Question: Pop Corporation owns a 40 percent interest
Pop Corporation owns a 40 percent interest in Son Company, a joint venture that is organized as an undivided interest. In its separate financial statements, Pop accounts for Son under the equity method, but for reporting purposes, the proportionate consolidation method is used.
Separate financial statements of Pop and Son at and for the year ended December 31, 2016, are summarized as follows (in thousands):
REQUIRED:
Prepare a workpaper for a proportionate consolidation of the financial statements of Pop Corporation and Son Company at and for the year ended December 31, 2016.
Transcribed Image Text:
Pop Corporation Son Company Combined Income and Retained Earnings Statements for the Year Ended December 31, 2016 Sales $ 800 $300 Income from Son 20 (150) (40) (60) Cost of sales (400) (100) (120) Depreciation expense Other expenses Net income Beginning retained earnings Beginning venture equity Dividends 200 50 300 250 (100) $ 400 Retained earnings/venture equity $300 Balance Sheets at December 31, 2016 Cash S 100 $ 50 Receivables-net 130 30 Inventories 110 40 Land 140 60 Buildings-net Equipment-net Investment in Son Total assets 200 100 300 180 120 $1,100 S 120 $460 Accounts payable Other liabilities Common stock, $10 par Retained earnings Venture equity Total equities S100 80 60 500 400 300 $1,100 $460
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