Help with a Consolidation Balance Sheet

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TUTORIAL

** Please see the attached file for a Word formatted copy of the solution **

In creating consolidated balance sheet, remember SAIDE

S - Subsidiary investment
This entry removes the beginning equity balances of the subsidiary and the investment in the subsidiary. In this entry, the non-controlling interest is recognized.
DR: Common stock - subsidiary
DR: Retained earnings, beginning - subsidiary
CR: Investment in subsidiary
CR: Non-controlling interest

A - Recognize adjustments for fair values
DR: Assets
CR: Investment in subsidiary

I - reverse recognized equity income in subsidiary
DR: Equity income in subsidiary
CR: Investment in subsidiary

D - Reverse entry for dividends
DR: Investment in subsidiary
CR: Dividends

E - recognize amortization expense for excess of fair value over ook value
DR: Amortization expense
CR: Asset

Here is an example that can help you understand the process better. Good luck!

COMPREHENSIVE CONSOLIDATION PROBLEM

Approaching a Consolidation Problem
- Original Investment
- Throughout the Period
- Set Up Worksheet
- Elimination Entries
- Preparing the Financial Statements

Approaching a Consolidation Problem

1. Original Investment - Record original investment using either initial value or equity method
- Allocate differential to identifiable accounts
- Determine goodwill (or gain)
- Determine how differential will be amortized
- Allocate differential to non-controlling interest

2. Throughout the accounting period - Equity or initial value method is used internally to account for the following subsidiary activities:
- Reporting of subsidiary net income (equity method only)
- Receipt of dividends (equity and initial value methods)

3. Set up worksheet - Organize accounts for preparation of:
- Income Statement
- Statement of Retained Earnings
- Balance Sheet

4. Elimination entries (most difficult part):
- Convert initial value to equity method (if needed)
- Eliminate equity section of subsidiary
- Adjust identifiable accounts to FMV and recognize goodwill (unless push down is used)
- Eliminate subsidiary net income
- Eliminate inter-company dividend payments
- Amortization/Depreciation of the differential (unless push down is used)
- Eliminate any inter-company transfers or debts

5. Prepare financial statements
- Closing entries

1. Original Investment - Record original investment using either initial value or equity method

Facts at January 1, 2009:
- Bull, Corp. purchased 80% of Calf, Co. on January 1, 2009 for $425,000.
- At acquisition, the FMV of the non-controlling interest is $102,500.
- Calf, Co. ...