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 Company Debit Credit Debit Credit
Item

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” multilevel consolidation worksheet showing the trial balance, eliminations and adjustments, the minority interest, controlling retained earnings, consolidated income statement, and consolidated