Problem Solving - Journal
Parent Corporation acquired 75 percent of Signature Company's voting stock on January 1, 201X, at underlying book value. The fair value of the non-controlling interest was equal to 25 percent of the book value of Signature at that date. Parent uses the fully adjusted equity method in accounting for its ownership of Signature during 201X. On December 31, 201X, the trial balances of the two companies are as follows:
(Source: Baker, Christensen, & Cottrell, 2012)
Complete the following items, providing written responses and spreadsheet as required:
Provide all the eliminating entries required as of December 31, 201X, to prepare consolidated financial statements and explain why these are eliminating entries.
Prepare a three-part consolidation worksheet.
Prepare a consolidated balance sheet, income statement and retained earnings statement for 201X.