Tugas17
Peter Pepper Company paid $100,000 for a 90% interest in Simple Pear on January 5,
20X2, when Simple Pear’s capital stock was $60,000 and its retained earnings $20,000.
Trial balances for the companies at December 31, 20X5 are as follows :
Peter Pepper
Simple Pear
$ 11,000
$ 15,000
15,000
25,000
Plant assets
220,000
180,000
Investment in Simple Pear
138,000
Cash
Receivable-net
-
Cost of goods sold
50,000
30,000
Operating expenses
25,000
40,000
Dividends
20,000
10,000
$479,000
$300,000
$ 90,000
$ 50,000
80,000
30,000
Capital stock
100,000
60,000
Paid-in excess
20,000
Retained earnings
73,000
70,000
100,000
90,000
Accumulated depreciation
Liabilities
Sales
Income from Simple Pear
-
16,000
$479,000
$300,000
The excess of investment cost over book value acquired was allocated $8,000 to
undervalued inventory items that were sold in 20X2 and the remainder to goodwill
having a remaining useful life of 10 years from January 1, 20X2.
Required
1. Summarize the changes in Peter Pepper Company’s investment in Simple Pear
account from January 5, 20X2 though December 31, 20X5.
2. Prepare consolidation working papers for Peter Pepper Company and Subsidiary
for the year 20X5 using the trial balance approach for your working papers.