Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $60,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Spirited Company Proud Corporation Debit $ 235,000 500,000 152,000 25,000 150,000 50,000 Credit Spirited Company Debit Credit $ 150,000 300,000 15,000 90,000 15,000 $ 200,000 $ 90,000 70,000 50,000 100,000 120,000 200,000 100,000 284,000 70,000 230,000 148,000 28,008 $ 1,112,000 1,112,000 S 570,000 $ 570,000 Required: a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. view transaction list transaction list No A Event Accounts Common stock Retained earnings Income from Spirited Company NCI in Net Income of Spirited Company Dividends declared Investment in Spirited Company NCI in Net Assets of Spirited Company B 2 Accumulated depreciation Depreciable assets Debit Credit 100,000 70,000 28,000 7,000 15,000 152,000 38,000 60,000 60,000
Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated depreciation on depreciable assets was $60,000 on the acquisition date. Proud uses the equity method in accounting for its ownership of Spirited. On December 31, 20X4, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Spirited Company Proud Corporation Debit $ 235,000 500,000 152,000 25,000 150,000 50,000 Credit Spirited Company Debit Credit $ 150,000 300,000 15,000 90,000 15,000 $ 200,000 $ 90,000 70,000 50,000 100,000 120,000 200,000 100,000 284,000 70,000 230,000 148,000 28,008 $ 1,112,000 1,112,000 S 570,000 $ 570,000 Required: a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. view transaction list transaction list No A Event Accounts Common stock Retained earnings Income from Spirited Company NCI in Net Income of Spirited Company Dividends declared Investment in Spirited Company NCI in Net Assets of Spirited Company B 2 Accumulated depreciation Depreciable assets Debit Credit 100,000 70,000 28,000 7,000 15,000 152,000 38,000 60,000 60,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair
value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated
depreciation on depreciable assets was $60,000 on the acquisition date. Proud uses the equity method in accounting for its
ownership of Spirited. On December 31, 20X4, the trial balances of the two companies are as follows:
Item
Current Assets
Depreciable Assets
Investment in Spirited Company
Depreciation Expense
Other Expenses
Dividends Declared
Accumulated Depreciation
Current Liabilities
Long-Term Debt
Common Stock
Retained Earnings
Sales
Income from Spirited Company
Proud Corporation
Debit
$ 235,000
500,000
152,000
25,000
150,000
50,000
Credit
Spirited Company
Debit
Credit
$ 150,000
300,000
15,000
90,000
15,000
$ 200,000
$ 90,000
70,000
50,000
100,000
120,000
200,000
100,000
284,000
70,000
230,000
148,000
28,008
$ 1,112,000
1,112,000
S 570,000 $ 570,000
Required:
a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
view transaction list
transaction list
No
A
Event
Accounts
Common stock
Retained earnings
Income from Spirited Company
NCI in Net Income of Spirited Company
Dividends declared
Investment in Spirited Company
NCI in Net Assets of Spirited Company
B
2
Accumulated depreciation
Depreciable assets
Debit
Credit
100,000
70,000
28,000
7,000
15,000
152,000
38,000
60,000
60,000
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