Ishtiaque AminRelated papers
Gavalas G. and Mazzilli G., Votive columns from the Archaic period on the Acropolis of Siphnos
Annuario della Scuola Archeologica di Atene e delle Missioni Italiane in Oriente 101,, 2023
This paper presents some results of a currently ongoing project on the architecture of the ancient asty of Siphnos during the Archaic and the early Classical periods, focusing on votive columns. The available evidence proves the existence of an impressive cityscape as early as the mid-6th c., likely within a broad civic building program, and provides Herodotus’ brief account about Siphnos with ground, indisputable arguments. Strict ties with the neighboring islands of Paros and Despotiko, but also Delos and Naxos are resulting as well, bringing Siphnos to the core of the discussions about the development of the Cycladic cult architecture during the considered timespan, in equal terms to them. Στο παρόν άρθρο παρουσιάζονται ορισμένα αποτελέσματα ενός ερευνητικού προγράμματος για τη μελέτη της αρχιτεκτονικής του αρχαίου άστεως της Σίφνου κατά την Αρχαϊκή και πρώιμη Κλασική περίοδο, με έμφαση στους αναθηματικούς κίονες. Το διαθέσιμο υλικό αποδεικνύει την ύπαρξη ενός εντυπωσιακού μνημειακού τοπίου του άστεως, ήδη από τα μέσα του 6ου αι. π.Χ. που πιθανώς να εντάσσεται σε ένα ευρύτερο οικοδομικό πρόγραμμα. Επίσης προσδίδει αδιαμφισβήτητη υπόσταση στη συνοπτική περιγραφή του Ηροδότου για την αρχαία πόλη της Σίφνου. Η μελέτη καταδεικνύει τους ισχυρούς δεσμούς με τα γειτονικά νησιά, την Πάρο, το Δεσποτικό, αλλά και τη Δήλο και τη Νάξο, τοποθετώντας τη Σίφνο στο ίδιο επίπεδο με αυτά, αλλά και στο κέντρο της συζήτησης για την εξέλιξη της κυκλαδικής ναϊκής αρχιτεκτονικής κατά το εξεταζόμενο χρονικό διάστημα.
Condensadores y Evaporadores
En el trabajo que a continuación se presentara se abordaran los conceptos de condensadores y evaporadores, intentando dar a entender de la mejor manera sus aplicaciones, clasificaciones entre otras cosas.
PH BAS Horseback fighting in Pietro del Montes Collectanea 150920200522 86931 1uqfgil
Acta Periodica Duellatorum Volume 7: Issue 1, 2019
The Italian Pietro del Monte left us a wonderful work on the martial arts of the late XVth century. Writing on weapons, gear, and fighting techniques, he gives special attention to horses and horseback fighting. In this succinct article, the goal is to present the two different types of cavalry that are covered directly or indirectly by Monte and to show his wide experience in the field, which led him to suggest some pragmatic techniques and not just write a book showing a wide range of technical and tactical possibilities.
Cita en Del Cueto, J., et al. (2014). Participación en redes sociales y comprensión de textos académicos: Un estudio piloto. IV Jornadas de Investigación de la Facultad de Psicología y III Encuentro de Becarios de Investigación (La Plata, 2014)
IV Jornadas de Investigación de la Facultad de Psicología y III Encuentro de Becarios de Investigación (La Plata, 2014), 2014
La proliferación en los últimos años del acceso a internet y en particular de las redes sociales ha producido modificaciones significativas en la forma en que las personas viven, se relacionan y se comunican. Las redes sociales constituyen un ámbito en el cual casi todas las actividades que en ellas se realizan suponen al texto escrito como tecnología básica, sin embargo, el tipo de "conversación" que en ellas se desarrolla posee sus propias convenciones de escritura, que difieren de las de la alfabetización formal. Simultáneamente, numerosos estudios han puesto de relieve que, cada vez más, los estudiantes universitarios encuentran dificultades para llevar a cabo una lectura comprensiva de los textos
Varför studerar jag egentligen - en socialpsykologisk studie om studieval
2012
Denna uppsats handlar om studieval. Studien baserar sig pa tolv kvalitativa semi-strukturerade intervjuer med forstaarsstudenter pa Halmstad Hogskola fran utbildningsprogrammen Affarssystem inriktn ...
Russia Reconsidered: Putin, Power, and Pragmatism, Midwest Books Review, December 2018
Critique: Exceptionally well written, organized and presented, "Russia Reconsidered: Putin, Power, and Pragmatism" is an invaluable and timely contribution to our current on-going national discussion of Russian foreign policies with respect to the electoral and political systems of the western democracies in general, and the current American presidency in particular. While a critically important and unreservedly recommended addition to community, U.S. State Department, college, and university library International Studies collections and Contemporary Russian Studies reading lists. It should be noted for students, academia, governmental policy makers, and non-specialist general readers with an interest in the subject that "Russia Reconsidered: Putin, Power, and Pragmatism" is also available in a digital book format
The plurality of concepts
Traditionally, theories of concepts in psychology assume that concepts are a single, uniform kind of mental representation. But no single kind of representation can explain all of the empirical data for which concepts are responsible. I argue that the assumption that concepts are uniformly the same kind of mental structure is responsible for these theories' shortcomings, and outline a pluralist theory of concepts that rejects this assumption. On pluralism, concepts should be thought of as being constituted by multiple representational kinds, with the particular kind of concept used on an occasion being determined by the context. I argue that endorsing pluralism does not lead to eliminativism about concepts as an object of scientific interest.
Pagan Sources Discovered in 1 Timothy: A Christian Apology to Pliny the Younger
Unnamed Russian Journal, 2022
This article was by invitation of a Russian journal before the invasion of Ukraine. Subsequently, it was accepted and in queue for publication. Following 24 February it was "expelled" from the journal, as ecclesiastical authorities considered it morally offensive. I lack the energy and and will to reedit it for another journal. I hope the present reader can enjoy my morally offensive and banned contribution. The so-called epistle of 1Tim belongs to all current canons of Christian Bibles. It has long been designated by specialists a pseudepigraphy by an unknown author of the second century. Its context and sources have eluded Biblicists. This study uncovers verbal and textual dependencies of 1Tim on Plutarch's Cato and Solon, a fragment of Elder Cato's speech on the Oppian Law (attested by Cassius Dio), as well as on the lex Bithyniorum. It is also very probable that some of the content of the Younger Pliny's epistolary correspondences were known to the anonymous author. The result of the investigation leads to a provisional identification of Timothy of Lystra as the so-called epistle's author.
A Crisis of Expectations: UN Peacekeeping in the 1990s
Australian Journal of Politics and History, 1995
Working capital journal
The present study has investigated the relationship between working capital management on organizational profitability in Nigeria with special reference to manufacturing companies in Nigerian Stock Exchange. The data used for this study were derived from the audited finance statements of the firms listed on the Nigerian Stock Exchange (NSE) between 2005 -2013 which comprises of twenty (20) manufacturing sectors was finally used as sample size. Panel data methodology was adopted because it combined time series and cross sectional data. The method of analysis is that of Pearson Correlation Moment Coefficient and multiple regressions and the method of estimation is Ordinary Least Squares (OLS).The result showed that working capital has negative and significant relationship with the return of assets (ROA) and return on equity (ROE) at 5% level.This implies that firms' performance can be increased with short size of Cash Conversion Cycle and the study recommended that cash conversion cycle should be reduced and inventory should be turned out quickly.
CHAPTER 4
UNDERSTANDING THE ISSUES
1.
