Chapter 03 – The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries with no Differential
270,000
Basic Entry
Chapter 03 – The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries with no Differential
3-32
P3-26 (continued)
Peanut
Co.
Snoopy
Co.
Consolidation
Entries
DR
CR
Consolidated
Balance Sheet
Cash
55,000
20,000
75,000
Accounts Receivable
50,000
30,000
80,000
Inventory
100,000
60,000
160,000
Investment in Snoopy Co.
270,000
270,000
0
Land
225,000
100,000
325,000
Buildings & Equipment
700,000
200,000
10,000
890,000
Less: Accumulated Depreciation
(400,000)
(10,000)
10,000
(400,000)
Total Assets
1,000,000
400,000
10,000
280,000
1,130,000
Accounts Payable
75,000
25,000
100,000
Bonds Payable
200,000
75,000
275,000
Common Stock
500,000
200,000
200,000
500,000
Retained Earnings
225,000
100,000
100,000
225,000
NCI in NA of Snoopy Co.
30,000
30,000
Total Liabilities & Equity
1,000,000
400,000
300,000
30,000
1,130,000
c.
Peanut Co.
Consolidated Balance Sheet
1/1/20X8
Cash
75,000
Accounts Receivable
80,000
Inventory
160,000
Land
325,000
Buildings & Equipment
890,000
Less: Accumulated Depreciation
(400,000)
Total Assets
1,130,000
Accounts Payable
100,000
Bonds Payable
275,000
Common Stock
500,000
Retained Earnings
225,000
NCI in NA of Snoopy Co.
30,000
Total Liabilities & Equity
1,130,000
Chapter 03 – The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries with no Differential
P3–27 Consolidated Worksheet at End of the First Year of Ownership (Equity Method)
a.
Equity Method Entries on Peanut Co.’s Books:
Investment in Snoopy Co.
270,000
Cash
270,000
Record the initial investment in Snoopy Co.
Investment in Snoopy Co.
67,500
Income from Snoopy Co.
67,500
Record Peanut Co.’s 90% share of Snoopy Co.’s 20X8 income
Cash
18,000
Investment in Snoopy Co.
18,000
Record Peanut Co.’s 90% share of Snoopy Co.’s 20X8 dividend
Book Value Calculations:
NCI
10%
+
Peanut
Co.
90%
=
Common
Stock
+
Retained
Earnings
Beginning book
value
30,000
270,000
200,000
100,000
+ Net Income
7,500
67,500
75,000
– Dividends
(2,000)
(18,000)
(20,000)
Ending book value
35,500
319,500
200,000
155,000
Chapter 03 – The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries with no Differential
3-34
P3–27 (continued)
Basic Consolidation Entry
Common stock
200,000
Retained earnings
100,000
Income from Snoopy Co.
67,500
NCI in NI of Snoopy Co.
7,500
Dividends declared
20,000
Investment in Snoopy Co.
319,500
NCI in NA of Snoopy Co.
35,500
Optional accumulated depreciation consolidation entry
Accumulated depreciation
10,000
Building & equipment
10,000
Investment in
Income from
Snoopy Co.
Snoopy Co.
Acquisition Price
270,000
90% Net Income
67,500
67,500
90% Net Income
18,000
90% Dividends
Ending Balance
319,500
67,500
Ending Balance
319,500
Basic
67,500
0
0
Chapter 03 – The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries with no Differential
3-35
P3–27 (continued)
Peanut
Co.
Snoopy
Co.
Consolidation
Entries
DR
CR
Consolidated
Income Statement
Sales
800,000
250,000
1,050,000
Less: COGS
(200,000)
(125,000)
(325,000)
Less: Depreciation Expense
(50,000)
(10,000)
(60,000)
Less: Other Expenses
(225,000)
(40,000)
(265,000)
Income from Snoopy Co.
67,500
67,500
0
Consolidated Net Income
392,500
75,000
67,500
400,000
NCI in Net Income
7,500
(7,500)
Controlling Interest in Net
Income
392,500
75,000
75,000
0
392,500
Statement of Retained Earnings
Beginning Balance
225,000
100,000
100,000
225,000
Net Income
392,500
75,000
75,000
0
392,500
Less: Dividends Declared
(100,000)
(20,000)
20,000
(100,000)
Ending Balance
517,500
155,000
175,000
20,000
517,500
Balance Sheet
Cash
158,000
80,000
238,000
Accounts Receivable
165,000
65,000
230,000
Inventory
200,000
75,000
275,000
Investment in Snoopy Co.
