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Consolidation Accounting

Facts: Parent Co paid $176,000 for 80% of the outstanding voting stock of Sub Co on January 1, 2018, when Sub Cos stockholders equity consisted of $120,000 common stock and $60,000 retained earnings. This implied that the total fair value of Sub co is $220,000 ($176,000 / 80%). The company assigned the $40,000 excess fair value to previously unrecorded patents with a 10-year useful life.

Parent Cos $36,800 income from Sub Co for 2018 consisted of 80% of Sub Cos $50,000 net income less $3,200 ($40,000 / 10 year life * 80%) patent amortization. Parent Cos investment in subsidiary account at December 31, 2018 consisted of the following:

Investment in Sub Co	$176,000
Income from subsidiary	36,800
Less: Dividend from Sub Co	(24,000)
Investment in subsidiary	$188,800

Required: Using the Excel file Case 1 - Advanced accounting topics and the worksheet Consolidation, prepare and show the required adjusting and eliminating journal entries (in journal entry form) and complete the worksheet, posting the journal entries to the worksheet and completing the Consolidated column with the totals.

Consolidation Accounting Separate Company Adjustments and Eliminations Financial Statements Sub Co Parent Co DR CR Consolidated Income Statement Net sales Income from subsidiary 500,000 36,800 130,000 0 536,800 130,000 80,000 400,00080000- 50,000 0 50,000 Total revenue Expenses Other expenses 400,000 600- Total expenses 136,800 0 136,800 Consolidated net income Noncontrolling interest share Controlling share of net Incom Statement of Retained Earnings Beginning retained earnings Net income Dividends 10,000 136,800 60,000 50,000 (60,00O) (30,000) 86,800 601000 Ending retained earnings Balance Sheet Assets Cash Other current assets 80,000 20,000 180000 100,000 78,000 Total current assets Plant and equipment, net Patents, net Investment in subsidiary 258,000 500,000 120,000 140,000 188,800 0 Total assets 946,800200000 Liabilities& Stockholders' Equity Other liabilitles Total current liabilities Common stock Retained earnings Noncontrolling interest 160,00060.000 60,000 120,000 80,000 160,000 700,000 86,800 200,000 260,000 Total stockholders' equity 786,800 946,800 Total liab & stockholders' eq Consolidation Accounting Separate Company Adjustments and Eliminations Financial Statements Sub Co Parent Co DR CR Consolidated Income Statement Net sales Income from subsidiary 500,000 36,800 130,000 0 536,800 130,000 80,000 400,00080000- 50,000 0 50,000 Total revenue Expenses Other expenses 400,000 600- Total expenses 136,800 0 136,800 Consolidated net income Noncontrolling interest share Controlling share of net Incom Statement of Retained Earnings Beginning retained earnings Net income Dividends 10,000 136,800 60,000 50,000 (60,00O) (30,000) 86,800 601000 Ending retained earnings Balance Sheet Assets Cash Other current assets 80,000 20,000 180000 100,000 78,000 Total current assets Plant and equipment, net Patents, net Investment in subsidiary 258,000 500,000 120,000 140,000 188,800 0 Total assets 946,800200000 Liabilities& Stockholders' Equity Other liabilitles Total current liabilities Common stock Retained earnings Noncontrolling interest 160,00060.000 60,000 120,000 80,000 160,000 700,000 86,800 200,000 260,000 Total stockholders' equity 786,800 946,800 Total liab & stockholders' e

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