Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company. The journal entries recorded by B company for its investment in C company.

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Answer 1

Question

Chapter 9, Problem 9.9E

(a)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by B company for its investment in C company.

(a)

Expert Solution

Explanation of Solution

Journal entries recorded by B company for its investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in C company's stock	120,000
	To cash		120,000
	(Recording entry for purchase of stock of C company by B company)

December 31, 20X3	Cash	9000
	To Investment in C company's stock ($15000*60%)		9000
	(Recording entry for receiving dividend from C company)

December 31, 20X3	Investment in C company's stock	24,000
	To Income from C company ($40,000*60%)		24,000
	(Recording entry for receiving income from C company on investment)

(b)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by A company for its investment in B company.

(b)

Expert Solution

Explanation of Solution

Journal entries recorded by A company for its investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in B company's stock	315,000
	To cash		315,000
	(Recording entry for purchase of stock of B company by A company)

December 31, 20X3	Cash	45,000
	To Investment in B company's stock ($50000*90%)		45,000
	(Recording entry for receiving dividend from B company)

December 31, 20X3	Investment in B company's stock	129,600
	To Income from B company ($120,000+$24000) *90%)		129,600
	(Recording entry for receiving income from C company on investment)

(c)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The consolidated entries related to B company’s investment in C company and A company’s investment in B company.

(c)

Expert Solution

Explanation of Solution

Consolidated entries related to B company’s investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	100,000
	Additional capital	60,000
	Retained earnings	40,000
	Income from C company	24,000
	Non-controlling interest of C company	16,000
	To Dividend declared		15,000
	To Investment in C company		135,000
	Non-controlling interest in Net asset of C company		90,000
	(Consolidated entry of investment in C company by B company)

Working Note:

Particulars	NCI 40%	B company 60%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$80,000	$1,20,000	=	$1,00,000	$60,000	$40,000
+ Net Income	$16,000	$24,000	=			$40,000
- Dividends	($6,000.00)	($9,000)	=			($15,000)
Ending book value	$90,000	$1,35,000	=	$1,00,000	$60,000	$65,000

Consolidated journal entries related to A company’s investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	150000
	Additional capital	60000
	Retained earnings	140000
	Income from C company	129600
	Non-controlling interest of B company	14400
	To Dividend declared		50000
	To Investment in B company		399600
	Non-controlling interest in Net asset of B company		44400
	(Consolidated entry of investment in B company by A company)

Working note:

Particulars	NCI 10%	A company 90%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$35,000	$3,15,000	=	$1,50,000	$60,000	$1,40,000
+ Net Income	$14,400	$1,29,600	=			$1,44,000
- Dividends	($5,000.00)	($45,000)	=			($50,000)
Ending book value	$44,400	$3,99,600	=	$1,50,000	$60,000	$2,34,000

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Answer 2

Question

Chapter 9, Problem 9.9E

(a)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by B company for its investment in C company.

(a)

Expert Solution

Explanation of Solution

Journal entries recorded by B company for its investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in C company's stock	120,000
	To cash		120,000
	(Recording entry for purchase of stock of C company by B company)

December 31, 20X3	Cash	9000
	To Investment in C company's stock ($15000*60%)		9000
	(Recording entry for receiving dividend from C company)

December 31, 20X3	Investment in C company's stock	24,000
	To Income from C company ($40,000*60%)		24,000
	(Recording entry for receiving income from C company on investment)

(b)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by A company for its investment in B company.

(b)

Expert Solution

Explanation of Solution

Journal entries recorded by A company for its investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in B company's stock	315,000
	To cash		315,000
	(Recording entry for purchase of stock of B company by A company)

December 31, 20X3	Cash	45,000
	To Investment in B company's stock ($50000*90%)		45,000
	(Recording entry for receiving dividend from B company)

December 31, 20X3	Investment in B company's stock	129,600
	To Income from B company ($120,000+$24000) *90%)		129,600
	(Recording entry for receiving income from C company on investment)

(c)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The consolidated entries related to B company’s investment in C company and A company’s investment in B company.

