Sale of subsidiary common shares: When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital. The consolidation entries needed to complete work sheet for 20X4.

Question

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 9, Problem 9.24P

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The consolidation entries needed to complete work sheet for 20X4.

Expert Solution

Answer to Problem 9.24P

	Debit	Credit
1. Eliminate gain on sale of S shares
Gain on sale of S company stock	10,000
Additional paid-in capital		10,000

2. Eliminate income from subsidiary
Income from subsidiary	18,000
Dividends declared		9,000
Investment in S stock		12,000

3. Assign income to non-controlling interest
Income to non-controlling interest	12,000
Dividends declared		4,000
Non-controlling interest		8,000

4. Eliminate investment in common stock
Common stock S company	100,000
Additional paid-in capital	20,000
Retained earnings January 1	130,000
Investment in S company stock		150,000
Non-controlling interest		100,000

Explanation of Solution

Gain on sale of common stock is eliminated by debiting to gain on sale and credit of additional paid-in capital.
Income from subsidiary is eliminated by reversing the transaction by debiting it and credit of investment in company stock
Income assigned to non-controlling interest is recognized by debit to income assigned to non-controlling interest and credit to dividends declared and non-controlling interest.
To eliminate investment in common stock, common stock in S and additional paid in capital is debited and investment in S stock and non-controlling interest is credited.

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The preparation of consolidation worksheet for 20X4.

Expert Solution

Answer to Problem 9.24P

Balance of liability and equity in consolidation worksheet 20X4 $1,000,000.

Explanation of Solution

P and S Company

Consolidation worksheet

December 31, 20X4

			elimination
	P	S	Debit	Credit	Consolidation
Sales	280,000	170,000			450,000
Gain on sale of E stock	10,000		10,000
Income from subsidiary	18,000		18,000
Net sales	308,000	170,000	28,000		450,000
Less: cost of sales	(210,000)	(100,000)			(310,000)
Depreciation expense	(20,000)	(15,000)			(35,000)
Other expense	(21,000)	(25,000)			(46,000)
Income to NCI			12,000		(12,000)
Net income	57,000	30,000	40,000		47,000
Retained earnings:
Balance January 1	320,000	130,000	130,000		320,000
Net income	57,000	30,000	40,000		47,000
Less dividends declared	(15,000)	(10,000)		6,000
				4,000	(15,000)
Ending balance	362,000	150,000	170,000	10,000	352,000
Balance sheet
Cash	30,000	35,000			65,000
Accounts receivable	70,000	50,000			120,000
Inventory	120,000	100,000			220,000
Buildings and equipment	650,000	230,000			880,000
Less depreciation	(170,000)	(95,000)			(265,000)
Total Assets	862,000	320,000			1,020,000
Accounts payable	50,000	20,000			70,000
Bonds payable	200,000	30,000			230,000
Common stock	200,000	100,000	100,000		200,000
Additional paid in cap	50,000	20,000	20,000	10,000	60,000
Retained earnings	362,000	150,000	170,000	10,000	352,000
NCI				8,000
				100,000	108,000
Liability and equity	862,000	320,000			1,020,000

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Problem No. 1 On January 1, 2025, Manuel Cruz and Sherimae Diasalo agreed to form a partnership that will manufacture and sell biscuits. The partnership agreement specified that Cruz is to invest cash of P1,000,000 and Diasalo is to contribute land and building to serve as the office and factory of the business. The following amounts are applicable to the property of Diasalo: Acquisition Cost Fair Market Value Land Building P1,000,000 500,000 P1,500,000 850,000 During the formation, it was found out that Cruz has accounts receivable amounting to P70,000 and the partners agreed that it will be assumed by the partnership. The name of the partnership will be Fita Pan. Required: 1. Prepare journal entry to record: a. The investment of Cruz to the partnership b. The investment of Diasalo to the partnershipood relay ni 000,219 2. Prepare the statement of financial position of the partnership as of January 1, 2025 Problem No. 2 The trial balance of Cleint Lumanao Nacho Supplies on February…

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Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 9, Problem 9.24P

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The consolidation entries needed to complete work sheet for 20X4.

