PROBLEM
Consolidated Workpaper, Wholly Owned Subsidiary
Perkins Company acquired of Schultz Company on January for $ On December the companies prepared the following trial balances:
Perkins
Schultz
Cash $ $
Inventory
Investment in Schultz Company
Land
Cost of Goods Sold
Other Expense
Dividends Declared
Total Debits $ $
Accounts Payable $ $
Capital Stock
Other Contributed Capital
Retained Earnings,
Sales
Equity in Subsidiary Income
Total Credits $ $
Required:
What method is being used by Perkins to account for its investment in Schultz Company? How can you tell?
Prepare a workpaper for the preparation of consolidated financial statements on December Any difference between the book value of equity acquired and the value implied by the purchase price relates to goodwill.
