Pop Son Statements of Income and Retained Earnings for the Year Ended December 31 Sales Income from Son Cost of sales $ 900 38 S300 (150) (90) 60 (600) Operating expenses Net Income (190) 148 Add: Retained earnings January 1 Less: Dividends 122 (100) S 170 50 (20) $ 90 Retained earnings December 31 Balance Sheet at December 31 $ 6 26 S 15 20 Cash Accounts receivable-net Inventories Advance to Son 82 20 60 Other current assets Land Plant assets-net 80 160 340 280 $ 994 S 24 5 30 230 Investment in Son Total assets $360 Accounts payable Dividends payable Other liabilities $ 15 10 45 Capital stock Retained earnings Total liabilities and stockholders' equity 100 700 170 200 90 $ 994 $360 REQUIRED: Using the Incomplete Equity method, prepare consolidation workpapex entries, necessary calculations and consolidated statements for Pop Corporation and Subsidiary for 2017.

Pop Son Statements of Income and Retained Earnings for the Year Ended December 31 Sales Income from Son Cost of sales $ 900 38 S300 (150) (90) 60 (600) Operating expenses Net Income (190) 148 Add: Retained earnings January 1 Less: Dividends 122 (100) S 170 50 (20) $ 90 Retained earnings December 31 Balance Sheet at December 31 $ 6 26 S 15 20 Cash Accounts receivable-net Inventories Advance to Son 82 20 60 Other current assets Land Plant assets-net 80 160 340 280 $ 994 S 24 5 30 230 Investment in Son Total assets $360 Accounts payable Dividends payable Other liabilities $ 15 10 45 Capital stock Retained earnings Total liabilities and stockholders' equity 100 700 170 200 90 $ 994 $360 REQUIRED: Using the Incomplete Equity method, prepare consolidation workpapex entries, necessary calculations and consolidated statements for Pop Corporation and Subsidiary for 2017.

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Pop
Son
Statements of Income and Retained Earnings
for the Year Ended December 31
Sales
$ 900
38
S300
Income from Son
Cost of sales
(600)
Operating expenses
Net Income
(190)
148
(150)
(90)
60
Add: Retained earnings January 1
Less: Dividends
Retained earnings December 31
122
(100)
S 170
50
(20)
$ 90
Balance Sheet at December 31
Cash
$ 6
S 15
Accounts receivable -net
Inventories
Advance to Son
26
82
20
20
60
Other current assets
Land
80
160
340
5
30
230
Plant assets-net
Investment in Son
Total assets
280
$ 994
S 24
$360
S 15
Accounts payable
Dividends payable
Other liabilities
Capital stock
Retained earnings
Total liabilities and stockholders' equity
100
700
170
10
45
200
90
$ 994
$360
REQUIRED: Using the Incomplete Equity method, prepare consolidation workpanct entries, necessary
calculations and consolidated statements for Pop Corporation and Subsidiary for 2017.

Pop Corporation acquired an 80 percent interest in Son Corporation for $240,000 on January 1, 2016, when
Son's stockholders' equity consisted of $200,000 capital stock and $25,000 retained earnings. The excess
fair value over book value acquired was assigned to plant assets that were undervalued by $50,000 and to
goodwill. The undervalued plant assets had a four-year useful life.
ADDITIONAL INFORMATION
1. Pop's account receivable includes $5,000 owed by Son.
2. Son mailed its check for $20,000 to Pop on December 30, 2017, in settlement of the advance.
3. A S10,000 dividend was declared by Son on December 30, 2017, but was not recorded by Pop.
4. Financial statements for Pop and Son Corporations for 2017 follow (in thousands):

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