Parent Inc. owns 80% of Subsidiary Co. Compute the total amount to be reported o

Question

Parent Inc. owns 80% of Subsidiary Co. Compute the total amount to be reported on the consolidated balance sheet of the Parent/Sub Corporation. The use of a consolidating journal entry is encouraged but not mandatory for full credit. ASSETSPANTUESIARY.DEBIT T CONSILIDATED ASSETSINC.INC DEBIT CREDIT INC. Cash Acc/Rec Note/Red From Panet 49,000 82,000 14,000 53,000 52,000 Inventory 60,00037,000 Investment 95,000 in Subsidiary Plant Assets, net Other Assets 186,000 129,000 22,000 8,000 TOTAL 494,000 293,000 LIABILITIES & EQUITY 44,0001 Note/Pay87,000 36,000 42,000 26,000 9 Other Liabilities 131,000 80,000 Common Stock 210,000 2 Retained 111,00020,000 Earnings TOTAL 494,000 293,000

Explanation / Answer

ASSETS PARENT, INC. SUBSIDARY, INC. DEBIT CREDIT CONSILIDATED, INC. Cash 49,000 14,000 63000 Acc/Rec 82,000 53,000 135000 Note/Rec From Parent 52,000 52000 0 Inventory 60,000 37,000 97,000 Investment in Subsidiary 95,000 95000 0 Plant Assets, net 186,000 129,000 315,000 Other Assets 22,000 8,000 30,000 Goodwill 31000 31,000 TOTAL 494,000 293,000 671,000 LIABILITIES & EQUITY Acc/Pay 44,000 26,000 70,000 Note/Pay 87,000 36,000 52000 71,000 Other Liabilities 42,000 131,000 173,000 Common Stock 210,000 80,000 80000 210,000 Retained Earnings 111,000 20,000 4000 127,000 NCI 20000 20,000 TOTAL 494,000 293,000 671,000 Goodwill calcultion: Fair value of consideration transferred 95000 Add: NCI at acquisition i.e. 20% of 80000 16000 Less: Net assets at acquisition -80000 (only share capital to be taken) 31000 NCI calculation: (80000+20000) x 20% = 20000 retained earning to be removed by 20 % only share of NCI i.e. 4000 Share capital is fully abolished, and any inter company assets and liabilities is removed. Investment in subsidiary is fully removed.

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