On January 1, 20X4, Pierce Corporation acquired 90 percent of Sharp Company's votingstock, at underlying book value. The fair value of the noncontrolling interest was equal to 10percent of the book value of Sharp at that date.The amount of accumulated depreciation toeliminate is $50,000. Pierce uses the equity method in accounting for its ownership of Sharp.On December 31, 20X5, the trial balances of the two companies are as follows:ItemSharp CorporationDebitPierce CompanyDebitCreditCurrent$ 225,500$ 145,000AssetsDepreciableAssets300,000225,000CreditInvestment144,000in SharpDepreciation30,00025,000ExpenseOther180,00085,000ExpensesDividends40,00010,000DeclaredAccumulated$ 150,000$ 100,000DepreciationCurrent45,00020,000LiabilitiesLong-Term75,00090,000DebtCommon Stock100,00075,000Retained282,50080,000EarningsSales253,500125,000Income from13,500Subsidiary$ 919,500$ 919,500$ 490,000$ 490,000Required:1) Give all consolidating entries required on December 31, 20X5, to prepare consolidatedfinancial statements.2) Prepare a three-part consolidation worksheet as of December 31, 20X5.

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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