Reference no: EM133433730
Question: Stage Company operates on a calendar-year basis, reporting its results of operations quarterly. For the first quarter of 20X1, Stage reported sales of $244,000 and operating expenses of $184,000 and paid dividends of $14,000. On April 1, 20X1, Parachute Theaters Inc. acquired 85 percent of Stage's common stock for $799,000. At that date, the fair value of the noncontrolling interest was $141,000, and Stage had 100,000 outstanding shares of $1 par common stock, originally issued at $6 per share. The differential is related to goodwill. On December 31, 20X1, the management of Parachute Theaters reviewed the amount attributed to goodwill as a result of its purchase of Stage common stock and concluded that goodwill was not impaired.
Stage's retained earnings statement for the full year 20X1 appears as follows:
Retained Earnings, January 1, 20X1 $ 148,000
Net Income 173,000
Dividends (36,000)
Retained Earnings, December 31, 20X1 $ 285,000
Parachute Theaters accounts for its investment in Stage using the equity method.
Required:
- Present all entries that Parachute Theaters would have recorded in accounting for its investment in Stage during 20X1.
- Present all consolidation entries needed in a worksheet to a complete set of consolidated financial statements for the year 20X1.