Padre, Incorporated, buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2024, for $757,280cash. At the acquisition date, Sierra's total fair value, including the noncontrolling interest, was assessed at $946,600, althoughSierra's book value was only $696,000. Also, several individual items on Sierra's financial records had fair values that differed fromtheir book values as follows:LandBuildings and equipment (10-year remaining life)Copyright (20-year remaining life)Notes payable (due in 8 years)RevenuesCost of goods soldDepreciation expenseAmortization expenseAccountFor internal reporting purposes, Padre, Incorporated, employs the equity method to account for this investment. The followingaccount balances are for the year ending December 31, 2024, for both companies.Current assetsInvestment in SierraInterest expenseEquity in income of SierraNet incomeRetained earnings, 1/1/24Net incomeDividends declaredRetained earnings, 12/31/24AccountAccounts payableNotes payableCommon stockLandBuildings and equipment (net)CopyrightTotal assetsBook Value$ 66,300294,000192,000(177,000)Additional paid-in capitalRetained earnings (above)Total liabilities and equitiesFair Value$ 251,300240,000300,000(165,400)At year-end, there were no intra-entity receivables or payables.Padre$ (1,447,260)755,000340,000044,700(152,440)$ (460,000)$ (1,382,500)(460,000)260,000$ (1,582,500)$ 913,780857,720350,000870,0000$ 2,991,500$ (192,000)(467,000)(300,000)(450,000)(1,582,500)$ (2,991,500)Required:Prepare a worksheet to consolidate the financial statements of these two companies.Sierra$ (649,500)423,00018,4009,6006,5000$ (192,000)$ (536,000)(192,000)65,000$ (663,000)$ 671,700066,300275,600182,400$ 1,196,000$ (196,000)(177,000)(100,000)(60,000)(663,000)$ (1,196,000)

Consolidation worksheet is prepared in order to use the same for preparing the consolidation…

Answered: Required: Prepare a worksheet to…

Business

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Required: Prepare a worksheet to consolidate the financial statements of these two companies.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 35P

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