The intercompany sale will cause both
sales and costs of goods sold to be overstated by $50,000 on the consolidated income statement. The amount remaining in
ending inventory will cause cost of goods
sold to be understated by $3,000 (1/4 ×
$12,000) on the consolidated income
statement and inventory to be overstated
by $3,000 (1/4 × $12,000) on the consolidated balance sheet.
6.
*(40% × $100,000)
**(60% × $100,000)
‡
($100,000 ÷ 20)
7. a. Company S is better off borrowing the
funds from Company P since it will receive a lower interest rate (9.5% instead of 10%). Therefore, Company S
will have lower annual interest charges.
b. During 2012, Company P will record
interest revenue and Company S will
record interest expense of $47,500
($500,000 × 9.5%). However, the interest expense and interest revenue are
eliminated during the consolidation
process. Only the $40,000 ($500,000 ×
8%) of external interest expense remains on the consolidated statements.
c. Intercompany interest expense and
interest revenue should not appear on
the 2011 consolidated income statement. Only the external interest expense of $40,000 will appear on the
consolidated income statement.
2. Debit Sales and credit Cost of Goods Sold
for $50,000. Debit Cost of Goods Sold and
credit Inventory for $3,000 (1/4 × $12,000).
3.
2011 2012
NCI
$ 0 $ 200 ($1,000 × 20%)
Controlling
interest
0 3,800 [$3,000 +
($1,000 × 80%)]
Total profit $ 0 $4,000
4. Company S has realized a $50,000 profit;
however, it is not immediate. The profit will
be realized over the 5-year life of the asset.
Company S will realize the profit by reducing consolidated depreciation expense by
$10,000 ($50,000 ÷ 5 years) each year for
5 years. The NCI will realize $2,000 (20% ×
$10,000) each year.
2011
5.
Realized gain by
reducing depreciation expense
[($60,000 –
$50,000)÷ 5 years]
Balance of gain at
time of sale
2012
2011
2012
2013
Profit recorded
by Company S $40,000* $60,000** $
0
Profit recorded
by consolidated
‡
firm
0
0
5,000
2013
$2,000 $2,000 $2,000
4,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
181
Ch. 4
EXERCISES
EXERCISE 4-1
Partplus Company and Subsidiary Sogern Company
Consolidated Income Statement
For the Year Ended December 31, 2011
Sales ($250,000 + $500,000 – $120,000) ........................................................
Cost of goods sold [$150,000 + $310,000 – $120,000 + (40% × $30,000)] ......
Gross profit ......................................................................................................
Expenses ($45,000 + $120,000) ......................................................................
Consolidated net income..................................................................................
Distributed to NCI.............................................................................................
Distributed to controlling interest ......................................................................
$630,000
352,000
$278,000
165,000
$113,000
$ 8,600
$104,400
Sogern Income Distribution Schedule
Unrealized profit in ending
inventory (40% × $30,000) ......
Internally generated income ..........
$55,000
Adjusted income............................
NCI share ......................................
NCI ................................................
$43,000
×
20%
$ 8,600
$12,000
Partplus Income Distribution Schedule
Internally generated income ..........
80% × Sogern adjusted
income of $43,000 ...................
$ 70,000
Controlling interest ........................
$104,400
34,400
Partplus Company and Subsidiary Sogern Company
Consolidated Income Statement
For the Year Ended December 31, 2012
Sales ($300,000 + $540,000 – $110,000) ........................................................
Cost of goods sold [$180,000 + $360,000 – $110,000 – (40% × $30,000)
+ (40% × $20,000)] ....................................................................................
Gross profit ......................................................................................................
Expenses ($56,000 + $125,000) ......................................................................
Consolidated net income..................................................................................
Distributed to NCI.............................................................................................
Distributed to controlling interest ......................................................................
$730,000
426,000
$304,000
181,000
$123,000
$ 13,600
$109,400
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
182
Ch. 4
Exercise 4-1, Concluded
Sogern Income Distribution Schedule
Unrealized profit in ending
inventory (40% × $20,000) ......
$8,000
Internally generated net
income.....................................
Realized profit in beginning
inventory (40% × $30,000) ......
Adjusted income............................
NCI share ......................................
NCI ................................................
$64,000
12,000
$68,000
×
20%
$13,600
Partplus Income Distribution Schedule
Internally generated net
income.....................................
80% × Sogern adjusted
income of $68,000 ...................
Controlling interest ........................
$ 55,000
54,400
$109,400
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
183
Ch. 4
EXERCISE 4-2
Source of income components:
Victor
Sales ......................................................
Cost of goods sold .................................
Other income .........................................
Other expenses......................................
Consolidated net income........................
Distributed to NCI...................................
Distributed to controlling interest ............
Norge
(220,000) (120,000)
150,000
90,000
(5,000)
40,000
12,000
Eliminations
Consolidated
Income
Statement
(IS) 80,000
(IS) (80,000)
(BI) (5,000)
(EI)
7,500
(S)
5,000
(S) (5,000)
(260,000)
162,500
47,000
(50,500)
3,100
(47,400)
Eliminations and Adjustments:
(IS)
Elimination of intercompany sales.
(BI)
Elimination of 25% profit from beginning inventory; debit would be to Retained Earnings;
allocated 80% to the controlling interest and 20% to the NCI.
(EI)
Elimination of 25% profit from ending inventory; credit would be to inventory account.
(S)
Elimination of consulting services transaction.
Note: The above format and presentation is not to be expected of the student. All that is required is the final consolidated income statement and its distribution to controlling and
noncontrolling interests. This format is presented to aid explanation of the exercise as it
shows the sources of the numbers that determine the income statement. This form will
be used for future exercises and problems to aid the instructor.
Subsidiary Norge Company Income Distribution
Unrealized ending inventory
profit ................................... (EI)
$7,500
Internally generated net
income..................................
$18,000
Realized beginning inventory
profit ..................................... (BI) 5,000
Adjusted income.........................
NCI share ...................................
NCI .............................................
$15,500
×
20%
$ 3,100
Parent Victor Corporation Income Distribution
Internally generated net
income.....................................
80% × Norge adjusted income
of $15,500 ...............................
Controlling interest ........................
$35,000
12,400
$47,400
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
184
Ch. 4
EXERCISE 4-3
(1) Gross profit recorded on the separate books:
Gross profit—Hide:
Sales ..................................................................................
Gross profit (25% × $400,000)............................................
Gross profit—Seek:
Sales ..................................................................................
Cost of goods sold (80% × $400,000) ................................
Add write-down of ending inventory ...................................
Gross profit ........................................................................
(2) Consolidated gross profit:
Sales ..................................................................................
Cost of goods sold to consolidated group*..........................
Gross profit ........................................................................
*Cost of goods sold is computed as follows:
Purchases at cost (80% × $400,000) .................................
Less ending inventory at cost ($80,000 × 80%) ..................
(note that cost is less than market)
Cost of goods sold ..............................................................
$400,000
100,000
$416,000
$320,000
10,000
330,000
$ 86,000
$416,000
256,000
$160,000
$320,000
64,000
$256,000
EXERCISE 4-4
(1) Gain on Sale of Land ..............................................................
Gain on Building .....................................................................
Land..................................................................................
Building .............................................................................
To defer unrealized gain on sale of land and
on building and reduce the assets to the cost
to the consolidated entity.
50,000
150,000
(2) Retained Earnings—Sayner* ..................................................
Retained Earnings—Wavemasters** ......................................
Accumulated Depreciation ($150,000 ÷ 20 years)...................
Building .............................................................................
Land..................................................................................
