Advanced Financial Accounting
Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 3, Problem 3.29P

a.

To determine

Concept introduction:

The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the retained earnings and the dividend produced by the subsidiaries towards its parent company.

To prepare: A journal entry by equity method for the investment in S in the year 2008 .

a.

Expert Solution
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Explanation of Solution

    ParticularsAmount$Amount$
    Investment in S
    Dr.
    296,000
    Cash
    Cr.
    296,000
    (To record investment in S Co.)

b.

To determine

Concept introduction:

The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the retained earnings and the dividend produced by the subsidiaries towards its parent company.

To prepare: The consolidate worksheet for the final values

b.

Expert Solution
Check Mark

Explanation of Solution

    Income statementP($)S ($)Eliminated DR
    ($)
    Eliminated CR ($)Consolidated
    ($)
    Cash109,00025,000134,000
    Accounts received65,00037,000102,000
    Inventory125,00087,000212,000
    Investment in SCo.296,000296,000
    Land280,000125,000405,000
    Building and equipment875,000250,00024,0001,101,000
    Less accumulated depreciation500,00024,00024,000500,000
    Total assets1,250,000500,000296,0001,454,000
    Account payable95,00030,000125,000
    Bonds250,000100,000350,000
    Common stocks625,000250,000250,000625,000
    Retained earnings280,000120,000120,000280,000
    NCI in NAin SCo.74,00074,000
    Total liabilities$1,250,000500,000370,000145,4000

c.

To determine

Concept introduction The consolidated balance sheet and the worksheets are the computed tools that are used to calculate the retained earnings and the dividend produced by the subsidiaries towards its parent company.

To prepare: The consolidate balance sheet on acquisition

c.

Expert Solution
Check Mark

Explanation of Solution

The Consolidated balance sheet immediately following the acquisition is as follows:

    P and Subsidiary
    Consolidated Balance sheet
    ParticularsAmount($)Amount($)
    Cash 134,000
    Accounts Receivable102,000
    Inventory212,000
    Land405,000
    Building and Equipment1,101,000
    Less: Accumulated Depreciation(500,000)601,000
    Total assets1,454,000
    Accounts Payable125,000
    Bonds Payable350,000
    Common Stock625,000
    Retained earnings280,000
    Non-controlling interest74,000
    Total liabilities and stock holders’ equity1,454,000

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