Expert Solution

Answer to Problem 9.24P

	Debit	Credit
1. Eliminate gain on sale of S shares
Gain on sale of S company stock	10,000
Additional paid-in capital		10,000

2. Eliminate income from subsidiary
Income from subsidiary	18,000
Dividends declared		9,000
Investment in S stock		12,000

3. Assign income to non-controlling interest
Income to non-controlling interest	12,000
Dividends declared		4,000
Non-controlling interest		8,000

4. Eliminate investment in common stock
Common stock S company	100,000
Additional paid-in capital	20,000
Retained earnings January 1	130,000
Investment in S company stock		150,000
Non-controlling interest		100,000

Explanation of Solution

Gain on sale of common stock is eliminated by debiting to gain on sale and credit of additional paid-in capital.
Income from subsidiary is eliminated by reversing the transaction by debiting it and credit of investment in company stock
Income assigned to non-controlling interest is recognized by debit to income assigned to non-controlling interest and credit to dividends declared and non-controlling interest.
To eliminate investment in common stock, common stock in S and additional paid in capital is debited and investment in S stock and non-controlling interest is credited.

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The preparation of consolidation worksheet for 20X4.

Expert Solution

Answer to Problem 9.24P

Balance of liability and equity in consolidation worksheet 20X4 $1,000,000.

Explanation of Solution

P and S Company

Consolidation worksheet

December 31, 20X4

			elimination
	P	S	Debit	Credit	Consolidation
Sales	280,000	170,000			450,000
Gain on sale of E stock	10,000		10,000
Income from subsidiary	18,000		18,000
Net sales	308,000	170,000	28,000		450,000
Less: cost of sales	(210,000)	(100,000)			(310,000)
Depreciation expense	(20,000)	(15,000)			(35,000)
Other expense	(21,000)	(25,000)			(46,000)
Income to NCI			12,000		(12,000)
Net income	57,000	30,000	40,000		47,000
Retained earnings:
Balance January 1	320,000	130,000	130,000		320,000
Net income	57,000	30,000	40,000		47,000
Less dividends declared	(15,000)	(10,000)		6,000
				4,000	(15,000)
Ending balance	362,000	150,000	170,000	10,000	352,000
Balance sheet
Cash	30,000	35,000			65,000
Accounts receivable	70,000	50,000			120,000
Inventory	120,000	100,000			220,000
Buildings and equipment	650,000	230,000			880,000
Less depreciation	(170,000)	(95,000)			(265,000)
Total Assets	862,000	320,000			1,020,000
Accounts payable	50,000	20,000			70,000
Bonds payable	200,000	30,000			230,000
Common stock	200,000	100,000	100,000		200,000
Additional paid in cap	50,000	20,000	20,000	10,000	60,000
Retained earnings	362,000	150,000	170,000	10,000	352,000
NCI				8,000
				100,000	108,000
Liability and equity	862,000	320,000			1,020,000

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 9, Problem 9.24P

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The consolidation entries needed to complete work sheet for 20X4.

Expert Solution

Answer to Problem 9.24P

	Debit	Credit
1. Eliminate gain on sale of S shares
Gain on sale of S company stock	10,000
Additional paid-in capital		10,000

2. Eliminate income from subsidiary
Income from subsidiary	18,000
Dividends declared		9,000
Investment in S stock		12,000

3. Assign income to non-controlling interest
Income to non-controlling interest	12,000
Dividends declared		4,000
Non-controlling interest		8,000

4. Eliminate investment in common stock
Common stock S company	100,000
Additional paid-in capital	20,000
Retained earnings January 1	130,000
Investment in S company stock		150,000
Non-controlling interest		100,000

Explanation of Solution

Gain on sale of common stock is eliminated by debiting to gain on sale and credit of additional paid-in capital.
Income from subsidiary is eliminated by reversing the transaction by debiting it and credit of investment in company stock
Income assigned to non-controlling interest is recognized by debit to income assigned to non-controlling interest and credit to dividends declared and non-controlling interest.
To eliminate investment in common stock, common stock in S and additional paid in capital is debited and investment in S stock and non-controlling interest is credited.

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The preparation of consolidation worksheet for 20X4.

Expert Solution

Answer to Problem 9.24P

Balance of liability and equity in consolidation worksheet 20X4 $1,000,000.

Explanation of Solution

P and S Company

Consolidation worksheet

December 31, 20X4

			elimination
	P	S	Debit	Credit	Consolidation
Sales	280,000	170,000			450,000
Gain on sale of E stock	10,000		10,000
Income from subsidiary	18,000		18,000
Net sales	308,000	170,000	28,000		450,000
Less: cost of sales	(210,000)	(100,000)			(310,000)
Depreciation expense	(20,000)	(15,000)			(35,000)
Other expense	(21,000)	(25,000)			(46,000)
Income to NCI			12,000		(12,000)
Net income	57,000	30,000	40,000		47,000
Retained earnings:
Balance January 1	320,000	130,000	130,000		320,000
Net income	57,000	30,000	40,000		47,000
Less dividends declared	(15,000)	(10,000)		6,000
				4,000	(15,000)
Ending balance	362,000	150,000	170,000	10,000	352,000
Balance sheet
Cash	30,000	35,000			65,000
Accounts receivable	70,000	50,000			120,000
Inventory	120,000	100,000			220,000
Buildings and equipment	650,000	230,000			880,000
Less depreciation	(170,000)	(95,000)			(265,000)
Total Assets	862,000	320,000			1,020,000
Accounts payable	50,000	20,000			70,000
Bonds payable	200,000	30,000			230,000
Common stock	200,000	100,000	100,000		200,000
Additional paid in cap	50,000	20,000	20,000	10,000	60,000
Retained earnings	362,000	150,000	170,000	10,000	352,000
NCI				8,000
				100,000	108,000
Liability and equity	862,000	320,000			1,020,000