38,500
154,000
7,500
50,000
150,000
150,000
50,000
*[$50,000 land + (19 ÷ 20 × $150,000 on building)] × 20%
**($200,000 original gain – $7,500 realized = $192,500) × 80%
Accumulated Depreciation ......................................................
Depreciation Expense .......................................................
7,500
7,500
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
185
Ch. 4
EXERCISE 4-5
In 2012, only a $4,000 loss can be recognized for the sale of the machinery on the consolidated
income statement. This is the amount of the impairment (FV – BV). The remaining $5,000 loss
must be deferred. This loss is deferred in the year of the intercompany sale. During each following year of use, the asset and accumulated depreciation accounts are adjusted to reflect the
$10,000 fair value, with an additional entry for the $1,000 of incremental depreciation.
On December 31, 2012, $5,000 of the $9,000 recorded loss should be eliminated.
Machine ...................................................................................
5,000
Loss on Sale of Machine ....................................................
5,000
Depreciation for the year is also restated:
Depreciation Expense ..............................................................
Accumulated Depreciation ..................................................
1,000
2013 Entry:
Loss on Sale of Machine (remaining unrecognized
loss at end of second year)* ...............................................
Depreciation Expense (adjustment for current year) .................
Retained Earnings—Hilton ($5,000 original
unrecognized loss less one year’s amortization) ..............
To record increase in depreciation expense
and increase in loss to the consolidated
company on sale of machine.
1,000
3,000
1,000
4,000
*Added to the subsidiary’s recorded loss of $1,000 results in a total loss of
$4,000 to the consolidated entity to be recognized in 2013.
EXERCISE 4-6
(1) In the year of sale, eliminate the $15,000 gain on the sale of the machine, and adjust the
machine to its net book value on the date of the sale. Reduce depreciation expense and
accumulated depreciation by $3,000 to reflect depreciation based on the consolidated book
value.
For 2013 to 2016, eliminate unamortized gain as reflected in Jungle’s beginning retained
earnings. Adjust machinery to reflect book value on the date of the sale. Reduce currentyear depreciation expense and accumulated depreciation by $3,000.
(2) Gain on Sale of Machinery ......................................................
Machinery .........................................................................
15,000
Accumulated Depreciation ......................................................
Depreciation Expense .......................................................
3,000
(3) Retained Earnings—Jungle Company ....................................
Accumulated Depreciation ......................................................
Machinery .........................................................................
12,000
3,000
Accumulated Depreciation ......................................................
Depreciation Expense .......................................................
3,000
15,000
3,000
15,000
3,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
186
Ch. 4
EXERCISE 4-7
Danner
Sales ......................................................
Cost of goods sold .................................
Other expenses......................................
Other income .........................................
Consolidated net income........................
Distributed to NCI...................................
Distributed to controlling interest ............
Link
(650,000) (280,000)
400,000 190,000
180,000
70,000
Consolidated
Income
Eliminations
Statement
(F1) 60,000
(F1) (40,000)
(F2a) (4,000)
(F2b) (2,500)
(20,000)
(870,000)
550,000
243,500
(20,000)
(96,500)
(400)
(96,100)
Eliminations and Adjustments:
(F1) Eliminate the gain on the intercompany machine sale. The machine account is credited
for the $20,000 gain.
(F2a) Reduce machine depreciation expense to reflect depreciation based on the consolidated
book value of the asset ($20,000 profit ÷ 5 years = $4,000 per year). The debit is to Accumulated Depreciation.
(F2b) Reduce building depreciation expense to reflect depreciation based on the consolidated
book value of the asset ($50,000 profit ÷ 20 years = $2,500 per year). The debit is to Accumulated Depreciation.
Subsidiary Link Company Income Distribution
Unrealized gain on sale
of machine ...................... (F1)
$20,000
Internally generated net
income..............................
$20,000
Realized gain through use
of machine ........................ (F2a)
4,000
Adjusted income.....................
NCI share ...............................
NCI .........................................
$ 4,000
×
10%
$ 400
Parent Danner Company Income Distribution
Internally generated net
income.................................
$90,000
Gain realized on use of building
sold to subsidiary ................. (F2b) 2,500
90% × Link adjusted
income of $4,000 .................
3,600
Controlling interest ....................
$96,100
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
187
Ch. 4
EXERCISE 4-8
(1) Revenue from Completed Contracts .......................................
Equipment.........................................................................
To eliminate intercompany profit on the first completed
machine and to reduce equipment cost to the
consolidated entity.
15,000
Accumulated Depreciation—Equipment ..................................
Depreciation Expense .......................................................
To reduce depreciation expense and accumulated
depreciation for one-half year to depreciation based
on cost of the machine to the consolidated entity.
1,500
Billings on Long-Term Contracts .............................................
Asset Under Construction .......................................................
Construction in Progress ...................................................
To eliminate double counting of construction costs
and asset under construction (second machine).
60,000
12,000
Contracts Payable ..................................................................
Contracts Receivable ........................................................
To eliminate intercompany debt.
3,000
15,000
1,500
72,000
3,000
(2) Essuman defers the $15,000 profit on the completed machine and recognizes the $1,500
realized portion through the use of the machine for one-half year. No profit is recognized on
the uncompleted contract.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
188
Ch. 4
EXERCISE 4-9
Parent’s entry:
Plant Asset Under Construction ...............................................
Contracts Payable ..............................................................
150,000
Subsidiary’s entries:
Construction in Progress ..........................................................
Payables (to outsiders) .......................................................
120,000
150,000
120,000
Construction in Progress (25% markup on cost)* .....................
Earned Income on Long-Term Contracts ............................
30,000
Contracts Receivable ...............................................................
Billings on Construction in Progress ...................................
150,000
30,000
150,000
*($250,000 contract price – $200,000 estimated cost) × 60% completed
Plant Asset Under Construction .......
Contracts Receivable .......................
Billings on Construction
in Progress .................................
Construction in Progress ..................
Earned Income on Long-Term
Contracts....................................
Contracts Payable ............................
Payables (to outsiders) ....................
Trial Balance
Plum
Apple
150,000
150,000
(150,000)
150,000
(30,000)*
(150,000)
Eliminations and
Adjustments
Dr.
Cr.
(LT3) 30,000
(LT1) 150,000
(LT3) 150,000
(LT3) 120,000
(LT2) 30,000
(LT2) 30,000
(LT1) 150,000
(120,000)
*60% × estimated profit of $50,000
Eliminations and Adjustments:
(LT1) Eliminate intercompany debt.
(LT2) Eliminate the income recorded on long-term contracts and remove profit from Construction in Progress.
(LT3) Eliminate balance of Construction in Progress and Billings on Construction in Progress
and reduce Plant Asset Under Construction for the amount billed in excess of cost.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
189
Ch. 4
EXERCISE 4-10
(1)
Saratoga
Notes Receivable ........... 50,000
Cash ...........................
To record receipt
of note on May 1,
2013.
Accrued Interest
Receivable .................. 2,000*
Interest Revenue ........
Year-end interest
accrual.
Windsor
50,000
2,000
Cash ..................................
Notes Payable................
To record receipt
of cash on May 1,
2013.
50,000
Interest Expense ...............
Accrued Interest
Payable ........................
Year-end interest
accrual.
2,000
50,000
2,000
*$50,000 × 6% × 8/12
(2) Eliminations:
(LN1) Notes Payable ..............................................................
Accrued Interest Payable ..............................................
Notes Receivable......................................................
Accrued Interest Receivable .....................................
To eliminate intercompany note and accrued
interest applicable to the note.
50,000
2,000
(LN2) Interest Revenue ..........................................................
