Prepare a worksheet to consolidate prestige and booking

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Reference no: EM131119147

Exhibit 7.34 presents the separate financial statements at December 31, 2011, of Prestige Resorts and its 80 percent-owned subsidiary Booking, Inc. Two years earlier on January 1, 2010, Prestige acquired 80 percent of the common shares of Booking for $1,170 million in cash. Booking's 2010 net income was $105 million, and Booking paid no dividends in 2010. Booking's 2011 income was $135 million, and it paid $75 million dividends on common stock during 2011. Booking's pre- and post-acquisition stock prices do not support the existence of a control premium. Exhibit 7.35 shows the allocation of fair value at the date of acquisition, January 1, 2010. Exhibit 7.36 traces Prestige Resorts' equity method accounting for Booking, Inc. Ignore deferred tax effects.

Required

a. Complete Exhibit 7.35 to show income effects and balance sheet adjustments to be reflected in the December 31, 2011 Eliminations column of the consolidated worksheet.

b. Complete Exhibit 7.36 to trace the noncontrolling interests in Booking, Inc.'s earnings and net assets.

c. Prepare a worksheet to consolidate Prestige and Booking at December 31, 2011.

Reference no: EM131119147

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