On January 1, 20X4, Pierce Corporation acquired 90 percent of Sharp Company's voting stock, at underlying book value. The fair value of thenoncontrolling interest was equal to 10 percent of the book value of Sharp at that date. Pierce uses the equity method in accounting for its ownershipof Sharp. On December 31, 20X4, the trial balances of the two companies are as follows:ItemCurrent AssetsDepreciable AssetsInvestment in SharpDepreciation ExpenseOther ExpensesDividends DeclaredAccumulated DepreciationCurrent LiabilitiesLong-Term DebtCommon StockRetained EarningsSalesIncome from SubsidiaryRequired:Pierce CompanyDebit$ 200,000300,000139,50030,000100,00030,000$ 799,500Credit$ 120,00062,00075,000100,000120,000300,00022,500$ 799,500Sharp CorporationDebit$ 120,000225,00025,00060,00010,000$ 440,000Credit$ 75,00025,00090,00075,00065,000110,000$ 440,0001) Provide all consolidating entries required as of December 31, 20X4, to prepare consolidated financial statements.2) Prepare a three-part consolidation worksheet.

Dividend Declared by Sharp Company = 10000Pierce company have share in the…

Answered: Required: 1) Provide all consolidating…

Required: 1) Provide all consolidating entries required as of December 31, 20X4, to prepare consolidated financial statements. 2) Prepare a three-part consolidation worksheet.

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

On January 1, 20X4, Pierce Corporation acquired 90 percent of Sharp Company's voting stock, at underlying book value. The fair value of the
noncontrolling interest was equal to 10 percent of the book value of Sharp at that date. Pierce uses the equity method in accounting for its ownership
of Sharp. On December 31, 20X4, the trial balances of the two companies are as follows:
Item
Current Assets
Depreciable Assets
Investment in Sharp
Depreciation Expense
Other Expenses
Dividends Declared
Accumulated Depreciation
Current Liabilities
Long-Term Debt
Common Stock
Retained Earnings
Sales
Income from Subsidiary
Required:
Pierce Company
Debit
$ 200,000
300,000
139,500
30,000
100,000
30,000
$ 799,500
Credit
$ 120,000
62,000
75,000
100,000
120,000
300,000
22,500
$ 799,500
Sharp Corporation
Debit
$ 120,000
225,000
25,000
60,000
10,000
$ 440,000
Credit
$ 75,000
25,000
90,000
75,000
65,000
110,000
$ 440,000
1) Provide all consolidating entries required as of December 31, 20X4, to prepare consolidated financial statements.
2) Prepare a three-part consolidation worksheet.

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