(c)

Expert Solution

Explanation of Solution

Consolidated entries related to B company’s investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	100,000
	Additional capital	60,000
	Retained earnings	40,000
	Income from C company	24,000
	Non-controlling interest of C company	16,000
	To Dividend declared		15,000
	To Investment in C company		135,000
	Non-controlling interest in Net asset of C company		90,000
	(Consolidated entry of investment in C company by B company)

Working Note:

Particulars	NCI 40%	B company 60%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$80,000	$1,20,000	=	$1,00,000	$60,000	$40,000
+ Net Income	$16,000	$24,000	=			$40,000
- Dividends	($6,000.00)	($9,000)	=			($15,000)
Ending book value	$90,000	$1,35,000	=	$1,00,000	$60,000	$65,000

Consolidated journal entries related to A company’s investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	150000
	Additional capital	60000
	Retained earnings	140000
	Income from C company	129600
	Non-controlling interest of B company	14400
	To Dividend declared		50000
	To Investment in B company		399600
	Non-controlling interest in Net asset of B company		44400
	(Consolidated entry of investment in B company by A company)

Working note:

Particulars	NCI 10%	A company 90%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$35,000	$3,15,000	=	$1,50,000	$60,000	$1,40,000
+ Net Income	$14,400	$1,29,600	=			$1,44,000
- Dividends	($5,000.00)	($45,000)	=			($50,000)
Ending book value	$44,400	$3,99,600	=	$1,50,000	$60,000	$2,34,000

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Answer 3

Question

Chapter 9, Problem 9.9E

(a)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by B company for its investment in C company.

(a)

Expert Solution

Explanation of Solution

Journal entries recorded by B company for its investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in C company's stock	120,000
	To cash		120,000
	(Recording entry for purchase of stock of C company by B company)

December 31, 20X3	Cash	9000
	To Investment in C company's stock ($15000*60%)		9000
	(Recording entry for receiving dividend from C company)

December 31, 20X3	Investment in C company's stock	24,000
	To Income from C company ($40,000*60%)		24,000
	(Recording entry for receiving income from C company on investment)

(b)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by A company for its investment in B company.

(b)

Expert Solution

Explanation of Solution

Journal entries recorded by A company for its investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in B company's stock	315,000
	To cash		315,000
	(Recording entry for purchase of stock of B company by A company)

December 31, 20X3	Cash	45,000
	To Investment in B company's stock ($50000*90%)		45,000
	(Recording entry for receiving dividend from B company)

December 31, 20X3	Investment in B company's stock	129,600
	To Income from B company ($120,000+$24000) *90%)		129,600
	(Recording entry for receiving income from C company on investment)

(c)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The consolidated entries related to B company’s investment in C company and A company’s investment in B company.

(c)

Expert Solution

Explanation of Solution

Consolidated entries related to B company’s investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	100,000
	Additional capital	60,000
	Retained earnings	40,000
	Income from C company	24,000
	Non-controlling interest of C company	16,000
	To Dividend declared		15,000
	To Investment in C company		135,000
	Non-controlling interest in Net asset of C company		90,000
	(Consolidated entry of investment in C company by B company)

Working Note:

Particulars	NCI 40%	B company 60%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$80,000	$1,20,000	=	$1,00,000	$60,000	$40,000
+ Net Income	$16,000	$24,000	=			$40,000
- Dividends	($6,000.00)	($9,000)	=			($15,000)
Ending book value	$90,000	$1,35,000	=	$1,00,000	$60,000	$65,000

Consolidated journal entries related to A company’s investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	150000
	Additional capital	60000
	Retained earnings	140000
	Income from C company	129600
	Non-controlling interest of B company	14400
	To Dividend declared		50000
	To Investment in B company		399600
	Non-controlling interest in Net asset of B company		44400
	(Consolidated entry of investment in B company by A company)

Working note:

Particulars	NCI 10%	A company 90%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$35,000	$3,15,000	=	$1,50,000	$60,000	$1,40,000
+ Net Income	$14,400	$1,29,600	=			$1,44,000
- Dividends	($5,000.00)	($45,000)	=			($50,000)
Ending book value	$44,400	$3,99,600	=	$1,50,000	$60,000	$2,34,000

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Answer 4

Question

Chapter 9, Problem 9.9E

(a)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by B company for its investment in C company.

