Give step-by-step solution with explanation and final answer:On January 1, 2023, Mons, Incorporated, acquired 80 percent of Lisa Company's common stack as well as 70 percent of is prefered
Shares. Mona pac $70,000 i cash forthe prefered sock, with a call value of 10 percent of the $50 per share par value. The
remaining 30 percent of the preferred shares traded at a $38,000 ai value. Mona paid $585,000 for the common stock Al the
acquisiion date, the noncontollng Interest nthe common stock had a al value of $65,000. The excess faif value over Lisa's book
Value was attibuted to franchise contracts of $54,000. Tis intangible asset i being amortized over a 30-year period. Lia pays all
preferred stock dividends ( total of $13,000 per year) on an annual bass. During 2023, sas book value Increased by $115.000.
On January 2. 2023, Mona acquired one-half of Lisa's outstanding bonds payable to reduce the business combinaton's debt postion.
Lisa's bonds had a face value of $100,000 and paid cash nterest of percent per year These bonds had been issued to the public to
yield 10 percent Interests paid each December 31. On January 2, 2023, these bonds had a total $87,320 carrying amount Mona paid
$51773, indicating an effective interest rate of § percent.
On January 3, 2023, Mona sold Lisa fixed assets that had originally cost $105,000 but had accumulated depreciation of $50,000 when
wansfered. The transfer was made at pice of $130,000. These assets were estimated to have a remaining usel Ife of 10 years.
The Individual financial statements fo these two companies for the year ending December 31, 2024, are as follows:
Accounts Mona, Incorporated Lisa Conpany
Sales and other revenues ¥sIn,00m 5 (210,000)
Expenses 225,000 25,000
Dividend incone-tisa comen stock (5 s0m)
Dividend income Lisa preferred stock (5.100)
Net. incane RECENT]
Retained earninos, 1/1/20 mow sonar
Net. incane.(3sove) Gorses) iss, e00)
Dividends sestared-connon stock 500 3,000
Dividends declared-preferrad stock 130m
Retained earnings, 12/31/24 ¥ (ot,000 5 (567,000)
current assets — mm swe
Invectaent in Liza-comon stock Ex
Investaent in Lisa preferras stock 75,000
Investaent in Liss bonds 50,950
Fix assets 1,105,080 ans, ono
Accumulated deprecistion (5os,000) (205,000)
Total assets 160,309 51,108,000
Account payable mem soar
Bonds payable (190,280)
DiScauht on bonds payable xed
Conon stack Ges,000) (205,000)
Preferred stock (105,000)
Retained earnings, 12/31/24 (514,000) (507.000)
Total Lisbilities and equities $03,601,309) 5 (3,105,000)
Note: Cras are incicated by parentheses.
Required:
a. What consoldation worksheet adjustments would have been required as of January 1, 2023, to eliminate the subsidiary’ common
and preferred stocks?
b. What consoldation worksheet adjustments would have been required as of December 31, 2023, to account for Mona's purchase of
Lisa's bons?
What consolidation worksheet adjustments would have been required as of December 31, 2023, o account for the ntra-ently sale
of fed assets?
d. Assume that consolidated financial statements are being prepared for the year ending December 31, 2024, Calculate the
consolidated balance for each of te flloving accounts:
Franchises
Fixed Assets
Accumulated Depreciation
Expenses
Question:
Give step-by-step solution with explanation and final answer:On January 1, 2023, Mons, Incorporated, acquired 80 percent of Lisa Company's common stack as well as 70 percent of is prefered
Shares. Mona pac $70,000 i cash forthe prefered sock, with a call value of 10 percent of the $50 per share par value. The
remaining 30 percent of the preferred shares traded at a $38,000 ai value. Mona paid $585,000 for the common stock Al the
acquisiion date, the noncontollng Interest nthe common stock had a al value of $65,000. The excess faif value over Lisa's book
Value was attibuted to franchise contracts of $54,000. Tis intangible asset i being amortized over a 30-year period. Lia pays all
preferred stock dividends ( total of $13,000 per year) on an annual bass. During 2023, sas book value Increased by $115.000.
On January 2. 2023, Mona acquired one-half of Lisa's outstanding bonds payable to reduce the business combinaton's debt postion.