Interest Expense .......................................................
To eliminate intercompany interest revenue
and expense.
2,000
50,000
2,000
2,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
190
Ch. 4
EXERCISE 4-11
(1)
Saratoga
May
July
July
May
1
1
1
1
Dec. 31
Notes Receivable ................................................................
Cash ...............................................................................
To record receipt of note.
50,000
Accrued Interest Receivable ...............................................
Interest Revenue ............................................................
To accrue interest for 2 months
(6% × $50,000 × 2/12).
500
Interest Expense (loss on discounting)................................
Cash ...................................................................................
Notes Receivable ...........................................................
Accrued Interest Receivable ...........................................
To record proceeds of discounting note at 8%.
(See schedule of computation of proceeds.)
1,033
49,467
Windsor
Cash ...................................................................................
Notes Payable ................................................................
To record receipt of cash.
Interest Expense .................................................................
Interest Payable..............................................................
To record year-end accrual (6% × $50,000 × 8/12).
Computation of Proceeds
Principal of note ......................................................................
Interest due at maturity (6% × $50,000) ..................................
Total maturity value.................................................................
Less maturity value multiplied by 8% discount rate
for 10/12 of period .............................................................
Net proceeds of note...............................................................
50,000
500
50,000
500
50,000
50,000
2,000
2,000
$50,000
3,000
$53,000
3,533
$49,467
(2) Eliminations:
(LN1) Notes Receivable Discounted .......................................
Notes Receivable......................................................
To eliminate intercompany note and reclassify
the discounted note receivable as a note
payable at its face value.
50,000
(LN2) Interest Revenue ..........................................................
Interest Expense .......................................................
To eliminate intercompany interest prior to the
discounting.
500
50,000
500
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
191
Ch. 4
EXERCISE 4-12
2011
Subsidiary Sandbar Company Income Distribution
Unrealized profit in ending
inventory (40% × $15,000) ......
$6,000
Internally generated net
income.....................................
$250,000
Adjusted income............................
NCI share ......................................
NCI ................................................
$244,000
×
20%
$ 48,800
Parent Peninsula Company Income Distribution
Gain on sale of real
estate ...................................... $200,000
Internally generated net
income.....................................
Realized gain on use of
sold real estate
[(75% × $200,000)/20] .............
80% × Sandbar adjusted
income of $244,000 .................
Controlling interest ........................
$520,000
8,000
195,200
$523,200
2012
Subsidiary Sandbar Company Income Distribution
Unrealized profit in ending
inventory (40% × $20,000) ......
$8,000
Internally generated net
income.....................................
Realized profit in beginning
inventory ..................................
Adjusted income............................
NCI share ......................................
NCI ................................................
$235,000
6,000
$233,000
×
20%
$ 46,600
Parent Peninsula Company Income Distribution
Internally generated net
income.....................................
Realized gain on use of
sold real estate ........................
80% × Sandbar adjusted
income of $233,000 .................
Controlling interest ........................
$340,000
8,000
186,400
$534,400
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
192
Ch. 4
PROBLEMS
PROBLEM 4-1
(1)
Cash ..........................................................
Accounts Receivable (net) .........................
Inventory....................................................
Investment in Crayon Company .................
Land ..........................................................
Building and Equipment .............................
Accumulated Depreciation .........................
Goodwill ....................................................
Accounts Payable ......................................
Bonds Payable ..........................................
Common Stock—Baxter ............................
Paid-In Capital in Excess of Par—Baxter ...
Retained Earnings, April 1, 2012—Baxter ..
Common Stock—Crayon ...........................
Paid-In Capital in Excess of Par—Crayon ..
Retained Earnings, April 1, 2012—Crayon
Sales .........................................................
Dividend Income (from Crayon Company) .
Cost of Goods Sold....................................
Baxter Corporation and Subsidiary Crayon Company
Worksheet for Consolidated Financial Statements
For Year Ended March 31, 2013
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Baxter
Crayon
Dr.
Cr.
Statement
216,200
290,000
...............
310,000
...............
425,000
...............
1,081,000
1,850,000
(940,000)
60,000
(242,200)
...............
(400,000)
(250,000)
(1,250,000)
(1,105,000)
...............
...............
...............
...............
...............
...............
(880,000)
...............
(24,000)
704,000
...............
...............
...............
44,300
97,000
...............
80,000
...............
...............
...............
150,000
400,000
(210,000)
...............
(106,300)
...............
...............
...............
...............
...............
...............
...............
(200,000)
(100,000)
(140,000)
...............
(630,000)
...............
...............
504,000
...............
...............
...............
...............
...............
...............
...............
...............
(CV)
32,000
...............
...............
...............
...............
(D)
131,250
(IAP)
10,000
(IAS)
5,000
...............
...............
...............
...............
(BIP)
1,350
(BIS)
560
(EL)
160,000
(EL)
80,000
(EL)
112,000
(BIS)
140
(ISP)
32,000
(ISS)
30,000
(CY2)
24,000
(EIP)
1,320
(EIS)
750
...............
...............
(IAP)
(IAS)
(EIP)
(EIS)
(EL)
(D)
(CV)
(NCI)
(BIP)
(ISP)
(BIS)
(ISS)
...............
10,000
5,000
1,320
750
352,000
105,000
...............
...............
...............
...............
...............
...............
...............
...............
...............
32,000
...............
...............
...............
...............
26,250
...............
...............
...............
...............
1,350
32,000
700
30,000
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(1,448,000)
...............
...............
...............
...............
1,146,020
NCI
Controlling
Retained
Earnings
Consolidated
Balance
Sheet
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(40,000)
(20,000)
...............
(54,110)
...............
...............
...............
...............
...............
...............
...............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
(1,135,090)
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
260,500
...............
372,000
...............
387,930
...............
...............
1,231,000
2,250,000
(1,150,000)
191,250
...............
(333,500)
(400,000)
(250,000)
(1,250,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
193
Ch. 4
Problem 4-1, Continued
(1)
Baxter Corporation and Subsidiary Crayon Company
Worksheet for Consolidated Financial Statements
For Year Ended March 31, 2013
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Baxter
Crayon
Dr.
Cr.
Statement
Other Expenses .........................................
Dividends Declared....................................
130,000
81,000
...............
...............
30,000
...............
(CY2)
24,000
25,000
0
0
620,370
620,370
Consolidated Net Income..................................................................................................................................................
211,000
...............
...............
90,980
NCI
Controlling
Retained
Earnings
Consolidated
Balance
Sheet
...............
6,000
...............
...............
..............
25,000
..............
..............
...............
...............
...............
...............
...............
(81,990)
...............
(1,192,080)
...............
...............
(117,100)
(1,192,080)
0
To NCI (see distribution schedule) ....................................................................................................................................
8,990
(8,990)
...............
To Controlling Interest (see distribution schedule) ............................................................................................................
81,990
Total NCI .................................................................................................................................................................................................
(117,100)
Retained Earnings—Controlling Interest, March 31, 2013 ................................................................................................................................................
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
194
Ch. 4
Problem 4-1, Continued
Eliminations and Adjustments:
(CV)
Convert to equity method:
Change in equity × 80% = $40,000 × 80% = $32,000.
(CY2)
Eliminate intercompany dividends.
(EL)
Eliminate parent’s share of subsidiary equity.
(D)/(NCI) Distribute excess and NCI adjustment to goodwill, according to determination
and distribution of excess schedule.
(BIP)
Eliminate intercompany profit from beginning inventory on sales from Baxter to
Crayon, $9,000 × 15% = $1,350.