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 9, Problem 9.24P

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The consolidation entries needed to complete work sheet for 20X4.

Expert Solution

Answer to Problem 9.24P

	Debit	Credit
1. Eliminate gain on sale of S shares
Gain on sale of S company stock	10,000
Additional paid-in capital		10,000

2. Eliminate income from subsidiary
Income from subsidiary	18,000
Dividends declared		9,000
Investment in S stock		12,000

3. Assign income to non-controlling interest
Income to non-controlling interest	12,000
Dividends declared		4,000
Non-controlling interest		8,000

4. Eliminate investment in common stock
Common stock S company	100,000
Additional paid-in capital	20,000
Retained earnings January 1	130,000
Investment in S company stock		150,000
Non-controlling interest		100,000

Explanation of Solution

Gain on sale of common stock is eliminated by debiting to gain on sale and credit of additional paid-in capital.
Income from subsidiary is eliminated by reversing the transaction by debiting it and credit of investment in company stock
Income assigned to non-controlling interest is recognized by debit to income assigned to non-controlling interest and credit to dividends declared and non-controlling interest.
To eliminate investment in common stock, common stock in S and additional paid in capital is debited and investment in S stock and non-controlling interest is credited.

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The preparation of consolidation worksheet for 20X4.

Expert Solution

Answer to Problem 9.24P

Balance of liability and equity in consolidation worksheet 20X4 $1,000,000.

Explanation of Solution

P and S Company

Consolidation worksheet

December 31, 20X4

			elimination
	P	S	Debit	Credit	Consolidation
Sales	280,000	170,000			450,000
Gain on sale of E stock	10,000		10,000
Income from subsidiary	18,000		18,000
Net sales	308,000	170,000	28,000		450,000
Less: cost of sales	(210,000)	(100,000)			(310,000)
Depreciation expense	(20,000)	(15,000)			(35,000)
Other expense	(21,000)	(25,000)			(46,000)
Income to NCI			12,000		(12,000)
Net income	57,000	30,000	40,000		47,000
Retained earnings:
Balance January 1	320,000	130,000	130,000		320,000
Net income	57,000	30,000	40,000		47,000
Less dividends declared	(15,000)	(10,000)		6,000
				4,000	(15,000)
Ending balance	362,000	150,000	170,000	10,000	352,000
Balance sheet
Cash	30,000	35,000			65,000
Accounts receivable	70,000	50,000			120,000
Inventory	120,000	100,000			220,000
Buildings and equipment	650,000	230,000			880,000
Less depreciation	(170,000)	(95,000)			(265,000)
Total Assets	862,000	320,000			1,020,000
Accounts payable	50,000	20,000			70,000
Bonds payable	200,000	30,000			230,000
Common stock	200,000	100,000	100,000		200,000
Additional paid in cap	50,000	20,000	20,000	10,000	60,000
Retained earnings	362,000	150,000	170,000	10,000	352,000
NCI				8,000
				100,000	108,000
Liability and equity	862,000	320,000			1,020,000

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Answer 5

Chapter 9, Problem 9.24P

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The consolidation entries needed to complete work sheet for 20X4.

Expert Solution

Answer to Problem 9.24P

	Debit	Credit
1. Eliminate gain on sale of S shares
Gain on sale of S company stock	10,000
Additional paid-in capital		10,000

2. Eliminate income from subsidiary
Income from subsidiary	18,000
Dividends declared		9,000
Investment in S stock		12,000

3. Assign income to non-controlling interest
Income to non-controlling interest	12,000
Dividends declared		4,000
Non-controlling interest		8,000

4. Eliminate investment in common stock
Common stock S company	100,000
Additional paid-in capital	20,000
Retained earnings January 1	130,000
Investment in S company stock		150,000
Non-controlling interest		100,000

Explanation of Solution

Gain on sale of common stock is eliminated by debiting to gain on sale and credit of additional paid-in capital.
Income from subsidiary is eliminated by reversing the transaction by debiting it and credit of investment in company stock
Income assigned to non-controlling interest is recognized by debit to income assigned to non-controlling interest and credit to dividends declared and non-controlling interest.
To eliminate investment in common stock, common stock in S and additional paid in capital is debited and investment in S stock and non-controlling interest is credited.

