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Business, 12.03.2021 15:40 meth77

Prime Company holds 80 percent of Lane Company’s stock, acquired on January 1, 20X2, for $160,000. On the acquisition date, the fair value of the noncontrolling interest was $40,000. Lane reported retained earnings of $50,000 and had $100,000 of common stock outstanding. Prime uses the fully adjusted equity method in accounting for its investment in Lane. Trial balance data for the two companies on December 31, 20X6, are as follows:
Prime Company Lane Company
Item Debit Credit Debit Credit
Cash and Accounts Receivable $113,000 $35,000
Inventory 260,000 90,000
Land 80,000 80,000
Buildings and Equipment 500,000 150,000
Investment in Lane Company Stock 191,600
Cost of Goods Sold 140,000 60,000
Depreciation and Amortization 25,000 15,000
Other Expenses 15,000 5,000
Dividends Declared 30,000 5,000
Accumulated Depreciation 205,000 45,000
Accounts Payable 60,000 20,000
Bonds Payable 200,000 50,000
Common Stock 300,000 100,000
Retained Earnings 322,000 95,000
Sales 240,000 130,000
Gain on Sale of Equipment 20,000
Income from Subsidiary 7,600
Total 1,354,600 1,354,600 440,000 440,000
Additional Information
1. At the date of combination, the book values and fair values of all separately identifiable assets and liabilities of Lane were the same. At December 31, 20X6, the management of Prime reviewed the amount attributed to goodwill as a result of its purchase of Lane stock and concluded an impairment loss of $18,000 should be recognized in 20X6 and shared proportionately between the controlling and noncontrolling shareholders.
2. On January 1, 20X5, Lane sold land that had cost $8,000 to Prime for $18,000.
3. On January 1, 20X6, Prime sold to Lane equipment that it had purchased for $75,000 on January 1, 20X1. The equipment has a total economic life of 15 years and was sold to Lane for $70,000. Both companies use straight-line depreciation.
4. There was $7,000 of intercompany receivables and payables on December 31, 20X6.
Required:
a. Give all consolidation entries needed to prepare a consolidation worksheet for 20X6. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Prepare a three-part worksheet for 20X6.
c. Prepare a consolidated balance sheet, income statement, and retained earnings statement for 20X6.

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Prime Company holds 80 percent of Lane Company’s stock, acquired on January 1, 20X2, for $160,000. O...

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