Chapter 9 – Consolidation Ownership Issues
P9-24 (continued)
b.
Penn
Corp.
ENC Co.
Consolidation
Entries
DR
CR
Consolidated
Income Statement
Sales
280,000
170,000
450,000
Less: COGS
(210,000)
(100,000)
(310,000)
Less: Depreciation Expense
(20,000)
(15,000)
(35,000)
Less: Other Expenses
(21,000)
(25,000)
(46,000)
Income from ENC Co.
18,000
0
18,000
0
Consolidated Net Income
47,000
30,000
18,000
0
59,000
NCI in Net Income
12,000
(12,000)
Controlling Interest in NI
47,000
30,000
30,000
0
47,000
Statement of Retained Earnings
Beginning Balance
320,000
130,000
130,000
320,000
Net Income
47,000
30,000
30,000
0
47,000
Less: Dividends Declared
(15,000)
(10,000)
10,000
(15,000)
Ending Balance
352,000
150,000
160,000
10,000
352,000
Balance Sheet
Cash
30,000
35,000
65,000
Accounts Receivable
70,000
50,000
120,000
Inventory
120,000
100,000
220,000
Buildings and Equipment
650,000
230,000
880,000
Less: Accumulated
Depreciation
(170,000)
(95,000)
(265,000)
Investment in ENC Co.
162,000
0
162,000
0
Total Assets
862,000
320,000
0
162,000
1,020,000
Accounts Payable
50,000
20,000
70,000
Bonds Payable
200,000
30,000
230,000
Common Stock
200,000
100,000
100,000
200,000
Additional Paid-In Capital
60,000
20,000
20,000
60,000
Retained Earnings
352,000
150,000
160,000
10,000
352,000
NCI in NA of ENC Co.
108,000
108,000
Total Liabilities & Equity
862,000
320,000
280,000
118,000
1,020,000
2-39
P9-25 (continued)
b.
Craft
Corp.
Delta
Corp.
Consolidation
Entries
DR
CR
Consolidated
Balance Sheet
Cash
50,000
230,000
280,000
Accounts Receivable
90,000
120,000
210,000
Inventory
180,000
200,000
380,000
Buildings and Equipment
700,000
600,000
1,300,000
Less: Accumulated Depr.
(200,000)
(220,000)
(420,000)
Investment in Delta Corp.
520,000
0
520,000
0
Total Assets
1,340,000
930,000
0
520,000
1,750,000
Accounts Payable
70,000
70,000
140,000
Mortgages Payable
250,000
250,000
Taxes Payable
80,000
80,000
Common Stock
300,000
240,000
240,000
300,000
Additional Paid-In Capital
220,000
190,000
190,000
220,000
Retained Earnings
500,000
350,000
350,000
500,000
NCI in NA of Delta Corp.
260,000
260,000
Total Liabilities & Equity
1,340,000
930,000
780,000
260,000
1,750,000
c.
Craft Corporation and Subsidiary
Consolidated Balance Sheet
January 1, 20X3
Current Assets:
Cash
$ 280,000
Accounts Receivable
210,000
Inventory
380,000
$ 870,000
Noncurrent Assets:
Buildings and Equipment
$1,300,000
Less: Accumulated Depreciation
(420,000)
880,000
Total Assets
$1,750,000
Current Liabilities:
Accounts Payable
$ 140,000
Taxes Payable
80,000
$ 220,000
Mortgages Payable
250,000
Stockholders’ Equity:
Controlling Interest:
Common Stock
$ 300,000
Additional Paid-In Capital
220,000
Retained Earnings
500,000
Total Controlling Interest
$1,020,000
Noncontrolling Interest
260,000
Total Stockholders’ Equity
1,280,000
Total Liabilities and Stockholders’ Equity
$1,750,000
Chapter 9 – Consolidation Ownership Issues
P9-26 Sale of Additional Shares to Parent
a. Consolidation entry:
Lane’s Previous Shares
7,500
Total Original Shares
10,000
New Shares Purchased by Lane
2,500
New Shares
2,500
Lane’s Total Shares
10,000
Total Shares
12,500
Lane’s New %
80%
(10,000/12,500)
New NCI %
20%
Chapter 9 – Consolidation Ownership Issues
2-41
P9-26 (continued)
b.
Lane
Tin
Corp.
Consolidation
Entries
DR
CR
Consolidated
Balance Sheet
Cash
77,500
210,000
287,500
Accounts Receivable
60,000
100,000
160,000
Inventory
100,000
180,000
280,000
Buildings and Equipment
600,000
600,000
1,200,000
Less: Accumulated Depreciation
(150,000)
(240,000)
(390,000)
Investment in Tin Corp.
400,000
400,000
0
Total Assets
1,087,500
850,000
0
400,000
1,537,500
Accounts Payable
50,000
50,000
100,000
Bonds Payable
400,000
300,000
700,000
Common Stock
200,000
125,000
125,000
200,000
Additional Paid-In Capital
37,500
175,000
175,000
37,500
Retained Earnings
400,000
200,000
200,000
400,000
NCI in NA of Tin Corp.
100,000
100,000
Total Liabilities & Equity
1,087,500
850,000
500,000
100,000
1,537,500
Chapter 9 – Consolidation Ownership Issues
2-42
P9-27 Complex Ownership Structure
Consolidated net income of $98,800 is reported:
Operating income of First Boston
$ 44,000
Operating income of Gulfside
34,000
Operating income of Paddock
50,000
Consolidated net income
$128,000
Income to noncontrolling interests:
Paddock 0.40[$50,000 + 0.10($30,000)]
$21,200
Gulfside 0.20[$34,000 + 0.60($10,000)]
8,000
(29,200)
Controlling interest in consolidated net income
$ 98,800
First
Boston
Paddoc
k
Gulfside
0.60
0.80
0.10