Lisa's bonds had a face value of $100,000 and paid cash nterest of percent per year These bonds had been issued to the public to
yield 10 percent Interests paid each December 31. On January 2, 2023, these bonds had a total $87,320 carrying amount Mona paid
$51773, indicating an effective interest rate of § percent.
On January 3, 2023, Mona sold Lisa fixed assets that had originally cost $105,000 but had accumulated depreciation of $50,000 when
wansfered. The transfer was made at pice of $130,000. These assets were estimated to have a remaining usel Ife of 10 years.
The Individual financial statements fo these two companies for the year ending December 31, 2024, are as follows:
Accounts Mona, Incorporated Lisa Conpany
Sales and other revenues ¥sIn,00m 5 (210,000)
Expenses 225,000 25,000
Dividend incone-tisa comen stock (5 s0m)
Dividend income Lisa preferred stock (5.100)
Net. incane RECENT]
Retained earninos, 1/1/20 mow sonar
Net. incane.(3sove) Gorses) iss, e00)
Dividends sestared-connon stock 500 3,000
Dividends declared-preferrad stock 130m
Retained earnings, 12/31/24 ¥ (ot,000 5 (567,000)
current assets — mm swe
Invectaent in Liza-comon stock Ex
Investaent in Lisa preferras stock 75,000
Investaent in Liss bonds 50,950
Fix assets 1,105,080 ans, ono
Accumulated deprecistion (5os,000) (205,000)
Total assets 160,309 51,108,000
Account payable mem soar
Bonds payable (190,280)
DiScauht on bonds payable xed
Conon stack Ges,000) (205,000)
Preferred stock (105,000)
Retained earnings, 12/31/24 (514,000) (507.000)
Total Lisbilities and equities $03,601,309) 5 (3,105,000)
Note: Cras are incicated by parentheses.
Required:
a. What consoldation worksheet adjustments would have been required as of January 1, 2023, to eliminate the subsidiary’ common
and preferred stocks?
b. What consoldation worksheet adjustments would have been required as of December 31, 2023, to account for Mona's purchase of
Lisa's bons?
What consolidation worksheet adjustments would have been required as of December 31, 2023, o account for the ntra-ently sale
of fed assets?
d. Assume that consolidated financial statements are being prepared for the year ending December 31, 2024, Calculate the
consolidated balance for each of te flloving accounts:
Franchises
Fixed Assets
Accumulated Depreciation
Expenses
This is AI generated Response.
Asked by: Nishant Saini
Created at: 2025-09-27 14:06:03
Final Answer:
RenderedRaw Text
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Let's tackle each requirement step-by-step. I'll provide clear explanations and calculations for each part.
---
## a. **Elimination of Subsidiary's Common and Preferred Stocks (as of January 1, 2023
**Purpose
To remove's equity accounts from the consolidated books and recognize Mona's investment.
### **Elimination Entry:**
On the acquisition date, Mona owns:
- 90% of Lisa’s common stock ($285,000 × 90% = $256,500)
- 70% of Lisa’s preferred stock ($105,000 × 70% = $73,500)
**Total consideration paid:**
- Common stock: $585,000
- Preferred stock: $70,000
- Noncontrolling interest in common stock: $65,000 (fair value)
- Noncontrolling interest in preferred stock: $39,000 (fair value, 30% of $130,000 call price)
- Intangible asset (franchise contracts): $54,000
#### **Elimination Entry as of January 1, 2023:**
| Account | Debit | Credit |
|----------------------------------|-----------------|---------------|
| Common stock (Lisa) | $285,000 | |
| Preferred stock (Lisa) | $105,000 | |
| Retained earnings (Lisa) | $510,000 | |
| Franchise contracts (intangible) | $54,000 | |
| Investment in Lisa—Common | | $585,000 |
| Investment in Lisa—Preferred | | $70,000 |
| Noncontrolling interest (Common) | | $65,000 |
| Noncontrolling interest (Preferred) | | $39,000 |
**Explanation:**
- Eliminate Lisa’s equity accounts (common stock, preferred stock, retained earnings).
- Recognize Mona’s investments and noncontrolling interests.
- Recognize intangible asset for franchise contracts.
