On January 1, 2019, Aronsen Company acquired 90 percent of Siedel Company's outstanding shares. Siedel had a net book value on that date of $577,200: common stock ($10 par value) of $230,000 and retained earnings of $347,200. Aronsen paid $648,900 for this investment. The acquisition-date fair value of the 10 percent noncontrolling interest was $72,100. The excess fair value over book value associated with the acquisition was used to increase land by $61,880 and to recognize copyrights (16-year remaining life) at $81,920. Subsequent to the acquisition, Aronsen applied the initial value method to its investment account. In the 2019-2020 period, the subsidiary's retained earnings increased by $102,400. During 2021, Siedel earned income of $86,000 while declaring $21,200 in dividends. Also, at the beginning of 2021, Siedel issued 4,600 new shares of common stock for $38 per share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and therefore recorded no entry. Prepare the appropriate 2021 consolidation entries for these two companies. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries 1 Prepare entry Note: Enter debits Transaction 1 2 Record entry 3 4 5 6 No journal entry required Additional paid-in capital (Aronsen) Additional paid-in capital (Siedel) Amortization expense Clear entry Debit Credit view consolidation entries
On January 1, 2019, Aronsen Company acquired 90 percent of Siedel Company's outstanding shares. Siedel had a net book value on that date of $577,200: common stock ($10 par value) of $230,000 and retained earnings of $347,200. Aronsen paid $648,900 for this investment. The acquisition-date fair value of the 10 percent noncontrolling interest was $72,100. The excess fair value over book value associated with the acquisition was used to increase land by $61,880 and to recognize copyrights (16-year remaining life) at $81,920. Subsequent to the acquisition, Aronsen applied the initial value method to its investment account. In the 2019-2020 period, the subsidiary's retained earnings increased by $102,400. During 2021, Siedel earned income of $86,000 while declaring $21,200 in dividends. Also, at the beginning of 2021, Siedel issued 4,600 new shares of common stock for $38 per share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and therefore recorded no entry. Prepare the appropriate 2021 consolidation entries for these two companies. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) view transaction list Consolidation Worksheet Entries 1 Prepare entry Note: Enter debits Transaction 1 2 Record entry 3 4 5 6 No journal entry required Additional paid-in capital (Aronsen) Additional paid-in capital (Siedel) Amortization expense Clear entry Debit Credit view consolidation entries
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2019, Aronsen Company acquired 90 percent of Siedel Company's outstanding shares. Siedel had a net book value on
that date of $577,200: common stock ($10 par value) of $230,000 and retained earnings of $347,200.
Aronsen paid $648,900 for this investment. The acquisition-date fair value of the 10 percent noncontrolling interest was $72,100. The
excess fair value over book value associated with the acquisition was used to increase land by $61,880 and to recognize copyrights
(16-year remaining life) at $81,920. Subsequent to the acquisition, Aronsen applied the initial value method to its investment account.
In the 2019-2020 period, the subsidiary's retained earnings increased by $102,400. During 2021, Siedel earned income of $86,000
while declaring $21,200 in dividends. Also, at the beginning of 2021, Siedel issued 4,600 new shares of common stock for $38 per
share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and therefore recorded
no entry.
Prepare the appropriate 2021 consolidation entries for these two companies. (If no entry is required for a transaction/event, select
"No journal entry required" in the first account field.)
view transaction list
Consolidation
Worksheet Entries
1
Prepare entry
Note: Enter debits
Transaction
1
2
Record entry
3
4
5
6
No journal entry required
Additional paid-in capital (Aronsen)
Additional paid-in capital (Siedel)
Amortization expense
Clear entry
Debit
Credit
view consolidation entries
>
Transcribed Image Text:1
2 Prepare Entry C1 to record the adjustment for the
subsidiary stock transaction.
3
4
Prepare entry *C to convert to the equity method.
6
Prepare Entry S to eliminate the subsidiary accounts.
Prepare Entry A to record the allocation for fair value.
5 Prepare Entry I to account for the income accrual.
Prepare Entry E to recognize the current year
amortization.
Note :
= journal entry has been entered
K
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