Prepare the consolidation entries

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Reference no: EM132736266

Question: Matthews Co. acquired 80% of the common stocks of Jackson Co. on January 1, 2019. As of that date Jackson had the following trial balance:

Cash. Debit 84,000

AR. Debit 60,000

Inventory. Debit 132,000

Supplies. Debit 24,000

Land. Debit 108,000

Buildings-net (20 remaining years life) Debit 168,000

Equipment-net (8 remaining years life) Debit 288,000

AP. Credit 72,000

Long-term liabilities (mature 12/31/2023) Credit 216,000

Common Stock. Credit 360,000

Additonal Paid in Capital. Credit 72,000

Retained Earnings (1-1-2019)

Matthews Co. acquired 80% oc the common stock of Jackson Co. for 672,000 cash. The fair value of 20% noncontrolling interest is 153,000. On 1/1/19 Jackson Co.'s stuff had the following fair values:

Land: 122,400

Buildings: 201,600

Equipment: 259,200

Long term liabilities: 192,000

Unrecorded R&D: 120,000

All other assets and liabilities are equal to their book values.

Matthews used initial value method for this investment.

During 2019 Jackson reported net income of 115,000 and paid dividends of 14,000. During 2020 Jackson reported net income of 158,000 and paid dividends of 42,000.

Prepare the consolidation entries for December 31, 2020, not 2019.

Reference no: EM132736266

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