Nama : yuda fadhil Mahfudz

NIM :2201803996
Class : LC53
Advance accounting

EXERCISE 4‐3
Workpaper Eliminating Entries, Equity Method LO 5
At the beginning of 2014, Presidio Company purchased 95% of the common stock of Succo
Company for $494,000. On that date, Succo Company's stockholders' equity consisted of
the following:

Common stok $300,000

Other contributed Capital 100,000
Retained earnings 120,000
Total $520,000
During 2022, Succo Company reported net income of $40,000 and distributed dividends in
the amount of $19,000. Succo Company's retained earnings balance at the end of 2021
amounted to $160,000. Presidio Company uses the equity method.

Required:
Prepare in general journal form the workpaper entries necessary in the compilation of
consolidated financial statements on December 31, 2022. Explain why the partial and
complete equity methods would result in the same entries in this instance.

ANSWER

Jurnal entry

Equity Income ($40,000 x 95%) $38,000

Investment in Succo Company $38,000

Investment in Succo Company ($19,000 x 95%) $18,050

Dividend Declared $18,050

Common Stock $300,000

Other Contributed Capital $100,000

Retained Earning (1/1/21) $160,000

Investment (($494,000 + (.95 x ($160,000 – $120,000)) $532,000

Non Control Intertest (($520,000 x .05 + (.05 x ($160,000 - $120,000)) $28,000