Preparation Of Consolidated Balance Sheet For Greene 490761

Preparation Of Consolidated Balance Sheetgreene Company Purchased

Facts Preparation of Consolidated Balance Sheet Greene Company purchased 60 percent of White Corporation's voting shares on June 3, 2012, at book value. At that date, the fair value of the noncontrolling interest was equal to 40 percent of the book value of White Corporation. The companies' permanent accounts on December 31, 2017, contained the following balances: Greene Company White Corporation Cash and Receivables $101,000 $20,000 Inventory 80,000 Land 150,000 Buildings & Equipment 400,000 Investment in White Corporation Stock 141,000 ________ $872,000 $450,000 Accumulated Depreciation $135,000 $85,000 Accounts Payable 90,000 Notes Payable 200,000 Common Stock 100,000 Retained Earnings 347,000 $872,000 $450,000 On January 1, 2013, Greene paid $100,000 for equipment with a 10-year expected total economic life. The equipment was depreciated on a straight-line basis with no residual value. White purchased the equipment from Greene on December 31, 2015, for $91,000. Assume White did not change the remaining estimated useful life of the equipment. White sold land it had purchased for $30,000 on February 23, 2015, to Greene for $20,000 on October 14, 2016. Assume Greene uses the fully adjusted equity method. Required 1. Prepare a consolidated balance sheet worksheet in good form as of December 31, 2017. 2. Prepare a consolidated balance sheet as of December 31, 2017.

Paper For Above instruction

Preparation Of Consolidated Balance Sheetgreene Company Purchased

The task involves preparing a consolidated balance sheet for Greene Company and its subsidiary White Corporation as of December 31, 2017. The challenge lies in correctly adjusting for the acquisition, intercompany transactions, depreciation, and land sale, ensuring compliance with accounting standards and accurately reflecting the financial position of the consolidated entity.

Initial acquisition details reveal Greene's ownership of 60% of White Corporation's voting shares acquired on June 3, 2012, at book value, with the noncontrolling interest (NCI) at 40% of White's book value. The fair value of the NCI at acquisition equated to 40% of White’s book value, indicating no goodwill arising from the acquisition. The balances of the companies’ accounts reveal significant assets, liabilities, and equity, which need to be adjusted for consolidation purposes. Key accounting considerations include recognition of fair value adjustments, intercompany transactions such as equipment sale and land sale, and the associated depreciation and gains/losses.

A vital part of the process involves eliminating the investment account against the subsidiary’s net equity, adjusting for fair value differences of assets and liabilities, and calculating the noncontrolling interest’s share of net assets. Additionally, adjustments for equipment depreciation, accumulated depreciation, and intercompany land sale gains must be meticulously incorporated. These adjustments ensure the consolidated balance sheet accurately reflects the financial position of the group as a single economic unit, eradicating intra-group transactions and balances.

The detailed preparation entails constructing a worksheet that consolidates individual accounts, applies elimination entries, and adjusts for fair value differences, as well as recording any necessary depreciation on fair value adjustments. The final step consolidates all adjusted balances into a single, well-formatted balance sheet that portrays the assets, liabilities, and equity attributable to both Greene's shareholders and the NCI. The process emphasizes the importance of thorough analysis and precise journal entries, especially considering the specific transactions that occurred during the period, including equipment and land transactions, and their implications for consolidation.

Essay: The Milton Friedman Goal of the Firm and Its Contemporary Relevance

The core philosophical foundation of corporate purpose, as articulated by economist Milton Friedman, emphasizes that the primary goal of a business firm is to maximize shareholder wealth within the bounds of law and ethical custom. Friedman's view posits that a company's responsibility is to its shareholders, and its managerial efforts should be directed solely toward increasing stockholder returns through profit maximization (Friedman, 1970). This perspective has profoundly influenced corporate governance and management practices throughout the 20th century, anchoring the role of businesses in economic growth and wealth creation.

However, the contemporary business environment increasingly questions whether Friedman's singular focus on shareholder wealth remains sufficient or appropriate in addressing broader societal challenges. Critics argue that a strict commitment to maximizing shareholder value may overlook the importance of social, environmental, and ethical considerations vital for sustainable development (Porter & Kramer, 2011). For example, companies that prioritize short-term profits at the expense of environmental degradation or employee welfare might experience temporary gains but ultimately face reputational and regulatory risks that undermine long-term shareholder interests.

In recent years, stakeholder theory has gained prominence, advocating that corporations have responsibilities to a broader set of stakeholders, including employees, customers, communities, and the environment (Freeman, 1984). This paradigm shift suggests that incorporating social and environmental objectives can bolster corporate reputation, foster trust, and contribute to sustained profitability. Companies like Patagonia exemplify this approach by integrating environmental consciousness into their core business strategy, which has contributed to their financial success and brand loyalty.

The debate extends to societal and governmental roles. Governments can play a pivotal part in expanding Friedman's narrow focus by establishing regulations and incentives that promote corporate social responsibility (CSR), environmental stewardship, and equitable economic participation. Policies such as carbon taxes, mandatory disclosures on sustainability metrics, and fair labor standards encourage companies to consider societal impacts alongside profit motives (Klein, 2014). Moreover, societal pressures and consumer activism increasingly influence corporate behavior, compelling firms to adopt more inclusive and sustainable practices without direct regulation.

In conclusion, while Friedman’s goal of profit maximization was appropriate within a particular economic context, the modern understanding recognizes that corporate success is intertwined with social license, environmental sustainability, and ethical governance. Responsible capitalism that balances profit objectives with social responsibility is increasingly viewed as essential for long-term economic prosperity and societal well-being (Hawken, 2010). Moving forward, both corporate leaders and policymakers must recognize the complementary roles they play in shaping a resilient and equitable economy.

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• Porter, M. E., & Kramer, M. R. (2011). Creating Shared Value. Harvard Business Review, 89(1/2), 62-77.
• Smith, A. (1776). The Wealth of Nations. Methuen & Co., Ltd.
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