Parker Company acquires an 80% interest in Sargent Company for $300,000 on January 1, 2015, when Sargent Company has the following balance sheet: (See image)The excess of the price paid over book value is attributable to the fixed assets, which have afair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parkeruses the sophisticated equity method to record the investment in Sargent Company.The trial balances of Parker and Sargent companies for December 31, 2016, are presented as follows: (see image)Parker Company continues to use the sophisticated equity method.Required:1. Prepare all the eliminations and adjustments that would be made on the 2016 consolidatedworksheet. ParkerSargentCurrent Assets102,000400,000115,000200,000(40,000)Depreciable Fixed AssetsAccumulated DepreciationInvestment in Sargent CompanyCurrent Liabilities....Common Stock ($10 par)Retained Earnings, January 1, 2016.Sales ..(130,000)312,000(80,000)(300,000)(256,000)(200,000)160,000(8,000)(100,000)(170,000)(100,000)85,000Expenses.Subsidiary Income (from Sargent Company). .Dividends Declared.10,000Totals ..Parker Company continues to use the sophisticated equity method.1. Prepare all the eliminations and adjustments that would be made on the 2016 consolidatedworksheet. AssetsLiabilities and EquityCurrent liabilities ....Common stock ($10 par). .Retained earnings ...Total liabilities and equity$100,000200,000$ 50,000100,000Current assetsDepreciable fixed assets150,000$300,000Total assets.$300,000The excess of the price paid over book value is attributable to the fixed assets, which have afair value of $250,000, and to goodwill. The fixed assets have a 10-year remaining life. Parkeruses the sophisticated equity method to record the investment in Sargent Company.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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

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
uses the sophisticated equity method to record the investment in Sargent Company.

The trial balances of Parker and Sargent companies for December 31, 2016, are presented as follows: (see image)

Parker Company continues to use the sophisticated equity method.

Required:
1. Prepare all the eliminations and adjustments that would be made on the 2016 consolidated
worksheet.

Parker
Sargent
Current Assets
102,000
400,000
115,000
200,000
(40,000)
Depreciable Fixed Assets
Accumulated Depreciation
Investment in Sargent Company
Current Liabilities....
Common Stock ($10 par)
Retained Earnings, January 1, 2016.
Sales ..
(130,000)
312,000
(80,000)
(300,000)
(256,000)
(200,000)
160,000
(8,000)
(100,000)
(170,000)
(100,000)
85,000
Expenses.
Subsidiary Income (from Sargent Company). .
Dividends Declared.
10,000
Totals ..
Parker Company continues to use the sophisticated equity method.
1. Prepare all the eliminations and adjustments that would be made on the 2016 consolidated
worksheet.

Assets
Liabilities and Equity
Current liabilities ....
Common stock ($10 par). .
Retained earnings ...
Total liabilities and equity
$100,000
200,000
$ 50,000
100,000
Current assets
Depreciable fixed assets
150,000
$300,000
Total assets.
$300,000
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
uses the sophisticated equity method to record the investment in Sargent Company.

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