13) Separate income statements of Plantation Corporation and its 90%-owned subsidiary, Savannah Corporation, for 2011 are as follows, prior to Plantation recording any income related to its subsidiary:
PlantationSavannah
Sales Revenue$870,000 $230,000
Gain on equipment35,000
Gain on land20,000
Cost of sales(470,000)(90,000)
Other expenses(265,000)(60,000)
Separate incomes$170,000 $100,000
Additional information:
1.Plantation acquired its 90% interest in Savannah Corporation when the book values were equal to the fair values.
2.The gain on equipment relates to equipment with a book value of $95,000 and a 7-year remaining useful life that Plantation sold to Savannah for $130,000 on January 1, 2011. The straight-line depreciation method was used and the equipment has no salvage value.
3.On January 1, 2011, Savannah sold land to an outside entity for $90,000. The land was acquired from Plantation in 2009 for $70,000. The original cost of the land to Plantation was $45,000.
4.Savannah did not declare or distribute dividends in 2011.
Required:
1.Prepare elimination/adjusting entries on the consolidated worksheet for the year 2011.
2.Prepare the consolidated income statement for the year ended December 31, 2011.