---
## b. **Worksheet Adjustments for Mona’s Purchase of Lisa’s Bonds (as of December 31, 2023)**
Mona acquired $100,000 face value of Lisa's bonds at $51,773 (effective interest rate 5%). Lisa's carrying value is $87,320.
### **Elimination Entry:**
| Account | Debit | Credit |
|---------------------------|-----------|----------|
| Bonds payable (Lisa) | $100,000 | |
| Discount on bonds payable | $6,942 | |
| Investment in Lisa bonds | | $51,773 |
| Gain on retirement of bonds | | $54,169 |
- **Bonds payable:** Remove the entire face value ($100,000).
- **Discount on bonds payable:** Remove Lisa’s carrying discount ($6,942).
- **Investment in Lisa’s bonds:** Remove Mona's carrying amount ($51,773).
- **Gain on retirement:** Plug for difference (to eliminate gain/loss on intra-entity bond holding).
---
## c. **Worksheet Adjustments for Intra-entity Sale of Fixed Assets (as of December 31, 2023)**
On Jan 3, 2023, Mona sold assets (original cost $105,000, accumulated depreciation $50,000) to Lisa for $130,000.
### **Calculation:**
- **Book value at sale:** $105,000 - $50,000 = $55,000
- **Sale price:** $130,000
- **Unrealized gain:** $130,000 - $55,000 = $75,000
- **Remaining useful life:** 10 years
- **Annual depreciation by Lisa:** $130,000 / 10 = $13,000
- **Additional annual depreciation (from excess):** $75,000 / 10 = $7,500
### **Elimination Entry:**
| Account | Debit | Credit |
|--------------------------|----------|----------|
| Gain on sale of fixed assets | $75,000 | |
| Accumulated depreciation | $7,500 | |
| Fixed assets | | $75,000 |
| Depreciation expense | | $7,500 |
- **Gain on sale:** Eliminate entire unrealized gain ($75,000).
- **Depreciation expense:** Adjust for excess depreciation taken by Lisa ($7,500).
- **Accumulated depreciation:** Adjust accordingly.
---
## d. **Consolidated Balances for Franchises, Fixed Assets, and Accumulated Depreciation (as of December 31, 2024)**
### **1. Franchises**
- **Intangible from combination:** $54,000 (amortized over 30 years)
- **Amortization for 2 years:** $54,000 × (2/30) = $3,600
- **Net carrying amount:** $54,000 - $3,600 = **$50,400**
---
### **2. Fixed Assets**
#### **Step 1: Add Book Values**
- Mona: $1,185,000
- Lisa: $805,000
#### **Step 2: Adjust for Intra-entity Sale**
- Subtract unrealized gain: $75,000
**Consolidated Fixed Assets:**
$1,185,000 + $805,000 - $75,000 = **$1,915,000**
---
### **3. Accumulated Depreciation**
#### **Step 1: Add Book Values**
- Mona: $365,000
- Lisa: $225,000
#### **Step 2: Adjust for Excess Depreciation**
- Add back excess depreciation for 2023 and 2024: $7,500 × 2 = $15,000
**Consolidated Accumulated Depreciation:**
$365,000 + $225,000 + $15,000 = **$605,000**
---
## **Summary Table**
| Account | Consolidated Balance (12/31/2024) |
|----------------------------|:----------------------------------:|
| Franchises (net) | $50,400 |
| Fixed assets | $1,915,000 |
| Accumulated depreciation | $605,000 |
---
### **Summary of Required Entries and Calculations**
- **a.** Eliminate Lisa’s equity accounts, recognize Mona’s investment, intangible, and noncontrolling interests.
- **b.** Eliminate intra-entity bond investment, bonds payable, discount, and recognize gain/loss.
- **c.** Eliminate intra-entity gain on fixed asset sale and adjust depreciation.
- **d.** Compute consolidated carrying amounts for franchise, fixed assets, and accumulated depreciation.
If you need the journal entries in a specific format or have questions on any calculation, let me know!
Question:
1st entry is correct but the accounts for 2nd and 3rd entry is incorrect i provide a image of both entry and make again but value should be same for my question
2nd entry:
Debit
Bonds payable
Interest income
Loss on retirement of bonds
Credit ]
Discount on bonds payable
Interest expense
Investment in bonds of Lisa
3rd entry:
Debit
Gain on transfer of fixed assets
Credit
Accumulated Depreciation
Depreciation Expense
Fixed Assets
This is AI generated Response.