(a)

Expert Solution

Explanation of Solution

Journal entries recorded by B company for its investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in C company's stock	120,000
	To cash		120,000
	(Recording entry for purchase of stock of C company by B company)

December 31, 20X3	Cash	9000
	To Investment in C company's stock ($15000*60%)		9000
	(Recording entry for receiving dividend from C company)

December 31, 20X3	Investment in C company's stock	24,000
	To Income from C company ($40,000*60%)		24,000
	(Recording entry for receiving income from C company on investment)

(b)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by A company for its investment in B company.

(b)

Expert Solution

Explanation of Solution

Journal entries recorded by A company for its investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in B company's stock	315,000
	To cash		315,000
	(Recording entry for purchase of stock of B company by A company)

December 31, 20X3	Cash	45,000
	To Investment in B company's stock ($50000*90%)		45,000
	(Recording entry for receiving dividend from B company)

December 31, 20X3	Investment in B company's stock	129,600
	To Income from B company ($120,000+$24000) *90%)		129,600
	(Recording entry for receiving income from C company on investment)

(c)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The consolidated entries related to B company’s investment in C company and A company’s investment in B company.

(c)

Expert Solution

Explanation of Solution

Consolidated entries related to B company’s investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	100,000
	Additional capital	60,000
	Retained earnings	40,000
	Income from C company	24,000
	Non-controlling interest of C company	16,000
	To Dividend declared		15,000
	To Investment in C company		135,000
	Non-controlling interest in Net asset of C company		90,000
	(Consolidated entry of investment in C company by B company)

Working Note:

Particulars	NCI 40%	B company 60%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$80,000	$1,20,000	=	$1,00,000	$60,000	$40,000
+ Net Income	$16,000	$24,000	=			$40,000
- Dividends	($6,000.00)	($9,000)	=			($15,000)
Ending book value	$90,000	$1,35,000	=	$1,00,000	$60,000	$65,000

Consolidated journal entries related to A company’s investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	150000
	Additional capital	60000
	Retained earnings	140000
	Income from C company	129600
	Non-controlling interest of B company	14400
	To Dividend declared		50000
	To Investment in B company		399600
	Non-controlling interest in Net asset of B company		44400
	(Consolidated entry of investment in B company by A company)

Working note:

Particulars	NCI 10%	A company 90%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$35,000	$3,15,000	=	$1,50,000	$60,000	$1,40,000
+ Net Income	$14,400	$1,29,600	=			$1,44,000
- Dividends	($5,000.00)	($45,000)	=			($50,000)
Ending book value	$44,400	$3,99,600	=	$1,50,000	$60,000	$2,34,000

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Answer 5

Chapter 9, Problem 9.9E

(a)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by B company for its investment in C company.

(a)

Expert Solution

Explanation of Solution

Journal entries recorded by B company for its investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in C company's stock	120,000
	To cash		120,000
	(Recording entry for purchase of stock of C company by B company)

December 31, 20X3	Cash	9000
	To Investment in C company's stock ($15000*60%)		9000
	(Recording entry for receiving dividend from C company)

December 31, 20X3	Investment in C company's stock	24,000
	To Income from C company ($40,000*60%)		24,000
	(Recording entry for receiving income from C company on investment)

(b)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by A company for its investment in B company.