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The preparation of consolidation worksheet for 20X4.

Expert Solution

Answer to Problem 9.24P

Balance of liability and equity in consolidation worksheet 20X4 $1,000,000.

Explanation of Solution

P and S Company

Consolidation worksheet

December 31, 20X4

			elimination
	P	S	Debit	Credit	Consolidation
Sales	280,000	170,000			450,000
Gain on sale of E stock	10,000		10,000
Income from subsidiary	18,000		18,000
Net sales	308,000	170,000	28,000		450,000
Less: cost of sales	(210,000)	(100,000)			(310,000)
Depreciation expense	(20,000)	(15,000)			(35,000)
Other expense	(21,000)	(25,000)			(46,000)
Income to NCI			12,000		(12,000)
Net income	57,000	30,000	40,000		47,000
Retained earnings:
Balance January 1	320,000	130,000	130,000		320,000
Net income	57,000	30,000	40,000		47,000
Less dividends declared	(15,000)	(10,000)		6,000
				4,000	(15,000)
Ending balance	362,000	150,000	170,000	10,000	352,000
Balance sheet
Cash	30,000	35,000			65,000
Accounts receivable	70,000	50,000			120,000
Inventory	120,000	100,000			220,000
Buildings and equipment	650,000	230,000			880,000
Less depreciation	(170,000)	(95,000)			(265,000)
Total Assets	862,000	320,000			1,020,000
Accounts payable	50,000	20,000			70,000
Bonds payable	200,000	30,000			230,000
Common stock	200,000	100,000	100,000		200,000
Additional paid in cap	50,000	20,000	20,000	10,000	60,000
Retained earnings	362,000	150,000	170,000	10,000	352,000
NCI				8,000
				100,000	108,000
Liability and equity	862,000	320,000			1,020,000

Answer 6

Chapter 9, Problem 9.24P

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The consolidation entries needed to complete work sheet for 20X4.

Expert Solution

Answer to Problem 9.24P

	Debit	Credit
1. Eliminate gain on sale of S shares
Gain on sale of S company stock	10,000
Additional paid-in capital		10,000

2. Eliminate income from subsidiary
Income from subsidiary	18,000
Dividends declared		9,000
Investment in S stock		12,000

3. Assign income to non-controlling interest
Income to non-controlling interest	12,000
Dividends declared		4,000
Non-controlling interest		8,000

4. Eliminate investment in common stock
Common stock S company	100,000
Additional paid-in capital	20,000
Retained earnings January 1	130,000
Investment in S company stock		150,000
Non-controlling interest		100,000

Explanation of Solution

Gain on sale of common stock is eliminated by debiting to gain on sale and credit of additional paid-in capital.
Income from subsidiary is eliminated by reversing the transaction by debiting it and credit of investment in company stock
Income assigned to non-controlling interest is recognized by debit to income assigned to non-controlling interest and credit to dividends declared and non-controlling interest.
To eliminate investment in common stock, common stock in S and additional paid in capital is debited and investment in S stock and non-controlling interest is credited.

Answer 7

Chapter 9, Problem 9.24P

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The consolidation entries needed to complete work sheet for 20X4.

Answer 8

Expert Solution

Answer to Problem 9.24P

	Debit	Credit
1. Eliminate gain on sale of S shares
Gain on sale of S company stock	10,000
Additional paid-in capital		10,000

2. Eliminate income from subsidiary
Income from subsidiary	18,000
Dividends declared		9,000
Investment in S stock		12,000

3. Assign income to non-controlling interest
Income to non-controlling interest	12,000
Dividends declared		4,000
Non-controlling interest		8,000

4. Eliminate investment in common stock
Common stock S company	100,000
Additional paid-in capital	20,000
Retained earnings January 1	130,000
Investment in S company stock		150,000
Non-controlling interest		100,000

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Gain on sale of common stock is eliminated by debiting to gain on sale and credit of additional paid-in capital.
Income from subsidiary is eliminated by reversing the transaction by debiting it and credit of investment in company stock
Income assigned to non-controlling interest is recognized by debit to income assigned to non-controlling interest and credit to dividends declared and non-controlling interest.
To eliminate investment in common stock, common stock in S and additional paid in capital is debited and investment in S stock and non-controlling interest is credited.

Answer 13

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The preparation of consolidation worksheet for 20X4.

