Scribd
Upload
1K views4 pages

Chapter 4 Consolidation HW

1. Price Corporation acquired Saver Company on January 1, 20X8 for $128,000. 2. Consolidation entries were made to record depreciation of $2,000 and recognize goodwill impairment of $5,500. 3. During 20X8, Price recorded Saver's dividend payment of $16,000 and income of $7,500 from its investment in Saver. 4. Consolidation entries on December 31, 20X8 combined the equity accounts and eliminated the investment in Saver.

Uploaded by

Khanh Nguyen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
1K views4 pages

Chapter 4 Consolidation HW

1. Price Corporation acquired Saver Company on January 1, 20X8 for $128,000. 2. Consolidation entries were made to record depreciation of $2,000 and recognize goodwill impairment of $5,500. 3. During 20X8, Price recorded Saver's dividend payment of $16,000 and income of $7,500 from its investment in Saver. 4. Consolidation entries on December 31, 20X8 combined the equity accounts and eliminated the investment in Saver.

Uploaded by

Khanh Nguyen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

CHAPTER 4 CONSOLIDATION

Student: Khanh “Kai” Nguyen


ACC 415_Section 001
Student: Khanh “Kai” Nguyen Professor: Jenny Teruya

P4-33: Price Corporation acquired 100 percent ownership of Saver Company on January 1,
20X8, for $128,000. At that date, the fair value of Saver’s buildings and equipment was $20,000
more than the book value. Buildings and equipment are depreciated on a 10-year basis. Although
goodwill is not amortized, Price’s management concluded at December 31, 20X8, that goodwill
involved in its acquisition of Saver shares had been impaired and the correct carrying value was
$2,500.
Trial balance data for Price and Saver on December 31, 20X8, are as follows:

1) Record the acquisition of Saver Company by Price Company on January 1, 20X8


2) Give all consolidation entries needed to prepare a consolidated balance sheet immediately
after the acquisition.
3) Give all journal entries recorded by Price with regard to its investment in Saver during 20X8
4) Give all consolidation entries needed to prepare consolidated financial statements on
December 31, 20X8.
5) Determine the balances that would be reported on December 31, 20X8 consolidated financial
statements for the following accounts: Building and Equipment, Goodwill, Depreciation
Expense, Accumulated Depreciation, Retained Earnings, Income from Saver Company.
Be sure to show all supporting computations and label your answers to coincide with the
numbered requirement (1 to 5).

Page 1 of 3
ACC 415_Section 001
Student: Khanh “Kai” Nguyen Professor: Jenny Teruya

ANSWER
1) Record the acquisition of Saver Company by Price Company on January 1, 20X8:
Investment in Saver 128,000
Cash 128,000
*Note: 128,000 = given

2) Give all consolidation entries needed to prepare a consolidated balance sheet immediately
after the acquisition.
Depreciation Expense 2,000
Goodwill and Impairment Loss 5,500
Income from Saver 7,500
*Note:
2,000 = 10,000 / 5
5,500 = 128,000 – (60,000 + 40,000) – 20,000 (building) – 2,500
7,500 = 2,000 + 5,500

Investment in Saver 24,000


Income from Saver 24,000
*Note: 24,000 = Sales – COGS – Depreciation Expense – Interest Expense – Other Expenses

3) Give all journal entries recorded by Price with regard to its investment in Saver during 20X8
Cash 16,000
Investment in Saver 16,000
*Note: 16,000 = given

Income from Saver 7,500


Investment in Saver 7,500
*Note:
7,500 = calculated above

Page 2 of 3
ACC 415_Section 001
Student: Khanh “Kai” Nguyen Professor: Jenny Teruya

4) Give all consolidation entries needed to prepare consolidated financial statements on


December 31, 20X8.
Common Stock 60,000
Retained Earnings 40,000
Income from Saver 24,000
Dividends Declared 16,000
Investment in Saver 108,000
*Note:
60,000 = given
40,000 = given
24,000 = calculated above
16,000 = given
108,000 = 60,000 + 40,000 + 24,000 – 16,000

Buildings and Equipment 20,000


Goodwill 2,500
Accumulated Depreciation 2,000
Investment in Saver 20,500
*Note:
20,000 = given
2,500 = given
2,000 = calculated above
20,500 = 20,000 + 2,500 – 2,000

Accumulated Depreciation 30,000


Building and Equipment 30,000

5) Determine the balances that would be reported on December 31, 20X8 consolidated financial
statements for the following accounts: Building and Equipment, Goodwill, Depreciation
Expense, Accumulated Depreciation, Retained Earnings, Income from Saver Company.
Building and Equipment = 350,000 + 150,000 + 20,000 – 30,000 = 490,000
Goodwill = 2,500
Depreciation Expense = 25,000 + 10,000 + 2,000 = 37,000
Accumulated Depreciation = 145,000 + 40,000 – 30,000 + 2,000 = 157,000
Retained Earnings = 131,000
Income from Saver Company = 16,500 – 24,000 + 7,500 = 0

Page 3 of 3

You might also like