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Stick Corporation is a wholly owned subsidiary of Point Corporation. Point acquired ownership of Stick on January 1, 20X3, for $28,000 above Stick's reported net assets. At that date, Stick reported common stock outstanding of $60,000 and retained earnings of $90,000. The differential is assigned to equipment with an economic life of seven years at the date of the business combination. Stick reported net income of $30,000 and paid dividends of $12,000 in 20x3 Required:

Stick Corporation is a wholly owned subsidiary of Point Corporation. Point acquired ownership of Stick on January 1, 20X3, for $28,000 above Stick's reported net assets. At that date, Stick reported common stock outstanding of $60,000 and retained earnings of $90,000. The differential is assigned to equipment with an economic life of seven years at the date of the business combination. Stick reported net income of $30,000 and paid dividends of $12,000 in 20x3 Required:

FINANCIAL ACCOUNTING
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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Exercise 4-19 (Static) Wholly Owned Subsidiary with a Differential LO 4-3 Stick Corporation is a wholly owned subsidiary of Point Corporation. Point acquired ownership of Stick on January 1, 20X3, for $28,000 above Stick's reported net assets. At that date, Stick reported common stock outstanding of $60,000 and retained earnings of $90,000. The differential is assigned to equipment with an economic life of seven years at the date of the business combination. Stick reported net income of $30,000 and paid dividends of $12,000 in 20x3. Required: a. Prepare the journal entries recorded by Point Corporation during 20X3 on its books if Point accounts for its investment in Stick using the equity method. b. Prepare the consolidating entries needed at December 31, 20X3, to prepare consolidated financial statements Complete this question by entering your answers in the tabs below. Required A Required B Prepare the consolidating entries needed at December 31, 20x3, 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 Journal entry worksheet B Record the amortized excess value reclassification entry. Note: Enter debits before credits Event 2 Accounts Debit Credit
Transcribed Image Text:Exercise 4-19 (Static) Wholly Owned Subsidiary with a Differential LO 4-3 Stick Corporation is a wholly owned subsidiary of Point Corporation. Point acquired ownership of Stick on January 1, 20X3, for $28,000 above Stick's reported net assets. At that date, Stick reported common stock outstanding of $60,000 and retained earnings of $90,000. The differential is assigned to equipment with an economic life of seven years at the date of the business combination. Stick reported net income of $30,000 and paid dividends of $12,000 in 20x3. Required: a. Prepare the journal entries recorded by Point Corporation during 20X3 on its books if Point accounts for its investment in Stick using the equity method. b. Prepare the consolidating entries needed at December 31, 20X3, to prepare consolidated financial statements Complete this question by entering your answers in the tabs below. Required A Required B Prepare the consolidating entries needed at December 31, 20x3, 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 Journal entry worksheet B Record the amortized excess value reclassification entry. Note: Enter debits before credits Event 2 Accounts Debit Credit
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