
Consolidated Worksheet:
Consolidated worksheet is a tool used to prepare consolidated financial statement of a parent company and its subsidiaries. It shows the individual book values of both companies, the necessary adjustment and eliminations and the final consolidated values.
:Preparation of Consolidated worksheet.

Answer to Problem 11.3P
Combined net income is equal to -7,919,550.
Explanation of Solution
Following is thepreparation of consolidated worksheet.
Consolidated Worksheet
S Company
Trail balance translation-December 31, 2018
Account | Balance (FC) | Relevant Exchange rate (in $) | Balance ($) |
Cash | 2,840,000 | 1.31 | 3,720,000 |
3,990,000 | 1.31 | 5,226,900 | |
Inventory | 5,800,000 | 1.31 | 7,598,000 |
Fixed Assets | 15,000,000 | 1.31 | 19,650,000 |
(6,800,000) | 1.31 | (8,908,000) | |
Account Payable | (1,580,000) | 1.31 | (2,069,800) |
Long-term debt | (5,000,000) | 1.31 | (6,550,000) |
Common Stock | (3,000,000) | 1.20 | (3,600,000) |
Paid-in capital in excess of par | (2,000,000) | 1.20 | (2,400,000) |
(7,950,000) | (refer note: 1) | (9,880,000) | |
Sales | (10,000,000) | 1.33 | (13,300,000) |
Cost of goods sold | 7,500,000 | 1.33 | 9,975,000 |
Operating expenses | 1,200,000 | 1.33 | 1,596,000 |
Cumulative translation adjustment | (1,058,500) | ||
Total | 0 | 0 |
Note: 1
Calculation of retained earnings balance:
Particulars | Amount (in $) |
Balance as on January 1, 2016 | 5,040,000 |
Income − 2016 | 2,240,000 |
Income − 2017 | 2,600,000 |
Total | 9880,000 |
Following is the P’s & S’s corporation consolidated financial statement:
P’s & S’s corporation consolidated financial statement
For the year ended December 31, 2018
Particulars | Trail Balance | Elimination and Adjustment | Consolidated Income statement (in $) | Consolidated | ||
P(in $) | S(in $) | Dr. (in $) | Cr. (in $) | |||
Cash | 4,050,000 | 3,720,000 | 7,770,400 | |||
Account Receivable | 5,270,000 | 5,226,900 | 10,496,000 | |||
Inventory | 5,540,000 | 7,598,000 | 13,138,000 | |||
Investment in S | 20,969,000 | 1,729,000 (refer note A) | ||||
15,880,000 (refer note B) | ||||||
3,360,000 (refer note C) | ||||||
Fixed assets | 21,000,000 | 19,650,000 | 655,000 (refer note C) | 41,305,000 | ||
Accumulated Depreciation | -12,560,000 | -8,908,000 | 196,500 (refer note D) | -21,664,500 | ||
Additional Equipment | 3,013,000 (refer note C) | 451,950 (refer note D) | 2,561,050 | |||
Account Payable | -3,450,000 | -2,069,800 | -5,519,800 | |||
long-term Debt | -10,000,000 | -6,550,000 | -16,550,000 | |||
Common stock- Parent Company | -4,000,000 | -4,000,000 | ||||
Common Stock- Subsidiary company | -3,600,000 | 3,600,000 (refer note B) | ||||
Paid-in capital in excess of par- Parent | -6,500,000 | -6,500,000 | ||||
Paid-in capital in excess of par- Subsidiary | -2,400,000 | 2,400,000 (refer note B) | ||||
Retained Earnings Jan 1, 2018- Parent | -12,180,000 | 425,700 (refer note D) | -11,754,300 | |||
Retained Earnings Jan 1, 2018- Subsidiary | -9,880,000 | 9,880,000 (refer note B) | ||||
Sales | -26,000,000 | -13,300,000 | -39,300,000 | |||
Cost of goods sold | 16,380,000 | 9,975,000 | 26,355,000 | |||
Operating Expense | 3,210,000 | 1,596,000 | 219,450 (refer note D) | 5,025,450 | ||
Subsidiary Income | -1,729,000 | 1,729,000 (refer note A) | ||||
Cumulative translation adjustment | -1,058,500 | 3,300 (refer note D) | 308,000 (refer note C) | -1,363,200 | ||
Total | 0 | 0 | 21,925,450 | 21,925,450 | ||
Combined Net Income | -7,919,550 | -7,919,550 |
Elimination and adjustment:
Note: A
Subsidiary income account ($1,729,000) should be eliminated against the investment account.
Note: B Eliminate the equity balance of the subsidiary on January 1, 2018, against the investment account.
Note: C Distribution of Excess of cost over book value:
Particulars | Amount in FC |
Cost to acquire subsidiary | 12,000,000 |
Book Value of Subsidiary | 9,200,000 |
Excess of cost over book value | 2,800,000 |
Less: Adjustment to equipment | 500,000 |
Additional Equipment | 2,300,000 |
Cumulative translation adjustment:
Particulars | Amount in $ |
Excess of cost over book value in dollars: | |
January 1, 2016 | 3,360,000 |
December 31, 2018: | |
Equipment | 655,000 |
Additional Equipment < | 3,013,000 |
Cumulative translation adjustment | 308,000 |
Note: D Record Excess Appropriate Depreciation:
Particulars | Amount (in $) |
Excess annual depreciation: | |
Equipment | 50,000 |
Additional Equipment | 115,000 |
Total | 165,000 |
Particulars | Amount (in $) |
Accumulated Depreciation in dollars: | |
December 31,2018: | |
Equipment | 196,500 |
Additional Equipment | 451,950 |
Total | 648,450 |
Particulars | Amount (in $) |
Current-year depreciation at December 31, 2018, in dollars: | 219,450 |
Prior year- Depreciation expense in dollars: | |
2016 - | 211,200 |
2017 - | 214,500 |
Total | 425,700 |
Calculation of Cumulative translation adjustment:
Hence, cumulative translation adjustment is $3,300.
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- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College