Assignment
Harrison Co. acquired 80% of the common stocks of James Co. on January 1, 2014. As of that date, James had the following trial balance:
Debit Credit
Cash and cash equivalents $56,000
Accounts receivable (net) 40,000
Inventory 88,000
Supplies 16,000
Land 72,000
Buildings-net (20 years remaining life) 112,000
Equipment-net (8 years remaining life) 192,000
Accounts payable 48,000
Long-term liabilities (mature 12/31/2018) 144,000
Common stocks 240,000
Additional paid-in capital 48,000
Retained earnings, 1/1/2014 96,000
Totals $576,000 $576,000
Harrison Co. acquired 80% of the common stock of James Co. for $448,000 in cash. The fair value of 20% noncontrolling interest is $102,400. As of January 1, 2014, James's land had a fair value of $81,600. Its buildings had a fair value of $134,400 and its equipment had a fair value of $172,800. Its long-term liabilities had a fair value of 128,000. It's unrecorded in-process Research and Development was valued at $80,000. All other assets and liabilities had fair values equal to their book values.
Harrison decided to use the initial value method for this investment.
During 2014, James reported net income of $76,800 while paying dividends of $9,600. During 2015, James reported net income of $105,600 while paying dividends of $28,800.
Required:
Prepare consolidation entries for December 31, 2015. Show calculations.