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 $56,000 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: Proud Corporation Debit $ 237,000 502,000 146,560 24,000 147,000 Spirited Company Debit $158,000 302,000 Item Credit Credit Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared 14,000 83,000 27,800 51,000 Accumulated Depreciation 2$ $ 84,000 199,000 70,000 101,760 188,000 272,000 236,000 40,800 $1,107,560 Current Liabilities ככ השח Long-Term Debt Common Stock Retained Earnings Sales 50,000 142,800 95,000 65,000 148,000 Income from Spirited Company $1,107,560 $584,800 $584,800 Required: a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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 $56,000 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: Proud Corporation Debit $ 237,000 502,000 146,560 24,000 147,000 Spirited Company Debit $158,000 302,000 Item Credit Credit Current Assets Depreciable Assets Investment in Spirited Company Depreciation Expense Other Expenses Dividends Declared 14,000 83,000 27,800 51,000 Accumulated Depreciation 2$ $ 84,000 199,000 70,000 101,760 188,000 272,000 236,000 40,800 $1,107,560 Current Liabilities ככ השח Long-Term Debt Common Stock Retained Earnings Sales 50,000 142,800 95,000 65,000 148,000 Income from Spirited Company $1,107,560 $584,800 $584,800 Required: a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $56,000 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:
Proud Corporation
Spirited Company
Item
Debit
Credit
Debit
Credit
$ 237,000
$158,000
302,000
Current Assets
Depreciable Assets
Investment in Spirited Company
Depreciation Expense
Other Expenses
502,000
146,560
24,000
147,000
51,000
14,000
83,000
27,800
Dividends Declared
$ 84,000
Accumulated Depreciation
Current Liabilities
$ 199,000
70,000
101,760
50,000
142,800
95,000
65,000
148,000
Long-Term Debt
Common Stock
188,000
272,000
236,000
Retained Earnings
Sales
Income from Spirited Company
40,800
$1,107,560
$1,107,560
$584,800
$584,800
Required:
a. Prepare all consolidation entries required on December 31, 20X4, to prepare consolidated financial statements. (If no entry is
required for a transaction/event, select "No journal entry required" in the first account field.)
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