(b)

Expert Solution

Explanation of Solution

Journal entries recorded by A company for its investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in B company's stock	315,000
	To cash		315,000
	(Recording entry for purchase of stock of B company by A company)

December 31, 20X3	Cash	45,000
	To Investment in B company's stock ($50000*90%)		45,000
	(Recording entry for receiving dividend from B company)

December 31, 20X3	Investment in B company's stock	129,600
	To Income from B company ($120,000+$24000) *90%)		129,600
	(Recording entry for receiving income from C company on investment)

(c)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The consolidated entries related to B company’s investment in C company and A company’s investment in B company.

(c)

Expert Solution

Explanation of Solution

Consolidated entries related to B company’s investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	100,000
	Additional capital	60,000
	Retained earnings	40,000
	Income from C company	24,000
	Non-controlling interest of C company	16,000
	To Dividend declared		15,000
	To Investment in C company		135,000
	Non-controlling interest in Net asset of C company		90,000
	(Consolidated entry of investment in C company by B company)

Working Note:

Particulars	NCI 40%	B company 60%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$80,000	$1,20,000	=	$1,00,000	$60,000	$40,000
+ Net Income	$16,000	$24,000	=			$40,000
- Dividends	($6,000.00)	($9,000)	=			($15,000)
Ending book value	$90,000	$1,35,000	=	$1,00,000	$60,000	$65,000

Consolidated journal entries related to A company’s investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	150000
	Additional capital	60000
	Retained earnings	140000
	Income from C company	129600
	Non-controlling interest of B company	14400
	To Dividend declared		50000
	To Investment in B company		399600
	Non-controlling interest in Net asset of B company		44400
	(Consolidated entry of investment in B company by A company)

Working note:

Particulars	NCI 10%	A company 90%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$35,000	$3,15,000	=	$1,50,000	$60,000	$1,40,000
+ Net Income	$14,400	$1,29,600	=			$1,44,000
- Dividends	($5,000.00)	($45,000)	=			($50,000)
Ending book value	$44,400	$3,99,600	=	$1,50,000	$60,000	$2,34,000

Answer 6

Chapter 9, Problem 9.9E

(a)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by B company for its investment in C company.

(a)

Expert Solution

Explanation of Solution

Journal entries recorded by B company for its investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in C company's stock	120,000
	To cash		120,000
	(Recording entry for purchase of stock of C company by B company)

December 31, 20X3	Cash	9000
	To Investment in C company's stock ($15000*60%)		9000
	(Recording entry for receiving dividend from C company)

December 31, 20X3	Investment in C company's stock	24,000
	To Income from C company ($40,000*60%)		24,000
	(Recording entry for receiving income from C company on investment)

Answer 7

Chapter 9, Problem 9.9E

(a)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by B company for its investment in C company.

Answer 8

(a)

Expert Solution

Explanation of Solution

Journal entries recorded by B company for its investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in C company's stock	120,000
	To cash		120,000
	(Recording entry for purchase of stock of C company by B company)

December 31, 20X3	Cash	9000
	To Investment in C company's stock ($15000*60%)		9000
	(Recording entry for receiving dividend from C company)

December 31, 20X3	Investment in C company's stock	24,000
	To Income from C company ($40,000*60%)		24,000
	(Recording entry for receiving income from C company on investment)

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

(b)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by A company for its investment in B company.

(b)

Expert Solution

Explanation of Solution

Journal entries recorded by A company for its investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in B company's stock	315,000
	To cash		315,000
	(Recording entry for purchase of stock of B company by A company)

December 31, 20X3	Cash	45,000
	To Investment in B company's stock ($50000*90%)		45,000
	(Recording entry for receiving dividend from B company)

December 31, 20X3	Investment in B company's stock	129,600
	To Income from B company ($120,000+$24000) *90%)		129,600
	(Recording entry for receiving income from C company on investment)

Answer 13

(b)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The journal entries recorded by A company for its investment in B company.

