CONSOLIDATION WORKSHEET PROBLEM Matinefo

CONSOLIDATION WORKSHEET PROBLEM Matinefo

Prepare the corresponding consolidating worksheets based on the following facts.

Companies involved: Parent and Sub.

Date of acquisition: Jan. 1, 20X3

Date of the worksheets you must prepare: December 31, 20X4

" 20X5

" 20X6

Percentage of common shares of S owned by P 90%

Price paid by P $6,000,000

At the time of acquisition these were some values concerning S:

Common stock $750,000

Aditional paid-in capital $750,000

Retained earnings $495,000

Years FMV-BV

Inventories <1 $600,000

Other current assets <1 $225,000

Plant & equipment, remaining life: 8 $1,500,000

Land $1,050,000

Long term liabilities; remaining life: 5 $225,000

Intangibles amortization: 10 1,071,667

Intercompany transactions:

20X3 20X4 20X5 20X6

Upstream inventory sales - $112,500 $95,625 $102,319

% in ending inventory - 9.00% 10.80% 12.96%

Gross profit rate on sales - 45.00% 54.00% 64.80%

Upstream building sale, Dec. 31

Sold for $1,500,000

Book value at time of sale $420,000

Remaining life: 10

% of S bonds purchased by P, Jan. 1 20%

Price paid $1,150,798

BV at that date $1,175,066

Remaining life: 5

Maturity value of acquired bonds $1,200,000

Required:

1. Complete the worksheets for 20X4-6.

2. Show how the Controlling and Non-controlling shares of Income from S were arrived at in X5 and X6.

3. In separate schedules for year ends X5 and X6, reconcile the Investment account with S's stockholders' equity.

4. In separate schedules for year ends X5 and X6, reconcile the ending Noncontrolling Interest with S's stockholders'equity.