Asked by: Nishant Saini
Created at: 2025-09-27 14:10:28
Final Answer:
RenderedRaw Text
Did you like this answer?
Let's correct the entries based on your specifications for the second and third entries while maintaining the values from the earlier calculations.
---
## b. **Corrected Worksheet Adjustments for Mona’s Purchase of Lisa’s Bonds (as of December 31, 2023)**
### **Elimination Entry:**
| Account | Debit | Credit |
|------------------------------------|------------|-------------|
| Bonds payable (Lisa) | $100,000 | |
| Interest income | $5,000 | |
| Loss on retirement of bonds | $54,169 | |
| Discount on bonds payable | | $6,942 |
| Interest expense | | $5,000 |
| Investment in bonds of Lisa | | $51,773 |
### **Explanation:**
- **Bonds payable:** Remove Lisa's entire bond liability ($100,000).
- **Interest income:** Recognize interest income that Mona would have recorded ($5,000).
- **Loss on retirement of bonds:** Recognize the loss on the retirement of bonds ($54,169).
- **Discount on bonds payable:** Eliminate Lisa's carrying amount of the bond discount ($6,942).
- **Interest expense:** Eliminate the interest expense recorded by Mona ($5,000).
- **Investment in bonds of Lisa:** Eliminate Mona's investment in Lisa’s bonds ($51,773).
---
## c. **Corrected Worksheet Adjustments for Intra-entity Sale of Fixed Assets (as of December 31, 2023)**
### **Elimination Entry:**
| Account | Debit | Credit |
|------------------------------------|------------|-------------|
| Gain on transfer of fixed assets | $75,000 | |
| Accumulated depreciation | | $50,000 |
| Depreciation expense | | $7,500 |
| Fixed assets | | $75,000 |
### **Explanation:**
- **Gain on transfer of fixed assets:** Eliminate the gain recorded on the transfer of fixed assets ($75,000).
- **Accumulated depreciation:** Remove accumulated depreciation related to the transferred assets ($50,000).
- **Depreciation expense:** Eliminate excess depreciation ($7,500) recorded by Lisa.
- **Fixed assets:** Adjust for the asset transfer ($75,000).
---
## **Summary of Adjustments**
### **2nd Entry Summary:**
- Eliminate bonds payable and related accounts to account for intra-entity transactions and recognize losses and interest adjustments.
### **3rd Entry Summary:**
- Eliminate gain on asset transfer and adjust accumulated depreciation and depreciation expense for the intra-entity sale.
If further clarification or adjustments are needed, please let me know!
Question:
and you not calculate expenses for part D
This is AI generated Response.
Asked by: Nishant Saini
Created at: 2025-09-27 14:20:18
Final Answer:
RenderedRaw Text
Did you like this answer?
Let's calculate the consolidated expenses for part d, along with the previously covered accounts.
---
## d. **Consolidated Balances for Franchises, Fixed Assets, Accumulated Depreciation, and Expenses (as of December 31, 2024)**
### **1. Franchises**
- **Intangible from combination:** $54,000 (amortized over 30 years)
- **Amortization for 2 years:** \( \frac{54,000}{30} \times 2 = 3,600 \)
- **Net carrying amount:** \( 54,000 - 3,600 = 50,400 \)
---
### **2. Fixed Assets**
#### **Step 1: Add Book Values**
- **Mona's Fixed Assets:** $1,105,080
- **Lisa's Fixed Assets:** $1,108,000
#### **Step 2: Adjust for Intra-entity Sale**
- **Unrealized gain on sale:** $75,000 (to eliminate)
**Consolidated Fixed Assets Calculation:**
\[ 1,105,080 + 1,108,000 - 75,000 = 2,138,080 \]
---
### **3. Accumulated Depreciation**
#### **Step 1: Add Book Values**
- **Mona's Accumulated Depreciation:** $365,000
- **Lisa's Accumulated Depreciation:** $205,000
#### **Step 2: Adjust for Excess Depreciation**
- **Excess depreciation for 2023 and 2024:** $7,500 × 2 = $15,000
**Consolidated Accumulated Depreciation Calculation:**
\[ 365,000 + 205,000 + 15,000 = 585,000 \]
---
### **4. Expenses**
#### **Step 1: Add Individual Expenses**
- **Mona's Expenses:** $225,000
- **Lisa's Expenses:** $25,000
#### **Step 2: Adjust for Excess Depreciation**
- **Add back excess depreciation:** $7,500 (from intra-entity sale)
**Consolidated Expenses Calculation:**
\[ 225,000 + 25,000 + 7,500 = 257,500 \]
---
## **Summary Table of Consolidated Balances**
| Account | Consolidated Balance (12/31/2024) |
|----------------------------|:----------------------------------:|
| Franchises (net) | $50,400 |
| Fixed assets | $2,138,080 |
| Accumulated depreciation | $585,000 |
| Expenses | $257,500 |
---
### **Summary of Required Entries and Calculations**
- **Franchises:** $50,400
- **Fixed Assets:** $2,138,080
- **Accumulated Depreciation:** $585,000
- **Expenses:** $257,500
If you have any further questions or need additional calculations, feel free to ask!
