PROBLEM 11-5 Proportionate Method-Complete Equity Method LO 4This problem is a continuation of the problem in Section 11.5 of the chapter. In the chapter, theworkpaper was prepared for the year of the acquisition. In this problem, the consolidated statementsare prepared for the second year after acquisition.On January 1, 2019, P Company, a European based-company, purchased 80% of S Companyfor €200,000 (when the common stock account was 80,000, other contributed capital was 50,000,and retained earnings were 40,000). The trial balances at the end of 2020 are reported below.P Company acquired S Company because it wanted to expand its operations geographically. SCompany is located in the United States and will be classified as a CGU. P Company elects totest for impairment on December 31 of each year. Because both P Company and S Company sellsimilar inventory, their inventory policies must conform for consolidation purposes. P Companyuses average cost for inventories and S Company used FIFO. In addition, P Company uses the pro-portionate method to record noncontrolling interest and the complete equity method to record theinvestment in S Company. There were no goodwill impairment charges during the year.Trial BalanceP CompanyS CompanyCr.December 31, 2020Dr.Cr.Dr.Cash€74,000€41,000Accounts Receivable (net)Inventory, 1/1Investment in S CompanyProperty and Equipment (net)Land71,00033,00067,00043,000232,800245,000133,20035,00017,000Accounts Payable€61,000€25,000Other Liabilities70,00028,200Common Stock, $10 par valueOther Contributed CapitalRetained Earnings, 1/1Dividends Declared200,00080,00075,00050,000263,40060,00030,00010,000Sales350,000190,000Equity in Subsidiary Income30,400Purchases215,000100,000Еxpenses56,00080,000€1,049,800€1,049,800€433,200€433,200Inventory, 12/3182,00046,000 The following information was available for inventory for 2020.Consider the following inventory information (numbers in euros).Average costDecember 31, 2020Income StatementCost of goods soldFIFO Cost€97,000€96,000Balance SheetBeginning inventory (1/1)Ending inventory43,00036,00046,00040,000December 31, 2020Inventory accountBeginning inventoryFIFO CostAverage cost€ 43,000€ 36,000Purchases100,000143,000100,000Available for sale136,000Ending inventoryCost of goods sold46,000€97,00040,000€96,000Required:1. Prepare the computation and allocation of difference schedule for the date of acquisition.2. Prepare the worksheet eliminating entries needed for consolidation for 2020.3. Complete the consolidated workpaper for the year ended December 31, 2020.4. Show the computation of noncontrolling interest in equity for 2020.

Consolidation - When an asset oscillates between a well-defined pattern of trading levels, it is…

This problem is a continuation of the problem in Section 11.5 of the chapter. In the chapter, the workpaper was prepared for the year of the acquisition. In this problem, the consolidated statements are prepared for the second year after acquisition. On January 1, 2019, P Company, a European based-company, purchased 80% of S Company for €200,000 (when the common stock account was 80,000, other contributed capital was 50,000, and retained earnings were 40,000). The trial balances at the end of 2020 are reported below. P Company acquired S Company because it wanted to expand its operations geographically. S Company is located in the United States and will be classified as a CGU. P Company elects to test for impairment on December 31 of each year. Because both P Company and S Company sell similar inventory, their inventory policies must conform for consolidation purposes. P Company uses average cost for inventories and S Company used FIFO. In addition, P Company uses the pro- portionate method to record noncontrolling interest and the complete equity method to record the investment in S Company. There were no goodwill impairment charges during the year. Trial Balance

This problem is a continuation of the problem in Section 11.5 of the chapter. In the chapter, the workpaper was prepared for the year of the acquisition. In this problem, the consolidated statements are prepared for the second year after acquisition. On January 1, 2019, P Company, a European based-company, purchased 80% of S Company for €200,000 (when the common stock account was 80,000, other contributed capital was 50,000, and retained earnings were 40,000). The trial balances at the end of 2020 are reported below. P Company acquired S Company because it wanted to expand its operations geographically. S Company is located in the United States and will be classified as a CGU. P Company elects to test for impairment on December 31 of each year. Because both P Company and S Company sell similar inventory, their inventory policies must conform for consolidation purposes. P Company uses average cost for inventories and S Company used FIFO. In addition, P Company uses the pro- portionate method to record noncontrolling interest and the complete equity method to record the investment in S Company. There were no goodwill impairment charges during the year. Trial Balance

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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