(ISP)
Eliminate sales from Baxter to Crayon from April 2012–March 2013 ($32,000).
(EIP)
Eliminate intercompany profit from ending inventory on sales from Baxter to
Crayon, $6,000 × 22% = $1,320.
(IAP)
Eliminate intercompany trade balances on sales from Baxter to Crayon.
(BIS)
Eliminate intercompany profit from beginning inventory on sales from Crayon to
Baxter, $3,500 × 20% = $700.
(ISS)
Eliminate sales from Crayon to Baxter.
(EIS)
Eliminate intercompany profit from ending inventory on sales from Crayon to
Baxter, $3,000 × 25% = $750.
(IAS)
Eliminate intercompany trade balances on sales from Crayon to Baxter.
Company
Implied
Fair Value
Value Analysis Schedule
Company fair value ..........................................
Fair value of net assets excluding goodwill ......
Goodwill ...........................................................
$531,250
400,000
$131,250
Parent
Price
(80%)
$425,000
320,000
$105,000
NCI
Value
(20%)
$106,250
80,000
$ 26,250
Based on the above information, the following D&D schedule is prepared:
Determination and Distribution of Excess Schedule
Company
Implied
Fair Value
Fair value of subsidiary .............
$531,250
Less book value of interest acquired:
Total equity ............................
400,000
Interest acquired ....................
Book value of interest ...............
Excess of cost over book value .
$131,250
Parent
Price
(80%)
NCI
Value
(20%)
$425,000
$106,250
$400,000
80%
$320,000
$105,000
$400,000
20%
$ 80,000
$ 26,250
Adjustment of identifiable accounts:
Goodwill ....................................
Adjustment
$131,250
Worksheet
Key
debit D
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
195
Ch. 4
Problem 4-1, Concluded
Subsidiary Crayon Company Income Distribution
Unrealized profit in ending
inventory .......................... (EIS) $750
Internally generated net
income .................................
$45,000
Realized profit in beginning
inventory .............................. (BIS)
700
Adjusted income ........................
NCI share ..................................
NCI ............................................
$44,950
×
20%
$ 8,990
Parent Baxter Corporation Income Distribution
Unrealized profit in ending
Internally generated net
inventory .......................... (EIP) $1,320
income ................................
$46,000
Realized profit in beginning
inventory ............................. (BIP) 1,350
80% × Crayon adjusted
income of $44,950 ..............
35,960
Controlling interest ....................
(2)
$81,990
Baxter Corporation and Subsidiary Crayon Company
Consolidated Income Statement
For Year Ended March 31, 2013
Sales ......................................................................................
Cost of goods sold ..................................................................
Gross profit .............................................................................
Expenses ................................................................................
Consolidated net income ........................................................
Distributed to NCI ...................................................................
Distributed to controlling interest .............................................
$1,448,000
1,146,020
$ 301,980
211,000
$ 90,980
8,990
$ 81,990
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
196
Ch. 4
PROBLEM 4-2
Price paid for investment in Jenko Company stock:
Jenko Company stock outstanding ($450,000 ÷ $5 par) ............
90,000 shares
Ownership interest .................................................................... ×
80%
Shares acquired ........................................................................
72,000
Silvio Corporation shares issued (72,000 ÷ 3) ...........................
24,000
Market value of shares .............................................................. ×
$40
Price paid for 80% interest ........................................................ $960,000
Company
Implied
Fair Value
Value Analysis Schedule
Company fair value .................................................
Fair value of net assets excluding goodwill .............
Goodwill ..................................................................
$1,200,000*
1,075,000**
$ 125,000
Parent
Price
(80%)
$960,000
860,000
$100,000
NCI
Value
(20%)
$240,000
215,000
$ 25,000
*$960,000/80%
**$1,000,000 equity + $75,000 adjustment
Based on the above information, the following D&D schedule is prepared:
Determination and Distribution of Excess Schedule
Company
Implied
Fair Value
Fair value of subsidiary ....................
Less book value of interest acquired:
Total equity ................................
Interest acquired ........................
Book value of interest.......................
Excess of cost over book value ........
$1,200,000
1,000,000
$ 200,000
Parent
Price
(80%)
NCI
Value
(20%)
$ 960,000
$ 240,000
$1,000,000
80%
$ 800,000
$ 160,000
$1,000,000
20%
$ 200,000
$ 40,000
Adjustment of identifiable accounts:
Land.................................................
Goodwill ...........................................
Total adjustments .......................
Adjustment
$ 75,000
125,000
$200,000
Worksheet
Key
debit D1
debit D2
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
197
Ch. 4
Problem 4-2, Continued
Silvio Corporation and Subsidiary Jenko Company
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2013
Trial Balance
Silvio
Jenko
Cash............................................................... 140,000
Accounts Receivable...................................... 285,000
Interest Receivable ........................................
1,500
Notes Receivable ...........................................
50,000
Inventory ........................................................ 470,000
Land ............................................................... 350,000
Depreciable Fixed Assets .............................. 1,110,000
Accumulated Depreciation ............................. (500,000)
Intangibles ......................................................
60,000
Investment in Jenko Company ....................... 1,128,000
.............
.............
Goodwill ......................................................... .............
Accounts Payable ......................................... (611,500)
Note Payable.................................................. .............
Interest Payable ............................................. .............
Common Stock—Silvio .................................. (400,000)
Paid-In Capital in Excess of Par—Silvio......... (1,235,000)
Retained Earnings, January 1, 2013—Silvio
(958,500)
.............
Common Stock—Jenko ................................. .............
Paid-In Capital in Excess of Par—Jenko........ .............
Retained Earnings, January 1, 2013—Jenko .............
Treasury Stock (at cost) ................................. 315,000
Sales .............................................................. (1,020,000)
Interest Income ..............................................
(1,500)
Subsidiary Income .........................................
(88,000)
Cost of Goods Sold ........................................ 705,000
....................................................................... .............
Other Expenses ............................................. 200,000
0
205,200
110,000
..............
..............
160,000
300,000
810,000
(200,000)
..............
..............
..............
..............
..............
(165,000)
10,000
(200)
..............
..............
..............
..............
(450,000)
(180,000)
(470,000)
..............
(500,000)
..............
..............
300,000
..............
90,000
0
Eliminations
and Adjustments
Dr.
Cr.
.............
.............
.............
.............
.............
(D1)
75,000
.............
.............
.............
.............
.............
.............
(D2) 125,000
(LN1)
10,000
.............
(LN2)
200
.............
.............
.............
(BI)
7,500
(EL) 360,000
(EL) 144,000
(EL) 376,000
.............
(IS)
140,000
(LN2)
200
(CY1)
88,000
(EI)
3,500
(IS) .............
.............
1,329,400
..............
..............
(LN2)
200
(LN1)
10,000
(EI)
3,500
..............
..............
..............
..............
(CY1)
88,000
(EL) 880,000
(D)
160,000
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
(NCI)
40,000
..............
..............
..............
..............
(BI)
7,500
140,000
(LN2)
200
1,329,400
Consolidated
Income
Statement
NCI
Controlling Consolidated
Retained
Balance
Earnings
Sheet
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
(1,380,000)
(1,300)
.............
.............
861,000
289,800
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
(90,000)
(36,000)
(134,000)
.............
.............
.............
.............
.............
............
.............
.............
..............
345,200
..............
395,000
..............
1,300
..............
40,000
..............
626,500
..............
725,000
..............
1,920,000
..............
(700,000)
..............
60,000
..............
.............
..............
.............
..............
.............
..............
125,000
..............
(776,500)
..............
.............
..............
.............
