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 Corman Stock Retained Earnings Sales Income from Spirited Company Proud Corporation Debit $ 235,080 500,000 152,000 Credit Spirited Company Debit $ 150,000 Credit 900,080 25,000 15,088 150,000 90,000 58,800 15,000 $ 200,000 $ 98,000 50,000 180,000 128,008 200,000 284 898 230,000 138,000 70,000 148,008 28,000 $ 1,112,000 1,112,080 $ 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. 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 2 Accumulated depreciation Depreciable assets Debit Credit 100,000 70,000 28,000 7.000 15,000 152,000 38,000 60,000 30,000
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 Corman Stock Retained Earnings Sales Income from Spirited Company Proud Corporation Debit $ 235,080 500,000 152,000 Credit Spirited Company Debit $ 150,000 Credit 900,080 25,000 15,088 150,000 90,000 58,800 15,000 $ 200,000 $ 98,000 50,000 180,000 128,008 200,000 284 898 230,000 138,000 70,000 148,008 28,000 $ 1,112,000 1,112,080 $ 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. 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 2 Accumulated depreciation Depreciable assets Debit Credit 100,000 70,000 28,000 7.000 15,000 152,000 38,000 60,000 30,000
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
Corman Stock
Retained Earnings
Sales
Income from Spirited Company
Proud Corporation
Debit
$ 235,080
500,000
152,000
Credit
Spirited Company
Debit
$ 150,000
Credit
900,080
25,000
15,088
150,000
90,000
58,800
15,000
$ 200,000
$ 98,000
50,000
180,000
128,008
200,000
284 898
230,000
138,000
70,000
148,008
28,000
$ 1,112,000
1,112,080
$ 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.
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
2
Accumulated depreciation
Depreciable assets
Debit
Credit
100,000
70,000
28,000
7.000
15,000
152,000
38,000
60,000
30,000
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