

627,000

215,000

Current Liabilities

50,000

30,000

Long Term Liabilities

120,000

50,000

Common Stock

100,000

50,000

Retained Earnings

357,000

85,000

NCI Share of Assets

-

-

Total Liabilities and Equity

627,000

215,000