Unformatted text preview: ation Entry 2-22 Worksheet for Consolidated Balance Sheet, January 1, 20X1; 80% Acquisition at Book Value 2-23 Consolidated Balance Sheet, January 1, 20X1; 80% Acquisition at Book Value 2-24 Additional Information 2-25 Initial Year of Ownership : Parent Company Entries 2-26 Initial Year of Ownership : Elimination Entries 2-27 2-28 Second Year of Ownership:
Parent Companies Entries 2-29 Second Year of Ownership:
Elimination Entries 2-30 2-31 Example: Basic Elimination Entry 1)
6) Given the following information:
Photo owns 70% of Snap
Snap’s net income for 20X4 is $160,000
Photo’s net income for 20X4 from its own separate operations is $500,000.
Snap’s declares dividends of $12,000 during 20X4. Snap has 10,000 shares of $4 par stock outstanding that were originally issued at $14 per share. Snap’s beginning balance in Retained Earnings for 20X4 is $120,000. Photo
70% Snap 2-32 Example: Basic Elimination Entry 2-33 Consolidated Net Income
+ Parent’s Income from its own operations
(excluding any investment income from consolidated sub.)
+ Net Income from each of the consolidated sub.
(adjusted for any differential write-off)
= CONSOLIDATED NET INCOME
• If all sub. are wholly owned → all of the consolidated net
income accrues to the parent company.
• If one or more of the consolidated sub. is less than wholly
owned → a portion of the consolidated net income accrues
to the non-controlling shareholders.
2-34 Consolidated Net Income: Example
Push Corporation purchases 80% of the stock of Shove Company
for an amount equal to 80% of its book value. During 20X1,
Shove reports net income of $25,000, while Push reports net
income of $120,000, including equity-method income from
Shove of $20,000 ($25,000 X 0.80).
Consolidated Net Income for 20X1 is computed and allocated as...
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