2. On January 1, 20X8, Gregory Corporation acquired 90 percent of Nova Company's voting stock, at underlying book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Nova at that date. Gregory uses the equity method in accounting for its ownership of Nova. On December 31, 20X8, the trial balances of the two companies are as follows:
Gregory Corp |
Nova Company |
|||
Dr |
Cr |
Dr |
Cr |
|
Current Assets |
200000 |
120000 |
||
Depreciable Assets |
300000 |
225000 |
||
Investment in Nova |
139500 |
|||
Depreciation Expense |
30000 |
25000 |
||
Other Expenses |
100000 |
60000 |
||
Dividends Declared |
30000 |
10000 |
||
Accumulated Depreciation |
120000 |
75000 |
||
Current Liabilities |
62000 |
25000 |
||
Long-Term Debt |
75000 |
90000 |
||
Common Stock |
100000 |
75000 |
||
Retained Earnings |
120000 |
65000 |
||
Sales |
300000 |
110000 |
||
Income from Subsidiary |
22500 |
|||
Totals |
799500 |
799500 |
440000 |
440000 |
Prepare a three-part consolidation worksheet as of December 31, 20X8.
Sr. No. | Accounts Title | Debit ($) | Credit ($) |
1 | Income from Subsidiary A/C | 22,500 | |
To Dividend Declared A/C | 9,000 | ||
To Investment in Nova company stock A/C | 13,500 | ||
2 | Income to Non controlling interest A/C | 2,500 | |
To Dividend Declared A/C | 1,000 | ||
To Non controlling interest A/C | 1,500 | ||
3 | Common Stock-Nova Company A/C | 75,000 | |
Retained Earnings, Jan. 1 A/C | 65,000 | ||
To Investment in Nova company stock A/C | 1,26,000 | ||
To Non controlling interest A/C | 14,000 |
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