LooseLeaf for Advanced Accounting (Irwin Accounting) - Standalone book
13th Edition
ISBN: 9781259444951
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Question
Chapter 7, Problem 25P
To determine
Prepare a consolidation worksheet.
Expert Solution & Answer
Explanation of Solution
The worksheet to consolidate the companies is as follows:
Company H and Consolidated Subsidiaries | |||||||
Consolidation Worksheet | |||||||
as on 12/31/2018 | |||||||
Company H | Company W | Company C | Consolidation Entries | Non-controlling | Consolidated | ||
Accounts | Debit | Credit | Interest | Balances | |||
Sales and other revenue | ($900,000) | ($700,000) | ($300,000) | (TI) 200,000 | ($1,700,000) | ||
Cost of goods sold | $551,000 | $300,000 | $140,000 | (G) 18,000 | (*G) 12,000 | $797,000 | |
(TI) 200,000 | |||||||
Operating expenses | $219,000 | $270,000 | $90,000 | (E) 2,000 | $581,000 | ||
Income of Company W | ($91,000) | (I2) 91,000 | $0 | ||||
Income of Company C | ($28,000) | ($28,000) | (I1) 56,000 | $0 | |||
Net income | ($249,000) | ($158,000) | ($70,000) | ||||
Consolidated net income | ($322,000) | ||||||
Net income attributable to | |||||||
non-controlling interest (Company W) | ($45,000) | $45,000 | |||||
Net income attributable to | |||||||
non-controlling interest (Company C) | ($14,000) | $14,000 | |||||
Net income attributable to Company H | ($263,000) | ||||||
Balance Sheet | |||||||
Cash and receivables | $220,000 | $334,000 | $67,000 | $621,000 | |||
Inventory | $390,200 | $320,000 | $103,000 | (G) 18000 | $795,200 | ||
Investment in Company W | $807,800 | (D2) 67,200 | (*C) 11200 | $0 | |||
(S2) 621600 | |||||||
(S2) 91000 | |||||||
(A) 151200 | |||||||
Investment in Company C | $128,000 | $128,000 | (D1) 40,000 | (S1) 240000 | $0 | ||
(I1) 56000 | |||||||
Buildings | $385,000 | $320,000 | $144,000 | (A) 54,000 | (E) 3000 | $900,000 | |
Equipment | $310,000 | $130,000 | $88,000 | (E) 5,000 | (A) 10000 | $523,000 | |
Land | $180,000 | $300,000 | $16,000 | $496,000 | |||
(A) 140,000 | $140,000 | ||||||
Franchise Contracts | (A) 32,000 | (E) 4000 | $28,000 | ||||
Total assets | $2,421,000 | $1,532,000 | $418,000 | $3,503,200 | |||
Liabilities | ($632,000) | ($570,000) | ($98,000) | ($1,300,000) | |||
Non-controlling interest in Company C | (S1) 60000 | ($60,000) | |||||
Non-controlling interest in Company W | (S2) 266400 | ||||||
Non-controlling interest in | (A) 64,800 | ($331,200) | |||||
subsidiary companies | ($411,400) | ($411,400) | |||||
Common stock | ($820,000) | ($310,000) | ($150,000) | (S1) 150,000 | ($820,000) | ||
(S2) 310,000 | |||||||
($969,000) | ($652,000) | ($170,000) | ($971,800) | ||||
Total liabilities and equities | ($2,421,000) | ($1,532,000) | ($418,000) | $1,916,400 | $1,916,400 | ($3,503,200) |
Table: (1)
Working note:
Statement of | Company H | Company W | Company C | Consolidation Entries | Non-controlling | Consolidated | |
Retained Earnings | Debit | Credit | Interest | Balances | |||
Retained earnings, 1/1/18: | |||||||
Company H | ($820,000) | (*C) 11,200 | ($808,800) | ||||
Company W | ($590,000) | (*G) 12,000 | $0 | ||||
(S2)578,000 | |||||||
Company C | ($150,000) | (S1)150,000 | $0 | ||||
Net Income | ($249,000) | ($158,000) | ($70,000) | ($263,000) | |||
Dividends declared | |||||||
Company H | $100,000 | $100,000 | |||||
Company W | $96,000 | (D2) 67,200 | $28,800 | $0 | |||
Company C | $50,000 | (D1) 40,000 | $10,000 | $0 | |||
Retained earnings, 12/31/18 | ($969,000) | ($652,000) | ($170,000) | ($971,800) |
Table: (2)
Computation of Non-controlling interest in Company C net income:
Particulars | Amount |
Non-controlling Interest in Net Income of Company C: | |
Reported net income | $ 70,000 |
Outside ownership | 20% |
Non-controlling interest in Company C net income | $ 14,000 |
Table: (3)
Computation of Non-controlling interest in net income of Company W:
Particulars | Amount |
Non-controlling Interest in Net Income of Company W: | |
Reported operating income | $ 130,000 |
Equity income of Company C($70,000 × 40%) | $ 28,000 |
Excess amortization | $ (2,000) |
Recognition of 2017gross profit (Entry *G) | $ 12,000 |
Deferral of 2018 intra-entity gross profit (Entry G) | $ (18,000) |
Accrual-based net income | $ 150,000 |
Outside ownership | 30% |
Non-controlling interest in net income of Company W | $ 45,000 |
Table: (4)
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Chapter 7 Solutions
LooseLeaf for Advanced Accounting (Irwin Accounting) - Standalone book
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