6 Proud Corporation acquired 80 percent of Spirited Company's voting stock on January 1, 20X3, at underlying book value. The fair
value of the noncontrolling interest was equal to 20 percent of the book value of Spirited at that date. Assume that the accumulated
depreciation on depreciable assets was $52,000 on the acquisition date. Proud uses the equity method in accounting for its
ownership of Spirited during 20X3. On December 31, 20X3, the trial balances of the two companies are as follows:
Item
Proud Corporation
Spirited Company
Debit
Credit
Debit
Credit
Current Assets
$ 181,000
$ 114,000
Depreciable Assets
509,000
316,000
Investment in Spirited Company
123,040
Depreciation Expense
23,000
13,000
Other Expenses
102,000
65,000
Dividends Declared
56,000
25,200
Accumulated Depreciation
$ 157,000
$ 65,000
Current Liabilities
46,000
36,000
Long-Term Debt
124,840
175,200
Common Stock
198,000
90,000
Retained Earnings
228,000
40,000
Sales
201,000
127,000
Income from Spirited Company
39,200
$ 994,040
$ 994,040 $ 533,200 $ 533,200
Required:
a. Prepare all consolidation entries required as of December 31, 20X3, to prepare consolidated financial statements.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
