Pirate Corporation acquired 60 percent ownership of Ship Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Ship Company. Accumulated depreciation on Buildings and Equipment was $75,000 on the acquisition date. Trial balance data at December 31, 20X8, for Pirate and Ship are as follows: Item Pirate Corporation Ship Company Debit Credit Debit Credit Cash $ 27,000 $8,000 Accounts Receivable 65,000 22,000 Inventory 40,000 30,000 Buildings and Equipment 500,000 235,000 Investment in Row Company 40,000 Investment in Ship Company 108,000 Cost of Goods Sold 150,000 110,000 Depreciation Expense 30,000 10,000 Interest Expense 8,000 3,000 Dividends Declared 24,000 15,000 Accumulated Depreciation $ 140,000 $ 85,000 Accounts Payable 63,000 20,000 Bonds Payable 100,000 50,000 Common Stock 200,000 100,000 Retained Earnings 208,000 60,000 Other Comprehensive Income from Ship Company (OCI)—Unrealized Gain on Investments 6,000 Unrealized Gain on Investments (OCI) 10,000 Sales 220,000 148,000 Income from Ship Company 15,000 $ 952,000 $ 952,000 $ 473,000 $ 473,000 Additional Information Ship purchased stock of Row Company on January 1, 20X8, for $30,000 and classified the investment as available-for-sale securities. The value of Row’s securities increased to $40,000 at December 31, 20X8. Required: Record all consolidation entries needed to prepare a three-part consolidation worksheet as of December 31, 20X8.

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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Pirate Corporation acquired 60 percent ownership of Ship Company on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Ship Company. Accumulated depreciation on Buildings and Equipment was $75,000 on the acquisition date. Trial balance data at December 31, 20X8, for Pirate and Ship are as follows:

Item	Pirate Corporation	Ship Company
Debit	Credit	Debit	Credit
Cash	$ 27,000		$8,000
Accounts Receivable	65,000		22,000
Inventory	40,000		30,000
Buildings and Equipment	500,000		235,000
Investment in Row Company			40,000
Investment in Ship Company	108,000
Cost of Goods Sold	150,000		110,000
Depreciation Expense	30,000		10,000
Interest Expense	8,000		3,000
Dividends Declared	24,000		15,000
Accumulated Depreciation		$ 140,000		$ 85,000
Accounts Payable		63,000		20,000
Bonds Payable		100,000		50,000
Common Stock		200,000		100,000
Retained Earnings		208,000		60,000
Other Comprehensive Income from Ship Company (OCI)—Unrealized Gain on Investments		6,000
Unrealized Gain on Investments (OCI)				10,000
Sales		220,000		148,000
Income from Ship Company		15,000
	$ 952,000	$ 952,000	$ 473,000	$ 473,000

Additional Information

Ship purchased stock of Row Company on January 1, 20X8, for $30,000 and classified the investment as available-for-sale securities. The value of Row’s securities increased to $40,000 at December 31, 20X8.

Required:

Record all consolidation entries needed to prepare a three-part consolidation worksheet as of December 31, 20X8.

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