319,500
319,500
0
Land
200,000
100,000
300,000
Buildings & Equipment
700,000
200,000
10,000
890,000
Less: Accumulated Depreciation
(450,000)
(20,000)
10,000
(460,000)
Total Assets
1,292,500
500,000
10,000
329,500
1,473,000
Accounts Payable
75,000
60,000
135,000
Bonds Payable
200,000
85,000
285,000
Common Stock
500,000
200,000
200,000
500,000
Retained Earnings
517,500
155,000
175,000
20,000
517,500
NCI in NA of Snoopy Co.
35,500
35,500
Total Liabilities & Equity
1,292,500
500,000
375,000
55,500
1,473,000
Chapter 03 – The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries with no Differential
P3–28 Consolidated Worksheet at End of the Second Year of Ownership (Equity Method)
a.
Equity Method Entries on Peanut Co.’s Books:
Investment in Snoopy Co.
72,000
Income from Snoopy Co.
72,000
Record Peanut Co.’s 90% share of Snoopy Co.’s 20X9 income
Cash
27,000
Investment in Snoopy Co.
27,000
Record Peanut Co.’s 90% share of Snoopy Co.’s 20X9 dividend
Book Value Calculations:
NCI
10%
+
Peanut
Co.
90%
=
Common
Stock
+
Retained
Earnings
Beginning book value
35,500
319,500
200,000
155,000
+ Net Income
8,000
72,000
80,000
– Dividends
(3,000)
(27,000)
(30,000)
Ending book value
40,500
364,500
200,000
205,000
Chapter 03 – The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries with no Differential
3-37
P3–28 (continued)
Basic Consolidation Entry
Common stock
200,000
Retained earnings
155,000
Income from Snoopy Co.
72,000
NCI in NI of Snoopy Co.
8,000
Dividends declared
30,000
Investment in Snoopy Co.
364,500
NCI in NA of Snoopy Co.
40,500
Optional accumulated depreciation consolidation entry
Accumulated depreciation
10,000
Building & equipment
10,000
Investment in
Income from
Snoopy Co.
Snoopy Co.
Beginning Balance
319,500
90% Net Income
72,000
72,000
90% Net Income
27,000
90% Dividends
Ending Balance
364,500
72,000
Ending Balance
364,500
Basic
72,000
0
0
Chapter 03 – The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries with no Differential
3-38
P3–28 (continued)
Peanut
Co.
Snoopy
Co.
Consolidation
Entries
DR
CR
Consolidated
Income Statement
Sales
850,000
300,000
1,150,000
Less: COGS
(270,000)
(150,000)
(420,000)
Less: Depreciation Expense
(50,000)
(10,000)
(60,000)
Less: Other Expenses
(230,000)
(60,000)
(290,000)
Income from Snoopy Co.
72,000
72,000
0
Consolidated Net Income
372,000
80,000
72,000
380,000
NCI in Net Income
8,000
(8,000)
Controlling Interest in Net
Income
372,000
80,000
80,000
0
372,000
Statement of Retained Earnings
Beginning Balance
517,500
155,000
155,000
517,500
Net Income
372,000
80,000
80,000
0
372,000
Less: Dividends Declared
(225,000)
(30,000)
30,000
(225,000)
Ending Balance
664,500
205,000
235,000
30,000
664,500
Balance Sheet
Cash
255,000
75,000
330,000
Accounts Receivable
190,000
80,000
270,000
Inventory
180,000
100,000
280,000
Investment in Snoopy Co.
364,500
364,500
0
Land
200,000
100,000
300,000
Buildings & Equipment
700,000
200,000
10,000
890,000
Less: Accumulated Depreciation
(500,000)
(30,000)
10,000
(520,000)
Total Assets
1,389,500
525,000
10,000
374,500
1,550,000
Accounts Payable
75,000
35,000
110,000
Bonds Payable
150,000
85,000
235,000
Common Stock
500,000
200,000
200,000
500,000
Retained Earnings
664,500
205,000
235,000
30,000
664,500
NCI in NA of Snoopy Co.
40,500
40,500
Total Liabilities & Equity
1,389,500
525,000
435,000
70,500
1,550,000