..............
(400,000)
.............. (1,235,000)
..............
.............
(951,000)
.............
..............
.............
..............
.............
..............
.............
..............
315,000
..............
.............
..............
.............
..............
.............
..............
.............
..............
.............
..............
.............
..............
.............
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
198
Ch. 4
Problem 4-2, Continued
Silvio Corporation and Subsidiary Jenko Company
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2013
Eliminations
Consolidated
Controlling Consolidated
Trial Balance
and Adjustments
Income
Retained
Balance
Silvio
Jenko
Dr.
Cr.
Statement
NCI
Earnings
Sheet
Consolidated Net Income ...................................................................................................................................
(230,500)
.............
..............
.............
To NCI (see distribution schedule) .....................................................................................................................
22,000
(22,000)
..............
.............
To Controlling Interest (see distribution schedule) .............................................................................................
208,500
.............
(208,500)
.............
..............
(282,000)
Total NCI .................................................................................................................................................................................
(282,000)
Retained Earnings—Controlling Interest, December 31, 2013 ..................................................................................................................... (1,159,500) (1,159,500)
0
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
199
Ch. 4
Problem 4-2, Concluded
Eliminations and Adjustments:
(CY1)
Eliminate the entry recording the parent’s share of the subsidiary’s net income.
(EL)
Eliminate the parent’s (80%) share of Jenko Company equity against the investment.
(D)/(NCI) Distribute excess and NCI adjustment according to the determination and distribution
of excess schedule.
(BI)
Eliminate the intercompany profit of $7,500 (30% × $25,000) from beginning inventory.
(IS)
Eliminate intercompany sales of $140,000.
(EI)
Eliminate intercompany profit remaining after write-down of ending inventory, $28,000
balance after write-down – ($35,000 × 70% = $24,500 seller’s cost) = $3,500 remaining profit.
(LN1)
Eliminate intercompany note.
(LN2)
Eliminate the intercompany interest on note, accrued receivable, and accrued payable
(12% × 4/12 × 1/2 × $10,000).
Subsidiary Jenko Company Income Distribution
Internally generated net
income.....................................
$110,000
Adjusted income............................
NCI share ......................................
NCI ................................................
$110,000
×
20%
$ 22,000
Parent Silvio Corporation Income Distribution
Unrealized profit in ending
inventory .................................
$3,500
Internally generated net
income.....................................
80% × Jenko adjusted
income of $110,000 .................
Realized profit on beginning
inventory ..................................
Controlling interest ........................
$116,500
88,000
7,500
$208,500
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
200
Ch. 4
PROBLEM 4-3
Pardon, Inc., and Subsidiary Slarno Corporation
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2012
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Pardon
Slarno
Dr.
Cr.
Statement
Cash..................................................................
45,000
31,211
..............
..............
.............
Accounts Receivable.........................................
119,000
73,500
..............
(IA)
27,000
.............
Billings on Construction in Progress .................
..............
(1,201,900)
..............
..............
.............
Mortgage Receivable ........................................
8,311
..............
..............
(LN1)
8,311
.............
Unsecured Notes Receivable ............................
18,000
..............
..............
..............
.............
Inventories ........................................................
217,000
117,500
..............
(EI)
1,200
.............
Land ..................................................................
34,000
42,000
..............
(LA)
5,000
.............
Building and Equipment (net) ............................
717,000
408,000
(F2)
225
(F1)
4,500
.............
Assets Under Construction ...............................
..............
..............
(LT2)
45,000
..............
.............
Investment in Slarno Corporation ......................
150,000
..............
(CV)
20,000
(EL) 170,000
.............
Accounts Payable .............................................
(203,000)
(147,000)
(IA)
27,000
..............
.............
Mortgages Payable ...........................................
(592,000)
(397,311) (LN1)
8,311
..............
.............
Common Stock—Pardon ..................................
(250,000)
..............
..............
..............
.............
Retained Earnings, January 1, 2012—Pardon
(139,311)
..............
..............
(CV)
20,000
.............
Common Stock—Slarno ...................................
..............
(100,000)
(EL) 100,000
..............
.............
Retained Earnings, January 1, 2012—Slarno ...
..............
(70,000)
(EL)
70,000
..............
.............
Sales ................................................................. (1,800,000)
..............
(IS)
238,000
.............. (1,562,000)
Earned Income on Long-Term Contracts ..........
..............
(437,000)
(F1)
4,500
..............
.............
..............
..............
(LT1)
12,000
..............
(420,500)
Cost of Goods Sold ...........................................
1,155,000
..............
(EI)
1,200
(IS)
238,000
918,200
Construction in Progress ...................................
..............
1,289,000
..............
(LT2)
45,000
.............
..............
..............
..............
(LT1)
12,000
.............
Selling, General, and Administrative Expenses
497,000
360,000
..............
(F2)
225
856,775
Interest Income .................................................
(20,000)
..............
(LN2)
851
..............
(19,149)
Interest Expense ...............................................
49,000
32,000
..............
(LN2)
851
80,149
Gain on Sale of Land ........................................
(5,000)
..............
(LA)
5,000
..............
.............
0
0
532,087
532,087
.............
Consolidated Net Income (no NCI) ..................................................................................................................................
146,525
Retained Earnings—Controlling Interest, December 31, 2012 ..............................................................................................................
Controlling
Retained
Earnings
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
(159,311)
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
(146,525)
(305,836)
Consolidated
Balance
Sheet
76,211
165,500
(1,201,900)
.............
18,000
333,300
71,000
1,120,725
45,000
.............
(323,000)
(981,000)
(250,000)
.............
.............
.............
.............
.............
.............
.............
.............
1,232,000
.............
.............
.............
.............
.............
.............
(305,836)
0
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
201
Ch. 4
Problem 4-3, Concluded
Eliminations and Adjustments:
(CV) Convert to the equity method as of January 1, 2012: 100% × $20,000 increase in Slarno
retained earnings.
(EL) Eliminate subsidiary equity in common stock against the investment account.
(LA) Eliminate profit on sale of land.
(LN1) Eliminate intercompany mortgage of $8,311.
(LN2) Eliminate interest expense and revenue applicable to mortgage as follows:
Payments made in 2012 (4 × $1,135) ....................................................................
$4,540
Less decrease in liability ($12,000 – $8,311) .........................................................
3,689
Interest charge...................................................................................................
$ 851
(F1) Reduce equipment to its cost to the consolidated company ($22,000 – $17,500).
(F2) Decrease depreciation on equipment for one-half year: 1/2 × 1/10 × $4,500 = $225.
(LT1) Eliminate income recorded with respect to the incomplete intercompany long-term contract, including elimination of the profit from Construction in Progress. Income recorded
on incomplete contract would be [45/75 × ($95,000 – $75,000 = $20,000)], or $12,000.
(LT2) Transfer unbilled costs of asset under construction to Assets Under Construction and
eliminate amount recorded for asset in Construction in Progress (optimal procedure).
(IS)
Eliminate intercompany merchandise sales.
(IA)
Eliminate intercompany trade debt resulting from merchandise sales.
(EI)
Eliminate profit in ending inventory: $11,200 – ($11,200 ÷ 1.12) = $1,200.
Determination and Distribution of Excess Schedule
Company
Implied
Fair Value
Fair value of subsidiary ....................
Less book value of interest acquired:
Common stock ...........................
Retained earnings ......................
Total stockholders’ equity .....
Interest acquired ........................
Book value .......................................
