Powell Corporation acquired 90% of the voting stock of Santer Corporation on January 1, 2014 for $11,700 when Santer had Capital Stock of $5,000 and Retained Earnings of $4,000. The amounts reported on the financial statements approximated fair value, with the exception of inventories, which were understated on the books by $500 and were sold in 2014, land which was undervalued by $1,000, and equipment with a remaining useful life of 5 years under the straight-line method which was undervalued by $1,500. Any remainder was assigned to goodwill.
Financial statements for Powell and Santer Corporations at the end of the fiscal year ended December 31, 2015 appear in the first two columns of the partially completed consolidation working papers. Powell has accounted for its investment in Santer using the equity method of accounting. Powell Corporation owed Santer Corporation $100 on open account at the end of the year. Dividends receivable in the amount of $450 payable from Santer to Powell is included in Powell's net receivables.
Required:
Complete the consolidation working papers for Powell Corporation and Subsidiary for the year ended December 31, 2015.
Powell Santer Eliminations Debit Credit Consolidated
INCOME STATEMENT
Sales $ 10,000 $ 6,500
Income from Santer 1,080
Cost of Sales ( 4,000 ) ( 3,300 )
Depreciation Expense ( 1,000 ) ( 1,000 )
Other expenses ( 1,800 ) ( 700 )
Noncontrolling Interest Share
Net income $ 4,280 $ 1,500
Retained Earnings 1/1 $ 2,510 $ 5,000
Add: Net income 4,280 1,500
Less: Dividends ( 2,000 ) ( 1,000 )
Retained Earnings 12/31 $ 4,790 $ 5,500
BALANCE SHEET
Cash $ 1,440 $ 1,900
Receivables-net 1,100 600
Inventories 1,500 1,200
Land 1,000 1,600
Equipment and Buildings-net 7,500 6,700
Investment in Santer Corp 12,060
Goodwill
TOTAL ASSETS $ 24,600 $ 12,000
LIAB. & EQUITY
Accounts payable $ 3,810 $ 1,000
Dividends Payable 2,000 500
Capital Stock 14,000 5,000
Ret. Earnings 4,790 5,500
Nonctl. Interest 1/1
Nonctl. Interest 12/31
LIAB. & EQUITY $ 24,600 $ 12,000