On January 1, 20X4, Pierce Corporation acquired 90 percent of Sharp Company's voting stock, atunderlying book value. The fair value of the noncontrolling interest was equal to 10 percent of thebook value of Sharp at that date. Pierce uses the equity method in accounting for its ownership ofSharp. On December 31, 20X4, the trial balances of the two companies are as follows:ItemSalesDepreciation ExpenseOther ExpensesIncome from SubsidiaryNet IncomeCurrent AssetsInvestment in SharpDepreciable AssetsAccumulated DepreciationCurrent LiabilitiesLong-Term DebtCommon StockRetained Earnings at Jan.120x4Dividends DeclaredPierce CompanyDebit$30,000100,000$ 200,000139,500300,00030,000$799,500Credit$300,00022,500$192,500$ 120,00062,00075,000100,000120,000$799,500Sharp CorporationDebit$25,00060,000$120,000225,00010,000$ 440,000Credit$110,000$25,000$75,00025,00090,00075,00065,000$440,000Required:Provide Basic consolidation entry and Accumulated depreciation consolidation entry required asof December 31, 20X4.

Answered: Image /qna-images/answer/11d5d877-9f14-43b0-ae04-aca4ea1d6ea2.jpg

Answered: On January 1, 20X4, Pierce Corporation…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 20X4, Pierce Corporation acquired 90 percent of Sharp Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Sharp at that date. Pierce uses the equity method in accounting for its ownership of Sharp. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Sharp Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Subsidiary Required: Pierce Company Debit $ 200,000 300,000 139,500 30,000 100,000 30,000 $ 799,500 Credit $ 120,000 62,000 75,000 100,000 120,000 300,000 22,500 $ 799,500 Sharp Corporation Debit $ 120,000 225,000 25,000 60,000 10,000 $ 440,000 Credit $ 75,000 25,000 90,000 75,000 65,000 110,000 $ 440,000 1) Provide all consolidating entries required as of December 31, 20X4, to prepare…

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