Answer 14

(b)

Expert Solution

Explanation of Solution

Journal entries recorded by A company for its investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
January 1, 20X3	Investment in B company's stock	315,000
	To cash		315,000
	(Recording entry for purchase of stock of B company by A company)

December 31, 20X3	Cash	45,000
	To Investment in B company's stock ($50000*90%)		45,000
	(Recording entry for receiving dividend from B company)

December 31, 20X3	Investment in B company's stock	129,600
	To Income from B company ($120,000+$24000) *90%)		129,600
	(Recording entry for receiving income from C company on investment)

Answer 15

(b)

Expert Solution

Answer 16

(b)

Expert Solution

Answer 17

Expert Solution

Answer 18

(c)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The consolidated entries related to B company’s investment in C company and A company’s investment in B company.

(c)

Expert Solution

Explanation of Solution

Consolidated entries related to B company’s investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	100,000
	Additional capital	60,000
	Retained earnings	40,000
	Income from C company	24,000
	Non-controlling interest of C company	16,000
	To Dividend declared		15,000
	To Investment in C company		135,000
	Non-controlling interest in Net asset of C company		90,000
	(Consolidated entry of investment in C company by B company)

Working Note:

Particulars	NCI 40%	B company 60%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$80,000	$1,20,000	=	$1,00,000	$60,000	$40,000
+ Net Income	$16,000	$24,000	=			$40,000
- Dividends	($6,000.00)	($9,000)	=			($15,000)
Ending book value	$90,000	$1,35,000	=	$1,00,000	$60,000	$65,000

Consolidated journal entries related to A company’s investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	150000
	Additional capital	60000
	Retained earnings	140000
	Income from C company	129600
	Non-controlling interest of B company	14400
	To Dividend declared		50000
	To Investment in B company		399600
	Non-controlling interest in Net asset of B company		44400
	(Consolidated entry of investment in B company by A company)

Working note:

Particulars	NCI 10%	A company 90%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$35,000	$3,15,000	=	$1,50,000	$60,000	$1,40,000
+ Net Income	$14,400	$1,29,600	=			$1,44,000
- Dividends	($5,000.00)	($45,000)	=			($50,000)
Ending book value	$44,400	$3,99,600	=	$1,50,000	$60,000	$2,34,000

Answer 19

(c)

To determine

Introduction: Consolidation is the process of combining financial results of various subsidiaries with the financial results of parent company. It is used only when parent company holds more than 50% of share of subsidiary company.

The consolidated entries related to B company’s investment in C company and A company’s investment in B company.

Answer 20

(c)

Expert Solution

Explanation of Solution

Consolidated entries related to B company’s investment in C company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	100,000
	Additional capital	60,000
	Retained earnings	40,000
	Income from C company	24,000
	Non-controlling interest of C company	16,000
	To Dividend declared		15,000
	To Investment in C company		135,000
	Non-controlling interest in Net asset of C company		90,000
	(Consolidated entry of investment in C company by B company)

Working Note:

Particulars	NCI 40%	B company 60%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$80,000	$1,20,000	=	$1,00,000	$60,000	$40,000
+ Net Income	$16,000	$24,000	=			$40,000
- Dividends	($6,000.00)	($9,000)	=			($15,000)
Ending book value	$90,000	$1,35,000	=	$1,00,000	$60,000	$65,000

Consolidated journal entries related to A company’s investment in B company is as follows:

Date	Particulars	Debit ($)	Credit ($)
December 31, 20X3	Common stock	150000
	Additional capital	60000
	Retained earnings	140000
	Income from C company	129600
	Non-controlling interest of B company	14400
	To Dividend declared		50000
	To Investment in B company		399600
	Non-controlling interest in Net asset of B company		44400
	(Consolidated entry of investment in B company by A company)

Working note:

Particulars	NCI 10%	A company 90%	=	Common Stock +	Additional Paid-In Capital +	Retained Earnings
Original book value	$35,000	$3,15,000	=	$1,50,000	$60,000	$1,40,000
+ Net Income	$14,400	$1,29,600	=			$1,44,000
- Dividends	($5,000.00)	($45,000)	=			($50,000)
Ending book value	$44,400	$3,99,600	=	$1,50,000	$60,000	$2,34,000