Police Corporation acquired 100 percent of Station Corporation's voting shares on January 1, 20X3, at underlying book value. At that date, the book values and fair values of Station's assets and liabilities were equal. Police uses the equity method in accounting for its investment in Station. Adjusted trial balances for Police and Station on December 31, 20X4, are as follows:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Police Corporation acquired 100 percent of Station Corporation's voting shares on January 1, 20X3, at underlying book
value. At that date, the book values and fair values of Station's assets and liabilities were equal. Police uses the equity
method in accounting for its investment in Station. Adjusted trial balances for Police and Station on December 31, 20X4,
are as follows:
Item
Current Assets
Depreciable Assets (net)
Investment in Station Corporation
Depreciation Expense
Other Expenses
Dividends Declared
Current Liabilities
Long-Term Debt
Common Stock
Retained Earnings
Sales
Income from Station Corporation
Police Corporation
Debit
$ 223,000
320,000
230,000
24,000
165,000
62,000
Credit
$ 50,000
93,000
193,000
414,000
223,000
51,000
$ 1,024,000 $ 1,024,000
Station Corporation
Debit
Credit
$ 161,000
212,000
14,000
82,000
31,000
$ 500,000
$ 30,000
113,000
83,000
127,000
147,000
$ 500,000
Required:
a. Prepare the consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.
Transcribed Image Text:Police Corporation acquired 100 percent of Station Corporation's voting shares on January 1, 20X3, at underlying book value. At that date, the book values and fair values of Station's assets and liabilities were equal. Police uses the equity method in accounting for its investment in Station. Adjusted trial balances for Police and Station on December 31, 20X4, are as follows: Item Current Assets Depreciable Assets (net) Investment in Station Corporation Depreciation Expense Other Expenses Dividends Declared Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Station Corporation Police Corporation Debit $ 223,000 320,000 230,000 24,000 165,000 62,000 Credit $ 50,000 93,000 193,000 414,000 223,000 51,000 $ 1,024,000 $ 1,024,000 Station Corporation Debit Credit $ 161,000 212,000 14,000 82,000 31,000 $ 500,000 $ 30,000 113,000 83,000 127,000 147,000 $ 500,000 Required: a. Prepare the consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.
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