Accounting assignment needed to be done by 11/30/2013 10:00pm

All instrcutions are included in the file please do all rquirements. I think “upstream/downstream sales are involved. You have to do a Carry forward schedule, consolidation worksheet, eliminating entries and the workpapers. Aside the main problem, please do the extra credit too.  I have included a file (an example of the format; how we have done the carry forward schedule, consolidation worksheet and 7 eliminating entries in class). I only want an accounting expert for this please.

 

P.S. This is college work. Please do a good job.

 Thanks!

THE PROBLEM

Part 1 THE PROBLEM: (7

0

Pts)
 
Thomas, the President of “Thomas’

Turkey

Corporation” (Turkey), a fabric material company, gobbled up “The Best

Stuffing

Company “(Stuffing), a pillow manufacturer, when Turkey paid $33,600 cash for a 70% interest in Stuffing on January 1, 2012, when Stuffing’s stockholders’ equity consisted of $

20,000

Capital Stock and $

10,000

of

Retained Earnings

.
Stuffing’ s Assets and Liabilities were tailored specifically for this acquisition and had total Fair Market Value differentials as follows at the time of acquisition:

Inventory was undervalued by $3,000 and were sold evenly over a three year period starting at the date of acquisition
Plant Assets with a 5 yr life were overvalued by $

5,000

Trade Marks with a 20 yr life and $

6,000

in value were not recorded
A mortgage with 10 yrs of remaining payments were overvalued by $1,000
Any remaing difference in Cost vs Book was attributed to Goodwill
 
Additional information:
  
1. Turkey sold feathers that cost $6,000 to Stuffing for $

8,000

during 2012 and one-half of these feathers remained in stock by Stuffing on December 31, 2012.
 
 2. During 2013 Turkey Corporation sold feathers that cost $8,000 to Stuffing for $10,000 and 30% of these feathers remained unsold by Stuffing on December 31, 2013. Stuffing Company owed Turkey $

2,000

on account at year-end 2013.
 
3. Turkey Corporation sold a plucking machine with a 5-year remaining life and a book value of $

4,000

to Stuffing for $5,000 on July 1, 2013. Straight-line depreciation is used.
4. On Sept 1, 2013 Stuffing shaved the price to $5,000 on a turkey feather trimming machine it sold to Turkey when the trimming machine had a book value of $7,000 with a 10 year remaining life.
 
5. Turkey and Stuffing declared annual dividends in 2013 of $10,000 and $4,000, respectively so that their shareholders could share in the gravy.
  
6. Separate financial statements for Turkey and Stuffing appear on partially completed consolidation working papers.
7. In 2012, Stuffing made net income of $10,000 and paid dividends of $2,000
  
Required:
So before you start, since you are doing 20″13″, make a wish using a “Turkey Wishbone” and then:

Please prepare all the required carryforward schedules for the above Consolidation
 
 We need to put the Stuffing back into the Turkey as a consolidated group as of December 31, 2013. So please complete the working papers to consolidate the financial statements for 2013 including all entries required in good journal form. Also prepare all proofs that you deem necessary (please note I am looking for your discretion on what you should prove but I believe there is a minimum that you need to do, so use your professional judgment and hopefully you will do all the right ones). If you believe there is an error in the underlying accounting of the parent’s equity accounting please make the appropriate correcting entry.
Part 2 (30 Pts):
Explain the 7 major classes of Eliminating entries. Just dont state what we do, I can see that by looking at the entry, tell me the theory of why you are doing it. Also if there is a major class that we dont have any entries for explain that major class anyways.
Extra

Credit

:
On January 1, 2012, Tidal Wave, Co. purchased 70% of the outstanding voting common stock of Colony, Inc., for $2,100,000. The book value of Colony’s net equity on that date was $3,000,000. Book values were equal to fair values except as follows:
Assets & Liabilities Book Values Fair Values
Inventory (sold current year) $200,000 $225,000
Building (10 year life Straight line) 850,000 750,000
Note payable (Due in 5 years) 300,000 320,000
Do all the underlying accounting of the Parent for both years including but not limited to all the general journal entries in good form, and the T accounts for both the “investment” accounting and “the income from Sub”. Also include anything else as a good accountant would!!!

