January 1, 2019 SOS company invested 2,400,000 $ for75% of RAT company, in that date the fair value of RAT is equal to its book value except inventories was undervalued 20,000, equipment (10years) undervalued 80,000 ,6% 5 years bonds undervalued 60,000. The owner’s equity was $1,300,000 shares, 900,000 premiums and 600,000 as retained earnings, the following are selective information about the parent and its subsidiary: During 2019
January 1, 2019 SOS company invested 2,400,000 $ for75% of RAT company, in that date the fair value of RAT is equal to its book value except inventories was undervalued 20,000, equipment (10years) undervalued 80,000 ,6% 5 years bonds undervalued 60,000. The owner’s equity was $1,300,000 shares, 900,000 premiums and 600,000 as
During 2019
1- The subsidiary reported net income for 2019 was$152,000 and declared and paid $50000 dividend.
During 2020
2- 1/1/ 2020 the parent sold a land cost 200,000 for $220,000. The reported income for the subsidiary was 90,000 and 10,000 dividends
3- 1/1/ 2020 the subsidiary sold an equipment for parent for 120,000 and net book value 110,000, five years remaining use life.
4- 1/11/2020 the parent sold goods for 250,000 including 25% markup, the subsidiary ending inventory include 60000$ inventory from parent.
5- The subsidiary sold goods at 150,000 which cost$120,000 ,30% of these goods remained in inventory
6- Subsidiary net income of the year 2020 was $180,000 and$30,000 dividend.
7- During 2020 the subsidiary sold goods with mark up 20% at cost 300,000, 25% of this inventory still in hand in 31/12/2020.
8- the subsidiary sold the land that purchased from parent for 250,000.
9- The subsidiary reported net income for 2020 was 80,000 and 20,000 dividends were paid.
10- The parent retained earnings in 31/12/2018 1,800,000 $. Dividends and income without income from subsidiary during the years was: 2019 (income 500,000$ dividend 150,000), 2020 (income 300,000$, dividend 80,000).
Required:
- Prepare all the elimination entries in 31/12/2020
- Journalize the income and dividend under equity methods in parent’s book for the year 2020.
- Complete the following table:
Accounts
2019
2020
Income from subsidiary
Controlling interest share
Consolidated income
Consolidated retained earning
Non-controlling share
Non-controlling of interest
Investment/
Unamortized amount
Amortizations
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