1. Business
2. Finance
3. Interest Rates and the Cost of Debt
4. 422468

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Consolidation work and financial statements subsequent to acquisition

Background and Information

Palus Corporation acquired 90 percent of Stalus Company's voting stock on January 1, 2010. The price paid was $145,000. The excess of costs over book value was $10,000, which should be attributed to goodwill and must be amortized over 10 years. The fair value of the non-controlling (minority) interest was equal to 10 percent of the book value of Stalus at that date. Palus uses the equity method in accounting for its ownership of Stalus during the year 2010. Income during the year was $30,000 for Stalus and the company also declared dividends of $10,000. On December 31, 2010, the trial balances of the two companies are as follows:

See the attached file for data.

Required

a. Prepare all eliminating journal entries required as of December 31, 2010, to prepare the consolidated worksheet.
b. Prepare a **"condensed" multilevel consolidation worksheet showing the trial balance, eliminations, and adjustments, the minority interest, controlling retained earnings, consolidated income statement, and consolidated balance sheet.
c. Prepare the formally consolidated balance sheet, income statement, and retained earnings statements as of December 31, 2010.

**You may condense the assets (net of liabilities) in order to shorten the trial balance and worksheet