On January 1, 20X9, Zigma Company acquired 90 percent of Standard Company's common shares at the underlying book value. Zigma paid $76,500 for the 90% ownership. Zigma uses the equity method in accounting for its ownership of Standard. On December 31, 20X9, the financials of the two companies are attached as part of the Consolidated Worksheet. During the year, Standard sold to Zigma land for $50K. Standard had purchased the land for $20K. Zigma still held the land at the end of of 20X10. In 20X11, Zigma sold the land for $80K. 1. Prepare all the eliminating entries needed as of December 31, 20X9, 20X10 and 20X11 and complete the consolidated worksheet. (Hint: I suggest that you reconcile the "Investment in Standard "and "Income from Standard" accounts by determining the equity entries that were made during the year).
December 31, 20X9 Eliminations
Zigma Standard Debit Credit Consolidated
Income Statement
Sales 227,000 107,000
Gain on Land Sale 30,000
Other Expenses (90,000) (70,000)
Depreciation (30,000) (17,000)
Income from Standard 18,000
Net Income 125,000 50,000
NCI Net Income
CI Net Income 125,000 50,000
Statement of Retained Earnings
Beginning RE 175,000 35,000
Net Income 125,000 50,000
Less Dividends Declared (32,000) (10,000)
Ending Retained Earnings 268,000 75,000
Balance Sheet
Current Assets 222,500 120,000
Depreicable Assets 300,000 170,000
Accumulated Depreciation (120,000) (85,000)
Land 50,000
Investment in Standard 85,500
Total Assets 538,000 205,000
Current Liabilities 50,000 30,000
Long Term Liabilities 120,000 50,000
Common Stock 100,000 50,000
Retained Earnings 268,000 75,000
NCI Share of Assets - -
Total Liabilities and Equity 538,000 205,000