Santa corp was keen on acquiring its competitor Barta corp and it has succesfully acquired 80 percent of Barta corp voting stock on January 1, 20X8, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Barta at that date. Assume that the accumulated depreciation on depreciable assets was $48,000 on the acquisition date. Santa uses the equity method in accounting for its ownership of Barta. On December 31, 20X9, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Barta corp Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Barta corp Santa corp Debit $235,000 502,000 121,440 22,000 143,000 52,000 Credit $195,000 68,000 101,240 181,000 265,000 230,000 Barta corp Debit Credit $154,000 315,000 12,000 88,000 22,200 $72,000 48,000 197,200 80,000 50,000 144,000 35,200 $1,075,440 $1,075,440 $591,200 $591,200 Required: a. Prepare all consolidation entries required on December 31, 20X9, to prepare consolidated financial statements. b. Prepare a three-part consolidation worksheet as of December 31, 20X9. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)
Santa corp was keen on acquiring its competitor Barta corp and it has succesfully acquired 80 percent of Barta corp voting stock on January 1, 20X8, at underlying book value. The fair value of the noncontrolling interest was equal to 20 percent of the book value of Barta at that date. Assume that the accumulated depreciation on depreciable assets was $48,000 on the acquisition date. Santa uses the equity method in accounting for its ownership of Barta. On December 31, 20X9, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Barta corp Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Barta corp Santa corp Debit $235,000 502,000 121,440 22,000 143,000 52,000 Credit $195,000 68,000 101,240 181,000 265,000 230,000 Barta corp Debit Credit $154,000 315,000 12,000 88,000 22,200 $72,000 48,000 197,200 80,000 50,000 144,000 35,200 $1,075,440 $1,075,440 $591,200 $591,200 Required: a. Prepare all consolidation entries required on December 31, 20X9, to prepare consolidated financial statements. b. Prepare a three-part consolidation worksheet as of December 31, 20X9. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Santa corp was keen on acquiring its competitor Barta corp and it has succesfully acquired 80
percent of Barta corp voting stock on January 1, 20X8, at underlying book value. The fair value
of the noncontrolling interest was equal to 20 percent of the book value of Barta at that date.
Assume that the accumulated depreciation on depreciable assets was $48,000 on the
acquisition date. Santa uses the equity method in accounting for its ownership of Barta. On
December 31, 20X9, the trial balances of the two companies are as follows:
Item
Current Assets
Depreciable Assets
Investment in Barta corp
Depreciation Expense
Other Expenses
Dividends Declared
Accumulated Depreciation
Current Liabilities
Long-Term Debt
Common Stock
Retained Earnings
Sales
Income from Barta corp
Santa corp
Debit
$235,000
502,000
121,440
22,000
143,000
52,000
Credit
$ 195,000
68,000
101,240
181,000
265,000
230,000
Barta corp
Debit
$ 154,000
315,000
12,000
88,000
22,200
Credit
$72,000
48,000
197,200
80,000
50,000
144,000
35,200
$1,075,440 $1,075,440 $591,200 $ 591,200
Required:
a. Prepare all consolidation entries required on December 31, 20X9, to prepare consolidated
financial statements.
b. Prepare a three-part consolidation worksheet as of December 31, 20X9. (Values in the first
two columns (the "parent" and "subsidiary" balances) that are to be deducted should be
indicated with a minus sign, while all values in the "Consolidation Entries" columns should be
entered as positive values. For accounts where multiple adjusting entries are required,
combine all debit entries into one amount and enter this amount in the debit column of the
worksheet. Similarly, combine all credit entries into one amount and enter this amount in the
credit column of the worksheet.)
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