Consolidation Worksheet with Differential Kennelly Corporation acquired all of Short Company’s common shares on January 1, 20X5, for $180,000. On that date, the book value of the net assets reported by Short was $150,000. The entire differential was assigned to depreciable assets with a six-year remaining economic life from January 1, 20X5. The adjusted trial balances for the two companies on December 31, 20X5, are as follows: Kennelly Corporation Short Company Item Debit Debit Credit Cash $ 15,000 $ 5,000 Accounts Receivable 30,000 40,000 Inventory 70,000 60,000 Depreciable Assets (net) 325,000 225,000 Investment in Short Company Stock 195,000 Depreciation Expense 25,000 15,000 Other Expenses 105,000 75,000 Dividends Declared 40,000 10,000 Accounts Payable $ 50,000 $ 40,000 Notes Payable 100,000 120,000 Common Stock 200,000 100,000 Retained Earnings 230,000 50,000 Sales 200,000 Income from Subsidiary $805,000 25,000 $430,000 $430,000 Kennelly uses the equity method in accounting for its investment in Short. Short declared and paid dividends on December 31, 20X5. Required a. Prepare the elimination entries needed as of December 31, 20X5, to complete a consolidation worksheet. b. Prepare a three-part consolidation worksheet as of December 31, 20X5.

Consolidation Worksheet with Differential Kennelly Corporation acquired all of Short Company’s common shares on January 1, 20X5, for $180,000. On that date, the book value of the net assets reported...

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Consolidation Worksheet with Differential

Kennelly Corporation acquired all of Short Company’s common shares on January 1, 20X5, for $180,000. On that date, the book value of the net assets reported by Short was $150,000. The entire differential was assigned to depreciable assets with a six-year remaining economic life from January 1, 20X5. The adjusted trial balances for the two companies on December 31, 20X5, are as follows:

	Kennelly Corporation	Short Company
Item	Debit		Debit	Credit
Cash	$ 15,000		$ 5,000
Accounts Receivable	30,000		40,000
Inventory	70,000		60,000
Depreciable Assets (net)	325,000		225,000
Investment in Short Company Stock	195,000
Depreciation Expense	25,000		15,000
Other Expenses	105,000		75,000
Dividends Declared	40,000		10,000
Accounts Payable		$ 50,000		$ 40,000
Notes Payable		100,000		120,000
Common Stock		200,000		100,000
Retained Earnings		230,000		50,000
Sales		200,000
Income from Subsidiary	$805,000	25,000	$430,000	$430,000

Kennelly uses the equity method in accounting for its investment in Short. Short declared and paid dividends on December 31, 20X5.

Required

a. Prepare the elimination entries needed as of December 31, 20X5, to complete a consolidation worksheet.

b. Prepare a three-part consolidation worksheet as of December 31, 20X5.

Answered Same Day Dec 25, 2021

Solution

Robert answered on Dec 25 2021

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Consolidation Worksheet with Differential Kennelly Corporation acquired all of Short Company’s common shares on January 1, 20X5, for $180,000. On that date, the book value of the net assets reported...

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