Excess of fair value over book value
$150,000
$100,000
50,000
$150,000
$
0
Parent
Price
(100%)
$150,000
NCI
Value
(0%)
N/A
$150,000
100%
$150,000
$
0
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
202
Ch. 4
PROBLEM 4-4
Value Analysis Schedule
Company fair value ..........................................
Fair value of net assets excluding goodwill ......
Goodwill ...........................................................
Company
Implied
Fair Value
Parent
Price
(80%)
$590,000
372,000*
$218,000
$480,000
297,600
$182,400
NCI
Value
(20%)
$110,000
74,400
$ 35,600
*$212,000 + $120,000 + $40,000
Determination and Distribution of Excess Schedule
Company
Implied
Fair Value
Price paid for investment ............
Less book value of interest acquired:
Common stock .....................
Paid-in capital in excess of par
Retained earnings ................
Total equity .....................
Interest acquired...................
Book value of interest .................
Excess of cost over book value ..
$590,000
$ 10,000
90,000
112,000
$212,000
$378,000
Parent
Price
(80%)
NCI
Value
(20%)
$480,000
$110,000
$212,000
80%
$169,600
$310,400
$212,000
20%
$ 42,400
$ 67,600
Adjustment of identifiable accounts:
Buildings ...................................
Equipment ................................
Goodwill ....................................
Total adjustments ..................
Adjustment
$120,000
40,000
218,000
$378,000
Worksheet
Key
debit D1
debit D2
debit D3
Periods
20
5
Amortization
$6,000
8,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
203
Ch. 4
Problem 4-4, Continued
Amortization Schedule
Account adjustments
to be amortized
Buildings
Equipment
Total amortizations
Life
20
5
Annual
Amount
$ 6,000
8,000
$14,000
Current
Year
$ 6,000
8,000
$14,000
Prior
Years
$ 6,000
8,000
$14,000
Total
$12,000
16,000
$28,000
Key
A10
A2
Parent
Profit
—
—
Sub
Amount
$12,000
18,000
Sub
%
25%
30%
Sub
Profit
$3,000
5,400
Parent
$15,000
2
—
15,000
3,000
Sub
—
—
—
—
—
Intercompany Inventory Profit Deferral
Beginning
Ending
Parent
Amount
—
—
Parent
%
0%
0%
Intercompany Fixed Asset Profit Deferral
Original profit ..............................................
Year of sale ................................................
Realized in prior years ................................
Balance, start of year ..................................
Realized in current year ..............................
Subsidiary Sandin Company Income Distribution
Ending inventory profit ..............
Amortizations ............................
$ 5,400
14,000
Internally generated net
income................................
Beginning inventory profit .........
$20,000
3,000
Total .........................................
NCI share .................................
Controlling share ......................
$ 3,600
720
$ 2,880
Parent Panther Company Income Distribution
Equipment gain .........................
$15,000 Internally generated net
income .................................
Controlling share of subsidiary ...
Realized gain on equipment ......
$165,000
2,880
3,000
Total ..........................................
$155,800
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
204
Ch. 4
Problem 4-4, Continued
(2)
Panther Company and Subsidiary Sandin Company
Consolidated Income Statement
For Year Ended December 31, 2012
Eliminations
Consolidated
and Adjustments
Income
Trial Balance
Panther
Sandin
Dr.
Cr.
Statement
NCI
Cash ..............................................................
24,000
132,000
...............
...............
...............
...............
Accounts Receivable .....................................
90,000
45,000
...............
(IA)
20,000
...............
...............
Inventory........................................................
120,000
56,000
...............
(EI)
5,400
...............
...............
Land ..............................................................
100,000
60,000
...............
...............
...............
...............
Investment in Sandin .....................................
512,000
...............
...............
(CY1)
16,000
...............
...............
...............
...............
(CY2)
8,000
...............
...............
...............
...............
...............
...............
(EL)
193,600
...............
...............
...............
...............
...............
(D)
310,400
...............
...............
Buildings ........................................................
800,000
200,000
(D1)
120,000
...............
...............
...............
Accumulated Depreciation .............................
(220,000)
(65,000)
...............
(A1)
12,000
...............
...............
Equipment .....................................................
150,000
72,000
(D2)
40,000
(F1)
15,000
...............
...............
Accumulated Depreciation .............................
(90,000)
(46,000)
...............
(A2)
16,000
...............
...............
...............
...............
(F2)
3,000
...............
...............
...............
Goodwill ........................................................ ...............
...............
(D3)
218,000
...............
...............
...............
Accounts Payable ..........................................
(60,000)
(102,000)
(IA)
20,000
...............
...............
...............
Bonds Payable .............................................. ...............
(100,000)
...............
...............
...............
...............
Discount (Premium) ....................................... ...............
...............
...............
...............
...............
...............
Common Stock—Sandin................................ ...............
(10,000)
(EL)
8,000
...............
...............
(2,000)
Paid-In Capital in Excess of Par—Sandin ...... ...............
(90,000)
(EL)
72,000
...............
...............
(18,000)
Retained Earnings—Sandin........................... ...............
(142,000)
(EL)
113,600
(NCI)
67,600
...............
...............
...............
...............
(BI)
600
...............
...............
...............
...............
...............
...............
...............
...............
(92,600)
...............
...............
(A1-2)
2,800
...............
...............
...............
Common Stock—Panther ..............................
(100,000)
...............
...............
...............
...............
...............
Paid-In Capital in Excess of Par—Panther .....
(800,000)
...............
...............
...............
...............
...............
Retained Earnings—Panther .........................
(365,000)
...............
(A1-2)
11,200
...............
...............
...............
...............
...............
(BI)
2,400
...............
...............
...............
...............
...............
...............
...............
...............
...............
Sales .............................................................
(800,000)
(350,000)
(IS)
75,000
...............
(1,075,000)
...............
Cost of Goods Sold .......................................
450,000
208,500
...............
(IS)
75,000
...............
...............
...............
...............
(EI)
5,400
(BI)
3,000
585,900
...............
Depreciation Expense—Buildings ..................
30,000
7,500
(A1)
6,000
...............
43,500
...............
Depreciation Expense—Equipment ...............
15,000
8,000
(A2)
8,000
...............
...............
...............
...............
...............
...............
(F2)
3,000
28,000
...............
Other Expenses ............................................
160,000
98,000
...............
...............
258,000
...............
Interest Expense ........................................... ...............
8,000
...............
...............
8,000
...............
Gain on Sale of Fixed Asset ..........................
(20,000)
...............
(F1)
15,000
...............
(5,000)
...............
Subsidiary Income ........................................
(16,000)
...............
(CY1)
16,000
...............
...............
...............
Dividends Declared—Sandin ........................ ...............
10,000
...............
(CY2)
8,000
...............
2,000
...............
...............
...............
...............
...............
Dividends Declared—Panther ........................
20,000
Total ..............................................................
0
0
745,000
745,000
...............
...............
Consolidated Net Income..................................................................................................................................................
(156,600)
...............
(720)
NCI Share (see distribution schedule) ...............................................................................................................................
720
To Controlling Interest (see distribution schedule) ............................................................................................................
155,880
...............
Total NCI .................................................................................................................................................................................................
(111,320)
Retained Earnings—Controlling Interest, December 31, 2012 .........................................................................................................................................
Controlling
Retained
Earnings
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(351,400)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
20,000
...............
...............
...............
(155,880)
...............
(487,280)
Consolidated
Balance
Sheet
156,000
115,000
170,600
160,000
...............
...............
...............
...............
1,120,000
(297,000)
247,000
...............
(149,000)
218,000
(142,000)
(100,000)
...............
...............
...............
...............
...............
...............
...............
