Platt Corporation Paid $87,500 for a 70% Interest in Suve

Essay

Platt Corporation paid $87,500 for a 70% interest in Suve Corporation on January 1, 2014, when Suve's Capital Stock was $70,000 and its Retained Earnings $30,000. The fair values of Suve's identifiable assets and liabilities were the same as the recorded book values on the acquisition date. Trial balances at the end of the year on December 31, 2014 are given below:
During 2014, Platt made only two journal entries with respect to its investment in Suve. On January 1, 2014, it debited the Investment in Suve account for $87,500 and on November 1, 2014, it credited Dividend Income for $7,000.
Required:
1. Prepare a consolidated income statement and a statement of retained earnings for Platt and Subsidiary for the year ended December 31, 2014.
2. Prepare a consolidated balance sheet for Platt and Subsidiary as of December 31, 2014.