Reference no: EM133128870

Question - On January 1, 2019, Aronsen Company acquired 75 percent of Siedel Company's outstanding shares. Siedel had a net book value on that date of $580,000: common stock ($10 par value) of $280,000 and retained earnings of $300,000.

Aronsen paid $600,000 for this investment. The acquisition-date fair value of the 30 percent noncontrolling interest was $240,000. The excess fair value over book value associated with the acquisition was used to increase land by $212,000 and to recognize copyrights (12-year remaining life) at $48,000. Subsequent to the acquisition, Aronsen applied the initial value method to its investment account.

In the 2019-2020 period, the subsidiary's retained earnings increased by $120,000. During 2021, Siedel earned income of $82,000 while declaring $22,000 in dividends. Also, at the beginning of 2021, Siedel issued 2,000 new shares of common stock for $40 per share to finance the expansion of its corporate facilities. Aronsen purchased none of these additional shares and therefore recorded no entry.

Required - Prepare the appropriate 2021 consolidation entries for these two companies.