Prepare a three- part consolidation worksheet as of december

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Reference no: EM131332480


Comprehensive Problem: Differential Apportionment

Mortar Corporation acquired 80 percent ownership of Granite Company on January 1, 20x7, for $173,000. At that date, the fair value of the non-controlling interest was $43,250. The trial balances for two companies on December 31, 20x7, included the following amounts:

                                                          Mortar corporation                  Ranite Company
Item                                                  Debit            Credit               Debit            Credit
Cash                                                 38,000                                 25,000
Accounts Receivable                            50,000                                 55,000
Inventory                                           240,000                               100,000
Land                                                  80,000                                 20,000
buildings & Equipment                         500,000                                150,000
Investment in Granite Company Stock   202,000
cost of Goods Sold                              500,000                               250,000
Depreciation Expense                           25,000                                 15,000
other expenses                                   75,000                                 75,000
Dividends declared                               50,000                                 20,000
Accumulated Depreciation                                        155,000                               75,000
Accounts Payable                                                    70,000                                 35,000
Mortgages Payable                                                  200,000                               50,000
Common Stock                                                       300,000                               50,000
Retained Earnings                                                   290,000                               100,000
Sales                                                                     700,000                               400,000
Income for Subsidiary                                              45,000
                                                        1,760,000     1,760,000          710,000        710,000

Additional information

1. On January 1, 20x7, Granite reported net assets with a book value of $150,000 and a fair value of $191,250.

2. Granite's depreciable assets had an estimated economic life of 11 years on the date of combination. The difference between fair value and book value of Granite's net assets is related entirely to buildings and equipment.

3. Mortar used the equity method in accounting for its investment in Granite.

4. Detailed analysis of receivables and payables showed that Granite owed Mortar $16,000 on December 31,20x7.

5. Assume that any goodwill impairment should be recorded as an adjustment in Mortar's equity method accounts along with the amortization of other differential components.


Give all journal entries recorded by Mortar with regard to its investment in Granite during 20x7. Give all eliminating entries needed to prepare a full set of consolidated financial statements for 20x7. Prepare a three- part consolidation worksheet as of December 31,20x7.

Reference no: EM131332480

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