ACCTG 5130 – On January 1, 20X9, Zigma Company
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On January 1, 20X9, Zigma Company acquired 90 percent of Standard Company’s common shares at the underlying book value. Zigma paid $76,500 for the 90% ownership. Zigma uses the equity method in accounting for its ownership of Standard. On December 31, 20X9, the financials of the two companies are attached as part of the Consolidated Worksheet. During the year, Standard sold to Zigma land for $40K. Standard had purchased the land for $20K. Zigma still held the land at the end of of 20X10. In 20X11, Zigma sold the land for $70K.
1. Prepare all the eliminating entries needed as of December 31, 20X9, 20X10 and 20X11 and complete the consolidated worksheet. (
December 31, 20X9
Zigma
Standard
Income Statement
Sales
227,000
107,000
Gain on Land Sale
30,000
Other Expenses
(90,000)
(70,000)
Depreciation
(30,000)
(17,000)
Income from Standard
18,000
Net Income
125,000
50,000
NCI Net Income
CI Net Income
Statement of Retained Earnings
Beginning RE
175,000
35,000
Net Income
125,000
50,000
Less Dividends Declared
(32,000)
(10,000)
Ending Retained Earnings
268,000
75,000
Balance Sheet
Current Assets
222,500
120,000
Depreicable Assets
300,000
170,000
Accumulated Depreciation
(120,000)
(85,000)
Land
50,000
Investment in Standard
85,500
Total Assets
538,000
205,000
Current Liabilities
50,000
30,000
Long Term Liabilities
120,000
50,000
Common Stock
100,000
50,000
Retained Earnings
268,000
75,000
NCI Share of Assets
–
–
Total Liabilities and Equity
538,000
205,000
December 31, 20X10
Zigma
Standard
Income Statement
Sales
200,000
100,000
Gain on Land Sale
–
Other Expenses
(90,000)
(70,000)
Depreciation
(30,000)
(20,000)
Income from Standard
9,000
Net Income
89,000
10,000
NCI Net Income
CI Net Income
Statement of Retained Earnings
Beginning RE
268,000
75,000
Net Income
89,000
10,000
Less Dividends Declared
–
–
Ending Retained Earnings
357,000
85,000
Balance Sheet
Current Assets
302,500
130,000
Depreicable Assets
300,000
170,000
Accumulated Depreciation
(120,000)
(85,000)
Land
50,000
Investment in Standard
94,500
Total Assets
627,000
215,000
Current Liabilities
50,000
30,000
Long Term Liabilities
120,000
50,000
Common Stock
100,000
50,000
Retained Earnings
357,000
85,000
NCI Share of Assets
–
–
Total Liabilities and Equity
627,000
215,000
