Question

Assume that a parent company acquired 100% of a subsidiary on 1/1/X1. The purchase price was $175,000 in excess of the subsidiary’s book value of net assets on acquisition date and the excess was assigned entirely to an unrecorded patent. The life of the patent is 10 years. Assume the subsidiary sells inventory to the parent. The parent ultimately sells the inventory to outside customers. The following relates to the years X2 and X3:

Inventory Sales GP of unsold inventory Receivable (Payable) $103,300 $29,441 $41,320 $87,900 $19,137 $27,986
Please complete the following using the spreadsheet below:
Prepare the consolidated financial statements at 12/31/X3 by placing the appropriate entries in their respective debit/credit column cells.

Answer 1

A spreadsheet was prepared for the consolidated financial statement for a parent company.

Below is the attached file and solution for the work spreadsheet for consolidation entries.

Step-by-step explanation:

Solution

Given that:

The following information for X2 and X3 is given below:

Sales (Inventory) The GP of inventory (Unsold) Receivable (Payable)

X2 $87,900 $19,137 $27,986

X3 $103,300 $29,441 $41,320

Now,

Note: Kindly find an attached copy of he spreadsheet below for the consolidated financial statement at 12/31/X3