Question

Pop Corporation acquired 70 percent of Soda Company's voting common shares on January 1, 20X2, for $119,000. At that date, the noncontrolling interest had a fair value of $51,000 and Soda reported $70,000 of common stock outstanding and retained earnings of $33,000. The differential is assigned to buildings and equipment, which had a fair value $29,000 higher than book value and a remaining 10-year life, and to patents, which had a fair value $38,000 higher than book value and a remaining life of five years at the date of the business combination. Trial balances for the companies as of December 31, 20X3, are as follows:

a. Record the basic consolidation entry

b. Record the amortized excess value reclassification entry.

c. Record the excess value (differential) reclassification entry.

d. Record the optional accumulated depreciation consolidation entry.

e. Record the entry to reverse last year's deferral.

f. Record the deferral of the unrealized profit on inventory transfers from 20X2.

g. Record the deferral of this year's unrealized profits on inventory transfers.

Prepare a three-part consolidation worksheet for 20X3.

Pop Corporation Debit SodaCompan Debit Credit Item Cash & Accounts Receivable $18,400 Inventory Land Buildings & Equipment Investment in Soda Company Cost of Goods Sold Depreciation Expense Interest Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Bond Premium Common Stock Retained Earnings Sales Other Income Income from Soda Company Credit $ 24,600 168,000 83,000 370,000 117,235 189,000 20,000 19,000 33,000 38,000 43,000 263,000 82,800 15,000 8,200 18,000 $ 143,e0e 95,400 240,790 $ 75,000 38,000 110,000 1,600 123,000 130,900 263,000 12,600 8,945 63,000 135,000 $1,017,635 $1,017,635 $492,600 $492,600 Consolidation Entries Pop Corp Soda Co DR CR Consolidated Income Statement Sales Other Income Less: COGS Less: Depreciation Expense Less: Interest Expense Less: Amortization Expense Income from Soda Company Consolidated Net Income NCI in Net Income Controlling Interest in Net Income Statement of Retained Earnings Beginning balance Net income Less: Dividends declared Ending Balance Balance Sheet $398,000 12,600 (271,800) (35,000) (27,200) $263,000 $ 135,000 12,600 (189,000) (20,000) (19,000) (82,800) (15,000) (8,200) 8,945 56,545 8,945 85,545 29,000 0 0 56,545 $ 29,000 $ 85,545 $193,900 85,545 (51,000) 0 S228,445 $130,900 S 56,545 (33,000) $154,445 $ 63,000 29,000 (18,000) 74,000 $ 18,400 $ Cash and Accounts Receivable Inventory Land BuildingS & Equipment 168,000 83,000 370,000 24,600 38,000 43,000 263,000 43,000 206,000 126,000 633,000 Less: Accumulated Depreciation Investment in Soda Company Patents Total Assets Accounts Payable Bonds Payable Bonds Premiumm Common Stock Retained Earnings NCI in NA of Soda Company Total Liabilities & Equity (143,000) 117,235 (75,000) (218,000) 117,235 0 $ 907,235 $ 133,400 350,790 1,600 193,000 228,445 $613,635 $ 293,600$ 95,400 $ 240,790 38,000 110,000 1,600 70,000 74,000 123,000 154,445 $613,635 $ 293,600$ 0 S907,235

Answer 1

Particulars Common stock Retained eanings income from soda com NCI in NI of soda compan Dividend declared DR $ 70,000.00 $63,000.00 $16,295.00 $ 18,000.00 $ 96,795.00 43,305.00 NCI in NI of soda com $7,600.00 $2,900.00 Amortization exp Income from soda com NCI in NI of soda co $7,350.00 $3,150.00 $ 29,000.00 $ 22,800.00 Building and equi Accumulated depreciation NCI in NA of soda com $5,800.00 32,200.00 in Accumula $45,000.00 Building and equipment 45,000.00 Investment in soda NCI in NA of soda com Cost of $7,350.00 $3,150.00 s sold $ 10,500.00 in NCI in NA of soda com $ 6,300.00 1,34,000.00 Cost of Invento $1,19,600.00 $ 14,400.00 s sold Consolidated financial statement Consolidated entries Particulars POP corp Soda Corp Consolidated DR CR Income s Sales Other income $ 2,63,000.00 $1,35,000.00 $1,34,000.00 $12,600.00 -1,89,000.00 -82,800.00 S 2,64,000.00 $ 12,600.00 $1,30,100.00 $-1,41,700.00 $37,900.00 S-27.200.00 $ -7,600.00 Depreciation expense 20,000.00 -15,000.00 2,900.00 $ 19,000.00-8,200.00 $ 7,600.00 $ 16,295.007,350.00$ Amortizaion exp Income from soda com Consolidated net income NCI in net income Controlling interest in net income Statement of retained earnings 56,545.00 29,000.00 1,60,795.00 $1,37,450.00 62,200.00 $ 8,805.00 $ 3,150.00 5,655.00 56,545.00 29,000.00 1,69,600.00 $1,40,600.00 56,545.00 ning balance $1,30,900.00 63,000.0063,000.00 1,30,900.00 56,545.00 $ 18,000.00 $ -33,000.00 15,445.00 74,000.00 $2,32,600.00 $1,58,600.00 1,54,445.00 56,545.00 29,000.00 $1,69,600.00 $1,40,600.00 $-33,000.00 -18,000.00 Dividends declared Ending balance Balance sheet Cash and accounts receivable 18,400.0024,700.00 $ 1,68,000.00 38,000.00 $ 83,000.00 43,000.00 $43,000.00 20,700.001,85,300.00 S 1,26,000.00 $ 3,70,000.00 $2,63,000.00 29,000.00$ 45,000.00 6,17,000.00 $-1,43,000.00 -75,000.00 45,000.00$ 5,800.00 $-1,78,800.00 Land ation Investment in soda com 1,17,235.00 S11,760.00 $1,28,995.00 $22,800.00 $ 6,13,635.00 $2,93,600.00 $1,08,560.00 $2,00,495.0O 8,15,300.00 1,33,400.00 3,50,790.00 1,600.00 Total assets $ 95,400.00$38,000.00 $2,40,790.00 $1,10,000.00 $ 1,23,000.00 70,000.00 70,000.00 Common stock Retained earnin NCI in NA soda company Total liabilities and S 1,54,445.00$ 74,000.00 $2,32,600.00 $1,58,600.00 1,54,445.00 5,040.00 57,105.00 $ 52,065.00 6,13,635.0O 2,93,600.00 $3,07,640.00 $2,15,705.00 8,15,300.00