P5-41 Consolidation Workpaper at End of First Year of Ownership

a. Eliminating entries:
(1)

(2)

(3)

(4)

(5)

(6)

Income from Subsidiary

Dividends Declared
Investment in Best Company Stock
Eliminate income from subsidiary.

16,500
12,000
4,500

Income to Noncontrolling Interest

Dividends Declared
Noncontrolling Interest
Assign income to noncontrolling interest.

6,000

Common Stock Best Company

Retained Earnings, January 1
Differential
Investment in Best Company Stock
Noncontrolling Interest
Eliminate beginning investment balance:
$21,000 = $96,000 (.75 x $100,000)

60,000
40,000
21,000

Buildings and Equipment

Goodwill
Differential
Assign beginning differential.

15,000
6,000

Depreciation Expense
Accumulated Depreciation
Amortize differential:
$1,500 = $15,000 / 10 years

1,500

Goodwill Impairment Loss

Goodwill
Write down goodwill for impairment.

3,500

4,000
2,000

96,000
25,000

21,000

1,500

3,500

b.

Rocky Corporation and Roaster Company

Consolidation Workpaper
December 31, 20X8
Item

Sales
Income from Subsidiary
Credits
Cost of Goods Sold
Wage Expense
Depreciation Expense
Interest Expense
Other Expenses
Goodwill Impairment Loss
Debits
Income to Noncontrolling Interest
Income, carry forward
Ret. Earnings, Jan. 1
Income, from above
Dividends Declared
Ret. Earnings, Dec. 31,
carry forward
Cash
Accounts Receivable
Inventory
Land
Buildings and Equipment
Investment in Best
Company Stock
Differential
Goodwill
Debits

Power
Corp.

Best
Co.

260,000
16,500
276,500
125,000
42,000
25,000
12,000
13,500

180,000

Eliminations
Debit
Credit

440,000
(1) 16,500

180,000
110,000
27,000
10,000
4,000
5,000

440,000
235,000
69,000
36,500
16,000
18,500
3,500
(378,500)
61,500

(5) 1,500
(6) 3,500

(217,500) (156,000)

59,000

24,000

102,000
59,000
161,000
(30,000)

40,000
24,000
64,000
(16,000)

131,000

48,000

47,500
70,000
90,000
30,000
350,000

21,000
12,000
25,000
15,000
150,000

(2) 6,000
27,500

(6,000)
55,500

(3) 40,000
27,500

102,000
55,500
157,500

67,500

(3) 21,000
(4) 6,000
223,000

(1) 12,000
(2) 4,000

(30,000)

16,000

127,500
68,500
82,000
115,000
45,000
515,000

(4) 15,000

100,500

688,000

Consolidated

(1) 4,500
(3) 96,000
(4) 21,000
(6) 3,500

2,500
828,000

Item

Power
Corp.

Accum. Depreciation
Accounts Payable
Wages Payable
Notes Payable
Common Stock
Power Corporation
Best Company
Retained Earnings,
from above
Noncontrolling
Interest

145,000
45,000
17,000
150,000

Credits

688,000

Best
Co.

Eliminations
Debit
Credit

40,000
16,000
9,000
50,000

(5) 1,500

200,000
131,000

Consolidated
186,500
61,000
26,000
200,000
200,000

60,000

(3) 60,000

48,000

67,500

16,000

127,500

169,500

(2) 2,000
(3) 25,000
169,500

27,000
828,000

223,000