Subsidiary with Other Comprehensive Income in Year Following Acquisition LO 5-4 Pirate Corporation acquired 60 percent ownership of Ship Company for $96,000 on January 1, 20X8, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of Ship Company. Accumulated depreciation on Buildings and Equipment was $75,000 on the acquisition date. Trial balance data at December 31, 20X9, for Pirate and Ship are as follows:
Pirate Corporation Ship Company
Item Debit Credit Debit Credit
Cash $ 18,000 $11,000
Accounts Receivable 45,000 21,000
Inventory 40,000 30,000
Buildings & Equipment 585,000 257,000
Investment in Row Company 44,000
Investment in Ship Company 116,400
Cost of Goods Sold 170,000 97,000
Depreciation Expense 30,000 10,000
Interest Expenses 8,000 3,000
Dividends Declared 40,000 20,000
Accumulated Depreciation $170,000 $95,000
Accounts Payable 75,000 24,000
Bonds Payable 100,000 50,000
Common Stock 200,000 100,000
Retained Earnings 231,000 70,000
Accumulated Other Comprehensive Income 6,000 10,000
Other Comprehensive Income from Ship Company
(OCI)—Unrealized Gain on Investments 2,400
Unrealized Gain on Investments (OCI) 4,000
Sales 250,000 140,000
Income from Ship Company 18,000
$ 1,052,400 $1,052,400 $493,000 $493,000
Additional Information
Ship purchased stock of Row Company on January 1, 20X8, for $30,000 and classified the investment as available-for-sale securities. The value of Row’s securities increased to $40,000 and $44,000, respectively, at December 31, 20X8, and 20X9. Assume that depreciation expense was $10,000 for the previous year as well.
Required:
a. Record all consolidation entries needed to prepare a three-part consolidation worksheet as of December 31, 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Prepare a three-part consolidation worksheet for 20X9 in good form.