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    Jun Zen Ralph V. Yap 3 Year - BSA Let's Check

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    Junzen Ralph Yap
    Pony Corporation purchased Short Company on January 1, 2020 for $180,000. The book value of Short Company's net assets was $150,000, with the excess $30,000 assigned to depreciable assets. On December 31, 2020, Short Company declared and paid a dividend of $10,000. Eliminating entries were made to remove the intercompany dividend, Short Company's equity accounts, and recognize the $30,000 excess as goodwill. A three-part consolidation working paper was prepared combining the financial statements of Pony and Short as of December 31, 2020.

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    Jun Zen Ralph V. Yap 3 Year - BSA Let's Check

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    Junzen Ralph Yap
    1K views4 pages
    Pony Corporation purchased Short Company on January 1, 2020 for $180,000. The book value of Short Company's net assets was $150,000, with the excess $30,000 assigned to depreciable assets. On December 31, 2020, Short Company declared and paid a dividend of $10,000. Eliminating entries were made to remove the intercompany dividend, Short Company's equity accounts, and recognize the $30,000 excess as goodwill. A three-part consolidation working paper was prepared combining the financial statements of Pony and Short as of December 31, 2020.

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    Yap_ACP312_ULOa_Let's Check

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    Pony Corporation purchased Short Company on January 1, 2020 for $180,000. The book value of Short Company's net assets was $150,000, with the excess $30,000 assigned to depreciable assets. On December 31, 2020, Short Company declared and paid a dividend of $10,000. Eliminating entries were made to remove the intercompany dividend, Short Company's equity accounts, and recognize the $30,000 excess as goodwill. A three-part consolidation working paper was prepared combining the financial statements of Pony and Short as of December 31, 2020.

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    1K views4 pages

    Jun Zen Ralph V. Yap 3 Year - BSA Let's Check

    Uploaded by

    Junzen Ralph Yap
    Pony Corporation purchased Short Company on January 1, 2020 for $180,000. The book value of Short Company's net assets was $150,000, with the excess $30,000 assigned to depreciable assets. On December 31, 2020, Short Company declared and paid a dividend of $10,000. Eliminating entries were made to remove the intercompany dividend, Short Company's equity accounts, and recognize the $30,000 excess as goodwill. A three-part consolidation working paper was prepared combining the financial statements of Pony and Short as of December 31, 2020.

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    © All Rights Reserved
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    of 4

    Jun Zen Ralph V.

    Yap 3rd Year - BSA

    Let’s Check

    Activity 1. Pony Corporation purchased all of the common shares of Short Company on January 1, 2020
    for P180,000. On that date, the book value of the net assets reported by Short Company was P150,000.
    The entire excess was assigned to depreciable assets with a 6-year remaining life from January 1, 2020.

    The adjusted trial balances for the two companies on December 31, 2020 are as follows:

    Pony Corporation uses the cost method in accounting for its investment in Short Company. Short
    Company dividends were declared and paid on December 31, 2020.

    Required:

    1. Prepare eliminating entries needed as of December 31, 2020 to complete a consolidation


    working paper

    E
    1 Dividend Income 10,000
    Dividends Declared - Short
    Co. 10,000
    To eliminate the intercompany dividends

    E
    2 Common Stock - Short Co. 100,000

    Retained Earnings - Short Co. 50,000

    Investment in Short Co. 150,000


    To eliminate the subsidiary's equity accounts against the investment
    account

    E
    3 Goodwill 30,000

    Investment in Short Co. 30,000


    To eliminate the excess of book value against the investment account
    and recognize the goodwill
    2. Prepare a three-part consolidation working paper as of December 31, 2020.

    Pony Corporation and Subsidiary


    Working Paper for Consolidated Financial Statements
    For the Year Ended December 31, 2020
    Pony Short Elimination Consolidated
    Debit Credit
    Statement of Comprehensive Income
    Sales 200,000 120,000 320,000
    Dividend Income 10,000 - 1) 10,000 -
    Total 210,000 120,000 320,000
    Less: Other Expense 105,000 75,000 180,000
    Depreciation Expense 25,000 15,000 40,000
    Comprehensive Income, carried forward 80,000 30,000 100,000

    Statement of Retained Earnings


    Retained Earnings, beg.
    Pony 230,000 230,000
    Short 50,000 2) 50,000
    Comprehensive Income
    Pony 80,000 100,000
    Short 30,000
    Less: Dividends Declared
    Pony 40,000 40,000
    Short 10,000 1) 10,000
    Retained Earnings, end, carried forward 270,000 70,000 290,000

    Statement of Financial Position


    Assets
    Cash and Receivables 15,000 5,000 20,000
    Accounts Receivables 30,000 40,000 70,000
    Inventory 70,000 60,000 130,000
    Depreciable Assets 325,000 225,000 550,000
    Investment in Short Co. 180,000 - 2) 150,000 -
    3) 30,000
    Goodwill - - 3) 30,000 30,000
    Total Assets 620,000 330,000 800,000
    Liabilities and Shareholders' Equity
    Liabilities
    Accounts Payable 50,000 40,000 90,000
    Notes Payable 100,000 120,000 220,000
    Total Liabilities 150,000 160,000 310,000
    Shareholders' Equity
    Common Stock
    Pony 200,000 200,000
    Short 100,000 2) 100,000
    Retained Earnings
    Pony 270,000 290,000
    Short 70,000
    Total Shareholders' Equity 470,000 170,000 490,000
    Total Liabilities and Shareholders' Equity 620,000 330,000 190,000 190,000 800,000

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