Problem -
Penn Central Company, a wholesaler, purcashed 80% of the issued and outstanding stock of Sante Fe Inc., a retailer, on December 31, 2013, for $300,000. At that date, Sante Fe Inc. had one class of common stock outstanding at a stated value of $150,000 and retained earnings of $37,500.
The leases will expire on December 30, 2023,and Penn Central Company executives estimated the market value of Sante Fe Inc.'s assets and liabilities compared to their book value on December 31, 2013, as follows:
Penn Central Company purchased Sante Fe Inc.'s stock from Sante Fe Inc.'s major stockholder, primarily to acquire control of signboard leases owned by Sante Fe Inc..
FMV BV
Current assets $41,250 $41,250
Inventories $123,750 $123,750
Land $30,000 $30,000
Buildings and equipment (net) $60,000 $60,000
Signboard leases $150,000 $60,000
Current liabilities $(127,500) $(127,500)
Sante Fe Inc. declared a $37,500 cash dividend on December 20, 2017, payable on January 20, 2018, to stockholders of record on January 2, 2018.
Penn Central Company accounts for this investment using the equity method.
Required:
Assume that you did not have the last column from the phantom books with which to prepare eliminating entry (a) on the spreadsheet. Set up schedules to demonstrate that all letter (a) entry amounts could be derived from other numbers already in the problem. In other words, set up schedules to support all debits and credits for the letter (a) eliminating entry.
Using the above data and Excel, prepare a consolidated worksheet for the period ending December 31, 2017. Be sure all input data is in a separate part of the schedule so that the solution will change with changes of the input. Include sub-schedules to calculate goodwill and the equity method subsidiary income for the period.
Attachment:- Assignment.rar