On January 1, 20X1, Parent Company Acquired 90% of the Common

question 23

Essay

On January 1, 20X1, Parent Company acquired 90% of the common stock of Subsidiary Company for $360,000. On this date, Subsidiary had total owners' equity of $270,000, including retained earnings of $100,000.
On January 1, 20X1, any excess of cost over book value is attributable to the undervaluation of land, building, and goodwill. Land is worth $20,000 more than cost. Building is worth $60,000 more than book value. It has a remaining useful life of 6 years and is depreciated using the straight-line method.
During 20X1, Parent has accounted for its investment in Subsidiary using the cost method.
During 20X1, Subsidiary sold merchandise to Parent for $70,000, of which $20,000 is held by Parent on December 31, 20X1. Subsidiary's usual gross profit on affiliated sales is 50%.
On December 31, 20X1, Parent still owes Subsidiary $5,000 for merchandise acquired in December.
On July 1, 20X1, Parent sold to Subsidiary some equipment with a cost of $40,000 and a book value of $18,000. The sales price was $30,000. Subsidiary is depreciating the equipment over a 4-year life, assuming no salvage value and using the straight-line method.
Required:
Prepare a determination and distribution of excess schedule. Next, complete the Figure 7-13 worksheet for a consolidated balance sheet as of December 31, 20X1.

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Definitions:

Offspring

The product of reproduction, a new organism produced by one or more parents.

Meiosis

A process of cell division in sexually reproducing organisms that reduces the number of chromosomes in reproductive cells to half, leading to the production of gametes or spores.

Parental Chromosome Number

The parental chromosome number refers to the specific number of chromosomes found in the genetic material an organism inherits from its parents, typically half from each.

Parent Cell

The cell that divides to give rise to daughter cells during cell division.