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question parker company acquires an 80 interest in sargent company for 300 000 in ca 4292718


Parker Company acquires an 80% interest in Sargent Company for $300,000 in cash on January 1, 2015, when Sargent Company has the following balance sheet:

Assets Liabilities and Equity

The excess of the price paid over book value is attributable to the fixed assets, which have a fair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parker Company uses the simple equity method to record its investment in Sargent Company.

The following trial balances of the two companies are prepared on December 31, 2015:

Parker Sargent

1. Prepare a determination and distribution of excess schedule (a value analysis is not needed) for the investment.

2. Prepare all the eliminations and adjustments that would be made on the 2015 consolidated worksheet.

3. Prepare the 2015 consolidated income statement and its related income distribution schedules.

4. Prepare the 2015 statement of retained earnings.

5. Prepare the 2015 consolidated balance sheet.

Current Assets


Current Liabilities


Depreciable fixed assets (net)


Common Stock ($10 par)




Retained Earnings


Total Assets


Total Liabilities and Equity



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