 

CONS WORKSHEET

Group

Turkey Stuffing

Consolidated

Db (Cr)

Credit Db (Cr)

2,000

20,000

6,000 2,000

8,000

(18,000)

(33,720) (18,000)

10,000 4,000

5,000

6,000

(10,000) (1,000)

Retained Earnings (47,890) (32,000)

Turkey with Stuffing	Consolidated
Consolidation Working Papers
at December 31, 2013
Eliminations
		Db (Cr)	Debit
INCOME STATEMENT
Sales	(90,000)	(50,000)
Income from Stuffing	(13,220)
Gain on Sale of Plucking Mach		(1,000)
Loss on Feather Trimming Mach
Cost of sales	40,000
Depreciation exp
Other Expenses	24,500
Net income		(33,720)			(18,000)
Retained Earnings 1/1	(24,170)
Add: Net income
Dividends
Retained Earnings 12/31		(47,890)		(32,000)
BALANCE SHEET
Cash	6,400	15,000
Receivables	1,500	8,200
Dividends Rec
Inventories	12,000
Plant/Equipment-net	41,000	30,000
Investment in Stuffing	48,340
TOTAL ASSETS	114,240	59,200
LIAB. & EQUITY
Accounts payable	(6,350)	(2,200)
Dividend payable		(10,000)	(4,000)
Other Debt
Capital stock	(40,000)	(20,000)
TOTAL LIAB. & EQUITY	(114,240)	(59,200)	– 0

ENTRIES

0

YOUR WORKPAPERS

EXTRA CREDIT

Sheet1

0% implied value

1/1/11

50,000 0 50,000 0 50,000

-5,000 5,000 0

0 0

3,000

50,000

1/1/11 11 Adj 12/31/11 12 Adj 12/31/12

Upstream Transaction

Goodwill

0 45,000 0 45,000

Downstream Trans
11 Def Gross Profit -5,000 -5,000 5,000 0

12 Def Gross Profit

-4,000

Deferred gain on land -3,000 -3,000 0 -3,000
Deferred gain on equip -9,000 -9,000

Depr on equip (gain) 3000 3,000

Excess cost over Bk 45,000 -8,000

-5,000

																																																																																																																																																																																																																																																																																																							1									0	90% interest at		1/1/11
Cost of Acquisition	800,000	600,000
BV of Sub	400,000	300,000
Excess Cost over Book							50,000	4					5,000
Excess Cost over Book – Consolidation		11 Adj		12/31/11		12 Adj										12/31/12
	Upstream Transaction
				Goodwill
	Downstream Trans
	11 Def Gross Profit					-5,000
	12 Def Gross Profit
	Deferred gain on land		–					3,000			-3,000
	Deferred gain on equip	-9000			–				9,000
	Depr on equip (gain)		3000
	Excess cost over Bk		-8,000	4			2,000	-1,000	4			4,000
Excess Cost over Book – Equity
			45,000
	-4,000
37,000	32,000

Sheet2

12/31/12

2,000

of Sub

12/31/12

Dividends

and Eliminate Dividends

12/31/12 NCI Share of Income 4,000
Dividends 2,000

2,000

12/31/12

50,000

Part 2

5,000

3,000 Part 3

Goodwill 50,000

12/31/12

20,000

12/31/12 Inventory 5,000

5,000

12/31/12 COGS 4,000
Inventory 4,000

9,000

9,000

3,000

3,000

12/31/12

30,000

9,000

9,000

STEP 1: Errors and Omissions – N/A
		Cash	2000
A/R
Step 2: Eliminate our share of NI and				Dividends
Income from Sub	31,000
18,000
Investment in Sub	13,000
To eliminate income and dividends from Sue and return the investment account to its beginning of the period balance
Step 3: Establish	NCI Share of Income
NCI Change
To enter noncontrolling interest share of subsidiary income and dividends
STEP 4: Eliminate the Investment Account
Investment in sub (boy)	145,000	Part 1
Common Stock – Sub		Part 2
R/E – Sub – BOY	70,000
		Inventory		Part 3
		Land
Part 4
NCI – BOY	17,000	Part 5
To eliminate reciprocal investment and equity balances and record beginning noncontrolling interest
STEP 5: Eliminate Inter-co profits or loss
5a Inter-co sales
		Sales		20,000
Cogs
To recognize total inter-co sales
STEP 6: FMV Adjustments (Per Cons CF Sch)
	COGS
To recognize previously 11 deferred gross profit
Gain on sale
Equipment
Equipment, net (A/D)
Depr Expense
To defer 12 gross profit
STEP 7: Eliminate Reciprocals
		Accounts payable		30,000
		Accounts receivable
		Dividends payable
		Dividends receivable
To eliminate reciprocal receivable and payable balances