Expert Solution

Answer to Problem 9.24P

Balance of liability and equity in consolidation worksheet 20X4 $1,000,000.

Explanation of Solution

P and S Company

Consolidation worksheet

December 31, 20X4

			elimination
	P	S	Debit	Credit	Consolidation
Sales	280,000	170,000			450,000
Gain on sale of E stock	10,000		10,000
Income from subsidiary	18,000		18,000
Net sales	308,000	170,000	28,000		450,000
Less: cost of sales	(210,000)	(100,000)			(310,000)
Depreciation expense	(20,000)	(15,000)			(35,000)
Other expense	(21,000)	(25,000)			(46,000)
Income to NCI			12,000		(12,000)
Net income	57,000	30,000	40,000		47,000
Retained earnings:
Balance January 1	320,000	130,000	130,000		320,000
Net income	57,000	30,000	40,000		47,000
Less dividends declared	(15,000)	(10,000)		6,000
				4,000	(15,000)
Ending balance	362,000	150,000	170,000	10,000	352,000
Balance sheet
Cash	30,000	35,000			65,000
Accounts receivable	70,000	50,000			120,000
Inventory	120,000	100,000			220,000
Buildings and equipment	650,000	230,000			880,000
Less depreciation	(170,000)	(95,000)			(265,000)
Total Assets	862,000	320,000			1,020,000
Accounts payable	50,000	20,000			70,000
Bonds payable	200,000	30,000			230,000
Common stock	200,000	100,000	100,000		200,000
Additional paid in cap	50,000	20,000	20,000	10,000	60,000
Retained earnings	362,000	150,000	170,000	10,000	352,000
NCI				8,000
				100,000	108,000
Liability and equity	862,000	320,000			1,020,000

Answer 14

To determine

Sale of subsidiary common shares:When parent sells subsidiary shares, a gain or loss normally occurs and is recorded on the seller’s books, which needs to be recognized in consolidated net income. Under ASE 810, changes in a parent’s ownership interest in a subsidiary while the parent retains control require an adjustment to the amount assigned to the non-controlling interest to reflect its change in ownership in subsidiary. Any difference in fair value of the controlling interest results in an adjustment to the stockholders equity attributable to the controlling interest, through an adjustment to additional paid-in capital.

The preparation of consolidation worksheet for 20X4.

Answer 15

Expert Solution

Answer to Problem 9.24P

Balance of liability and equity in consolidation worksheet 20X4 $1,000,000.

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

P and S Company

Consolidation worksheet

December 31, 20X4

			elimination
	P	S	Debit	Credit	Consolidation
Sales	280,000	170,000			450,000
Gain on sale of E stock	10,000		10,000
Income from subsidiary	18,000		18,000
Net sales	308,000	170,000	28,000		450,000
Less: cost of sales	(210,000)	(100,000)			(310,000)
Depreciation expense	(20,000)	(15,000)			(35,000)
Other expense	(21,000)	(25,000)			(46,000)
Income to NCI			12,000		(12,000)
Net income	57,000	30,000	40,000		47,000
Retained earnings:
Balance January 1	320,000	130,000	130,000		320,000
Net income	57,000	30,000	40,000		47,000
Less dividends declared	(15,000)	(10,000)		6,000
				4,000	(15,000)
Ending balance	362,000	150,000	170,000	10,000	352,000
Balance sheet
Cash	30,000	35,000			65,000
Accounts receivable	70,000	50,000			120,000
Inventory	120,000	100,000			220,000
Buildings and equipment	650,000	230,000			880,000
Less depreciation	(170,000)	(95,000)			(265,000)
Total Assets	862,000	320,000			1,020,000
Accounts payable	50,000	20,000			70,000
Bonds payable	200,000	30,000			230,000
Common stock	200,000	100,000	100,000		200,000
Additional paid in cap	50,000	20,000	20,000	10,000	60,000
Retained earnings	362,000	150,000	170,000	10,000	352,000
NCI				8,000
				100,000	108,000
Liability and equity	862,000	320,000			1,020,000

Answer 20

Ch. 9 - Prob. 9.1Q Ch. 9 - Prob. 9.2Q Ch. 9 - Prob. 9.3Q Ch. 9 - Prob. 9.4Q Ch. 9 - Prob. 9.5Q Ch. 9 - Prob. 9.6Q Ch. 9 - Prob. 9.7Q Ch. 9 - Prob. 9.8Q Ch. 9 - Prob. 9.9Q Ch. 9 - Prob. 9.10Q

Concept explainers

Answer to Problem 9.24P

Explanation of Solution

Answer to Problem 9.24P

Explanation of Solution

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