Consolidation work and financial statements subsequent to acquisition Background and Information Palus Corporation acquired 90 percent of Stalus Company's voting stock on January 1, 2010. The price paid was $145,000. The excess of costs over book value was $10,000, which should be attributed to goodwill and must be amortized over 10 years. The fair value of the non-controlling (minority) interest was equal to 10 percent of the book value of Stalus at that date. Palus uses the equity method in accounting for its ownership of Stalus during the year 2010. Income during the year was $30,000 for Stalus and the company also declared dividends of $10,000.
On December 31, 2010, the trial balances of the two companies are as follows: Palus Corporation Stalus Corporation Item Debit Credit Debit Credit Current Assets $173,000 $105,000 Depreciable Assets 500,000 300,000 Investment in Stalus Company 163,000 Dividends Declared 10,000 Accumulated Depreciation 175,000 75,000 Current Liabilities 171,000 115,000 Long-Term Debt 100,000 45,000 Common Stock 200,000 100,000 Retained Earnings 123,000 50,000 Sales 100,000 80,000 Expenses 60,000 50,000 Income from Subsidiary 27,000 $896,000 $896,000 $465,000 $465,000 Required A. Prepare all eliminating journal entries required as of December 31, 2010, to prepare the consolidated worksheet. B. Prepare a condensed consolidation worksheet showing the trial balance, eliminations and adjustments, controlling retained earnings, controlling income statement, and consolidated balance sheet. C. Prepare the formal consolidated balance sheet, income statement, and retained earnings statements as of December 31, 2010.