Tugas20
Poly Corporation purchased a 90% interest in Susan Corporation on December 31, 20X4
for $275,000 cash, when Susan had capital stock of $200,000 and retained earnings of
$50,000. All Susan’s assets and liabilities were recorded at their fair values when Poly
acquired its interest. The excess of cost over book value is being amortized over a 10year period.
The Poly/Susan affiliation is vertically integrated merchandising operation, with
Susan selling all of its output to Poly Corporation at 140% of its cost. Poly sells the
merchandise acquired from Susan at 150% of its purchase price from Susan. All of Poly’s
December 31, 20X6 and December 31, 20X7 inventories of $28,000 and $42,000,
respectively, were acquired from Susan. Susan’s December 31, 20X6 and December 31,
20X7 inventories were $80,000 each.
Poly’s accounts payable at December 31, 20X7 includes $10,000 owed to Susan
from 20X7 purchases.
Comparative financial statements for Poly Corporation and Susan Corporations at
and for the year ended December 31, 20X7 are as follows:
Poly
Susan
$819,000
$560,000
Combined Income and Retained Earnings Statements
for the Year Ended December 31, 20X7
Sales
Income from Susan
81,400
-
Cost of sales
(546,000)
400,000)
Other expenses
(154,400)
(60,000)
Net income
Add : Beginning retained earnings
Deduct : Dividends
Retained earnings December 31, 20X7
200,000
100,000
120,000
70,000
(100,000)
(50,000)
$220,000
$120,000
$ 75,800
$ 50,000
42,000
80,000
Balance Sheet at December 31, 20X7
Cash
Inventory
Other current assets
60,000
20,000
Plant assets-net
300,000
300,000
Investment in Susan
312,200
-
$790,000
$450,000
$170,000
$130,000
Capital stock
400,000
200,000
Retained earnings
220,000
120,000
$790,000
$450,000
Total assets
Current liabilities
Total equities
Required : Prepare consolidation working papers for Poly Corporation and Subsidiary for
the year ended December 31, 20X7.