Hide Corp Seek Corp
Sales 300,000 150,000
Less: COGS 210,000 85,000
Gross Profit 90,000 65,000
Less:
Depreciation Expense 25,000 20,000
Other Expenses 23,000 25,000
Net income from own operations 42,000 20,000
Add: Investment income 19,000
Net income 61,000 20,000
Date of Acquisition - January 1, 2020
Fair value of Subsidiary (100%)
Consideration transferred:
Cash 220,000
Less:
Book value of stocholders' equity of Seek Corp.
Common Stock 150,000
Retained earnings 50,000 200,000
Goodwill 20,000
Consolidation Workpaper, December 31, 2020
Income Statement Hide Corp. Seek Corp. Dr. Cr.
Sales 300,000 150,000
Investment income 19,000 (4) 19,000
Total Revenue 319,000 150,000
Cost of Goods Sold 210,000 85,000
Depreciation Expense 25,000 20,000
Other Expenses 23,000 25,000
Total Cost and Expenses 258,000 130,000
Net Income to Retained Earnings 61,000 20,000
Statement of Retained Earnings Hide Corp. Seek Corp. Dr. Cr.
Retained Earnings, 1/1
Hide Corp. 230,000
Seek Corp. 50,000 (1) 50,000
Net income, from above 61,000 20,000
Total 291,000 70,000
Dividends paid
Hide Corp. 20,000
Seek Corp. 10,000 (4) 10,000
Retained Earnings, 12/31 to Balance 271,000 60,000
Balance Sheet Hide Corp. Seek Corp. Dr. Cr.
Cash 37,000 20,000
Receivables 50,000 30,000
Inventory 70,000 60,000
Building and Equipment 300,000 240,000
Goodwill (2) 20,000
Investment in Seek 229,000 (1) 200,000
(2) 20,000
(4) 9,000
Total 686,000 350,000
Accumulated Depreciation 105,000 65,000
Accounts Payable 40,000 20,000
Taxes Payable 70,000 55,000
Common Stock
Hide Corp. 200,000
Seek Corp. 150,000 (1) 150,000
Retained Earnings, from above 271,000 60,000
Total 686,000 350,000 239,000 239,000
Consolidated Financial Statements
Hide Corporation and Subsidiary
Consolidated Income Statement
For the Year Ended December 31, 2020
Sales 450,000
Less: Cost of goods sold 295,000
Gross Profit 155,000
Less: Expenses
Depreciation expense 45,000
Other expenses 48,000 93,000
Consolidated Net Income 62,000
Hide Corporation and Subsidiary
Consolidated Retained Earnings
For the Year Ended December 31, 2020
Retained earnings, Jan. 1 - Hide Corp. 230,000
Consolidated net income 62,000
Total 292,000
Divideds paid - Hide Corp. 20,000
Retained earnings, Dec. 31 - Hide Corp 272,000
Hide Corporation and Subsidiary
Consolidated Balance Sheet
For the Year Ended December 31, 2020
Assets
Cash 57,000
Receivables 80,000
Inventory 130,000
Building and Equipment 540,000
Less: Accumulated Depreciation 170,000 370,000
Goodwill 20,000
Total Assets 657,000
Liabilities and Stockholders' Equity
Liabilities
Accounts Payable 60,000
Taxes Payable 125,000
Total Liabilities 185,000
Stockholders' Equity
Common Stock 200,000
Retained earnings 272,000
Total Stockholders' Equity 472,000
Total Liabilities and Stockholders' Equity 657,000
Consolidated
450,000
450,000
295,000
45,000
48,000
388,000
62,000
Consolidated
230,000
62,000
292,000
20,000
272,000
Consolidated
57,000
80,000
130,000
540,000
20,000
827,000
170,000
60,000
125,000
200,000
272,000
827,000
Requirement 1 - Journal entries
(1) Investment in Red Light 160,000
Cash 160,000
To record acquisition of 80% ownersip of Red Light
(2) Cash 8,000
Dividend income 8,000
To record dividends from Red Light
Requirement 2 - Eliminating entries
(1) Common Stock - Red Light 100,000
Retained Earnings - Red Light 50,000
Investment in Red Light 120,000
Non-controlling interest 30,000
To eliminate intercompany investment and equity of
subsidiary; and to establish non-controlling interest
(2) Buildings and Equipment 50,000
Investment in Red Light 40,000
Non-controlling interest 10,000
To allocate excess of cost over book value of identifiabe
assets acquired; and to establish non-controlling interest
(3) Depreciation expense 5,000
Accumulated Depreciation 5,000
To provide amortization of identifiable assets
(4) Dividend income - Green Light 8,000
Non-controlling interest 2,000
Dividends delcared - Red Light 10,000
To eliminate intercompany dividends and non-controlling interest
(5) Non-controlling interest in Net Income of Subsidiary 5,000
Non-controlling interest 5,000
To establish non-controlling interest in subsidiary's adjusted net income
(6) Accounts payable 10,000
Cash and accounts receivables 10,000
To eliminate intercompany payables and receivables
Date of Acquisition - January 1, 2020
Fair value of Subsidiary (100%)
Consideration transferred:
Cash 160,000
Less:
Book value of stocholders' equity of Seek Corp.
Common Stock 80,000
Retained earnings 40,000 120,000
Allocated Excess (excess of cost over book value) 40,000
Less: Over/Under valuation of assets and liabilities
Increase in depreciable assets 40,000
Goodwill (excess of cost over fair value) 0
Green Light and Subsidiary
Consolidation Working Paper
December 31, 2020
Income Statement Green Light Red Light Dr. Cr.
Sales 200,000 100,000
Dividend income 8,000 (4) 8,000
Total revenue 208,000 100,000
Cost of goods sold 120,000 50,000
Depreciation expense 25,000 15,000 (3) 5,000
Inventory losses 15,000 5,000
Total cost and expenses 160,000 70,000
Net income 48,000 30,000
NCI in Net Income - Subsidiary - - (5) 5,000
Net Income to Retained Earnings 48,000 30,000
Retained Earnings Green Light Red Light Dr. Cr.
Retained Earnings, 1/1
Green Light 298,000
Red Light 90,000 (1) 50,000
Net income from above 48,000 30,000
Total 346,000 120,000
Dividends paid
Green Light 30,000
Red Light 10,000 (4) 10,000
Retained Earnings, 12/31 to balance sheet 316,000 110,000
Balance Sheet Green Light Red Light Dr. Cr.
Cash and Receivables 81,000 65,000 (6) 10,000
Inventory 260,000 90,000
Land 80,000 80,000
Building and Equipment 500,000 150,000 (2) 50,000
Investment in Red Light 160,000 (1) 120,000
(2) 40,000
Total 1,081,000 385,000
Accumulated Depreciation 205,000 105,000 (3) 5,000
Accounts Payable 60,000 20,000 (6) 10,000
Notes Payable 200,000 50,000
Common Stock
Green Light 300,000
Red light 100,000 (1) 100,000
Retained Earnings from above 316,000 110,000
Non-controlling interest (4) 2,000 (1) 30,000
(2) 10,000
(5) 5,000
Total 1,081,000 385,000 230,000 230,000
Consolidated
300,000
300,000
170,000
45,000
20,000
235,000
65,000
(5,000)
60,000
Consolidated
298,000
40,000
60,000
398,000
30,000
368,000
Consolidated
136,000
350,000
160,000
700,000
1,346,000
315,000
70,000
250,000
300,000
368,000
43,000
1,346,000