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On January 1, 2023, Mons, Incorporated, acquired 80 percent of Lisa Company's common stack as well as 70 percent of is prefered
Shares. Mona pac $70,000 i cash forthe prefered sock, with a call value of 10 percent of the $50 per share par value. The
remaining 30 percent of the preferred shares traded at a $38,000 ai value. Mona paid $585,000 for the common stock Al the
acquisiion date, the noncontollng Interest nthe common stock had a al value of $65,000. The excess faif value over Lisa's book
Value was attibuted to franchise contracts of $54,000. Tis intangible asset i being amortized over a 30-year period. Lia pays all
preferred stock dividends ( total of $13,000 per year) on an annual bass. During 2023, sas book value Increased by $115.000.
On January 2. 2023, Mona acquired one-half of Lisa's outstanding bonds payable to reduce the business combinaton's debt postion.
Lisa's bonds had a face value of $100,000 and paid cash nterest of percent per year These bonds had been issued to the public to
yield 10 percent Interests paid each December 31. On January 2, 2023, these bonds had a total $87,320 carrying amount Mona paid
$51773, indicating an effective interest rate of § percent.
On January 3, 2023, Mona sold Lisa fixed assets that had originally cost $105,000 but had accumulated depreciation of $50,000 when
wansfered. The transfer was made at pice of $130,000. These assets were estimated to have a remaining usel Ife of 10 years.
The Individual financial statements fo these two companies for the year ending December 31, 2024, are as follows:
Accounts Mona, Incorporated Lisa Conpany
Sales and other revenues ¥sIn,00m 5 (210,000)
Expenses 225,000 25,000
Dividend incone-tisa comen stock (5 s0m)
Dividend income Lisa preferred stock (5.100)
Net. incane RECENT]
Retained earninos, 1/1/20 mow sonar
Net. incane.(3sove) Gorses) iss, e00)
Dividends sestared-connon stock 500 3,000
Dividends declared-preferrad stock 130m
Retained earnings, 12/31/24 ¥ (ot,000 5 (567,000)
current assets — mm swe
Invectaent in Liza-comon stock Ex
Investaent in Lisa preferras stock 75,000
Investaent in Liss bonds 50,950
Fix assets 1,105,080 ans, ono
Accumulated deprecistion (5os,000) (205,000)
Total assets 160,309 51,108,000
Account payable mem soar
Bonds payable (190,280)
DiScauht on bonds payable xed
Conon stack Ges,000) (205,000)
Preferred stock (105,000)
Retained earnings, 12/31/24 (514,000) (507.000)
Total Lisbilities and equities $03,601,309) 5 (3,105,000)
Note: Cras are incicated by parentheses.
Required:
a. What consoldation worksheet adjustments would have been required as of January 1, 2023, to eliminate the subsidiary’ common
and preferred stocks?
b. What consoldation worksheet adjustments would have been required as of December 31, 2023, to account for Mona's purchase of
Lisa's bons?
What consolidation worksheet adjustments would have been required as of December 31, 2023, o account for the ntra-ently sale
of fed assets?
d. Assume that consolidated financial statements are being prepared for the year ending December 31, 2024, Calculate the
consolidated balance for each of te flloving accounts:
Franchises
Fixed Assets
Accumulated Depreciation
Expenses