Sheet3

Corporation and Subsidiary

Pal

Eliminations
Sales

)

)

31.0

9.0

4.0 4.0

)

— Par

(157.0)

70.0 – 0

(40.0) (142.0)

Dividends 60.0 20.0 20.0 60.0

)

Cash 100.0

2.0

Accounts receivable 90.0 50.0

Dividends receivable 9.0 9.0 – 0

3.0 3.0

20.0 8.0 5.0 5.0

Land 40.0

3.0

50.0

60.0 9.0

– 0

Goodwill 50.0 50.0
Accounts payable

)

30.0 (98.0)

Dividends payable

9.0

(300.0)

50.0 (300.0)

Retained earnings

(239.0)

17.0

2.0

– 0 – 0

	Pal
Consolidation Workpapers
for the year ended December 31, 2012
	(in thousands)
	Adjustments and		Consolidated
Sim 90%				Eliminations		Statements
	Income Statement		Debit Credit
					(300.0)	(		100.0		(400.0)
Income from Sim	(		31.0												– 0
Gain on sale of equipment												9.0	1		8.0
	Cost of sales	1		40.0												50.0						4.0								20.0		169.0
					5.0
	Depreciation expense								3.0		(3.0)
	Operating expenses								60.0		10.0				70.0
	Consolidated NI		(146.0)
	Noncontrolling share
	Controlling share of NI		(12				2.0				(40.0)				(142.0)
	Retained Earnings
		Retained earnings				(157.0)
	Retained earnings — Sul		(70.0)
	Net income		(122.0)
	Retained earnings – Dec 31		(219.0)	(		90.0				(239.0)
	Balance Sheet
			17.0		119.0
	32.0		108.0
	Accumulated depr-equipment
	Inventories		28.0
	15.0		52.0
	Buildings — net		135.0		185.0
	Equipment — net		165.0		216.0
	Investment in Sim		158.0		13.0
	145.0
	717.0		200.0		761.0
			(98.0)	(		30.0
	(15.0)		(10.0)		(16.0)
	Other liabilities		(67.0)		(20.0)		(87.0)
	Capital stock		(50.0)
	(237.0)			(90.0)
	(717.0)		(200.0)
	Noncontrolling interest January 1
	Noncontrolling interest December 31		(19.0)
	267.0		283.0		(759.0)

Sheet4

Corporation and Subsidiary

(in thousands)
Adjustments and Consolidated

Pig

Eliminations Statements

Eliminations
Income Statement Debit Credit
Sales (300.0)

(400.0)

31.0 – 0

9.0 9.0

Cost of sales

50.0 4.0 20.0 169.0
5.0
Depreciation expense 3.0 (3.0)
Operating expenses 60.0 10.0 70.0
Consolidated NI (146.0)
Noncontrolling share 4.0 4.0
Controlling share of NI (122.0) (40.0) (142.0)

Retained Earnings

(157.0) (157.0)
Retained earnings — Sul (70.0) 70.0 – 0
Net income (122.0) (40.0) (142.0)
Dividends 60.0 20.0 20.0 60.0

Retained earnings – Dec 31 (219.0) (90.0) (239.0)
Balance Sheet
Cash 100.0 17.0 2.0 119.0
Accounts receivable 90.0 50.0 32.0 108.0
Dividends receivable 9.0 9.0 – 0
Accumulated depr-equipment 3.0 3.0
Inventories 20.0 8.0 5.0 5.0 28.0
Land 40.0 15.0 3.0 52.0
Buildings — net 135.0 50.0 185.0
Equipment — net 165.0 60.0 9.0 216.0
Investment in Sim 158.0 13.0 – 0
145.0
Goodwill 50.0 50.0
717.0 200.0 761.0

Accounts payable (98.0)

30.0 (98.0)
Dividends payable (15.0) (10.0) 9.0 (16.0)
Other liabilities (67.0) (20.0) (87.0)
Capital stock (300.0) (50.0) 50.0 (300.0)
Retained earnings (237.0) (90.0) (239.0)
(717.0) (200.0)
Noncontrolling interest January 1 17.0
Noncontrolling interest December 31 2.0 (19.0)
– 0 – 0 267.0 283.0 (759.0)

	Pig
Consolidation Income Statement
for the year 2011
Sal 90%
(100.0)
Income from Sal	(31.0)
Gain on building	18.0
140.0	Retained earnings — Par	(30.0)