(100,000)
(800,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(111,320)
(487,280)
0
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
205
Ch. 4—Problems
Problem 4-4, Concluded
Eliminations and Adjustments:
(CY1)
Current-year subsidiary income.
(CY2)
Current-year dividend.
(EL)
Eliminate controlling interest in subsidiary.
(D)/(NCI) Distribute excess and NCI adjustment.
(A)
Amortize excess.
(IS)
Eliminate intercompany sales during current period.
(IA)
Eliminate intercompany unpaid trade accounts.
(BI)
Defer beginning inventory profit.
(EI)
Defer ending inventory profit.
(F1)
Fixed asset profit at beginning of year.
(F2)
Fixed asset profit realized.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
206
Ch. 4
PROBLEM 4-5
Value Analysis Schedule
Company fair value ...........................................
Fair value of net assets excluding goodwill .......
Goodwill............................................................
Company
Implied
Fair Value
Parent
Price
(80%)
$590,000
372,000*
$218,000
$480,000
297,600
$182,400
NCI
Value
(20%)
$110,000
74,400
$ 35,600
*$212,000 + $120,000 + $40,000
Determination and Distribution of Excess Schedule
Company
Implied
Fair Value
Price paid for investment.............
Less book value of interest acquired:
Common stock ......................
Paid-in capital in excess of par
Retained earnings .................
Total equity ......................
Interest acquired ...................
Book value of interest..................
Excess of cost over book value ...
$590,000
$ 10,000
90,000
112,000
$212,000
$378,000
Parent
Price
(80%)
NCI
Value
(20%)
$480,000
$110,000
$212,000
80%
$169,600
$310,400
$212,000
20%
$ 42,400
$ 67,600
Adjustment of identifiable accounts:
Buildings ....................................
Equipment .................................
Goodwill.....................................
Total adjustments ...................
Adjustment
$120,000
40,000
218,000
$378,000
Worksheet
Key
debit D1
debit D2
debit D3
Periods
20
5
Amortization
$6,000
8,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S.
Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
207
Ch. 4
Problem 4-5, Continued
Amortization Schedule
Account adjustments
to be amortized
Buildings
Equipment
Total amortizations
Life
20
5
Annual
Amount
$ 6,000
8,000
$14,000
Current
Year
$ 6,000
8,000
$14,000
Prior
Years
$ 6,000
8,000
$14,000
Total
$12,000
16,000
$28,000
Parent
Profit
$6,000
7,500
Sub
Amount
—
—
Sub
%
0%
0%
Parent
—
—
—
—
—
Sub
$24,000
1
4,000
$20,000
$ 4,000
Key
A10
A2
Intercompany Inventory Profit Deferral
Beginning
Ending
Parent
Amount
$20,000
25,000
Parent
%
30%
30%
Sub
Profit
—
—
Intercompany Fixed Asset Profit Deferral
Original profit ..............................................
Year of sale ................................................
Realized in prior years ................................
Balance, start of year ..................................
Realized in current year ..............................
Subsidiary Sandin Company Income Distribution
Amortizations ................................
$14,000
Internally generated net
income ....................................
Realized gain on equipment ..........
$20,000
4,000
Total .............................................
NCI share .....................................
Controlling share ...........................
$10,000
2,000
$ 8,000
Parent Panther Company Income Distribution
Ending inventory profit ..................
$ 7,500
Internally generated net
income ....................................
Controlling share of subsidiary ......
Beginning inventory profit .............
$165,000
8,000
6,000
Total .............................................
$171,500
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S.
Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
208
Ch. 4
Problem 4-5, Continued
(2)
Cash ..............................................................
Accounts Receivable .....................................
Inventory........................................................
Land ..............................................................
Investment in Sandin .....................................
Buildings ........................................................
Accumulated Depreciation .............................
Equipment .....................................................
Accumulated Depreciation .............................
Goodwill ........................................................
Accounts Payable ..........................................
Bonds Payable ..............................................
Discount (Premium) .......................................
Common Stock—Sandin................................
Paid-In Capital in Excess of Par—Sandin ......
Retained Earnings—Sandin...........................
Common Stock—Panther ..............................
Paid-In Capital in Excess of Par—Panther .....
Retained Earnings—Panther .........................
Sales .............................................................
Cost of Goods Sold .......................................
Depreciation Expense—Buildings ..................
Depreciation Expense—Equipment ...............
Other Expenses .............................................
Interest Expense ...........................................
Gain on Sale of Fixed Asset ..........................
Subsidiary Income ........................................
Dividends Declared—Sandin ........................
Dividends Declared—Panther ........................
Panther Company and Subsidiary Sandin Company
Consolidated Income Statement
For Year Ended December 31, 2012
Trial Balance
Panther
Sandin
24,000
132,000
90,000
45,000
120,000
56,000
100,000
60,000
512,000
...............
...............
...............
...............
...............
...............
...............
800,000
200,000
(220,000)
(65,000)
150,000
72,000
(90,000)
(46,000)
...............
...............
...............
...............
...............
...............
(60,000)
(102,000)
...............
(100,000)
...............
...............
...............
(10,000)
...............
(90,000)
...............
(142,000)
...............
...............
...............
...............
...............
...............
(100,000)
...............
(800,000)
...............
(365,000)
...............
...............
...............
...............
...............
(800,000)
(350,000)
450,000
208,500
...............
...............
30,000
7,500
15,000
8,000
...............
...............
160,000
98,000
...............
8,000
(20,000)
...............
(16,000)
...............
...............
10,000
...............
20,000
0
0
Eliminations
and Adjustments
(CY2)
(D1)
(D2)
(F1)
(F2)
(D3)
(IA)
(EL)
(EL)
(EL)
(FI)
(A1-2)
(A1-2)
(BI)
(F1)
(IS)
(EI)
(A1)
(A2)
(CY1)
Dr.
...............
...............
...............
...............
...............
8,000
...............
...............
120,000
...............
40,000
...............
4,000
4,000
218,000
15,000
...............
...............
8,000
72,000
113,600
4,000
...............
2,800
...............
...............
11,200
6,000
16,000
100,000
...............
7,500
6,000
8,000
...............
...............
...............
...............
16,000
...............
...............
780,100
(IA)
(EI)
(CY1)
(EL)
(D)
(A1)
(F1)
(A2)
(NCI)
(IS)
(BI)
(F2)
(CY2)
Cr.
...............
15,000
7,500
...............
16,000
...............
193,600
310,400
...............
12,000
24,000
16,000
...............
...............
...............
...............
...............
...............
...............
...............
67,600
...............
...............
...............
...............
...............
...............
...............
...............
...............
100,000
6,000
...............
...............
4,000
...............
...............
...............
...............
8,000
...............
780,100
Consolidated
Income
Statement
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(1,050,000)
...............
560,000
43,500
...............
27,000
258,000
8,000
(20,000)
...............
...............
...............
...............
NCI
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(2,000)
(18,000)
...............
...............
(89,200)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
2,000
...............
...............
Controlling
Retained
Earnings
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(331,800)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
20,000
...............
Consolidated
Balance
Sheet
156,000
120,000
168,500
160,000
...............
...............
...............
...............
1,120,000
(297,000)
238,000
...............
...............
(144,000)
218,000
(147,000)
(100,000)
...............
...............
...............
...............
...............
...............
...............
(100,000)
(800,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
209
Ch. 4
Problem 4-5, Concluded
(2)
Panther Company and Subsidiary Sandin Company
Consolidated Income Statement
For Year Ended December 31, 2012
Eliminations
Consolidated
and Adjustments
Income
Trial Balance
Panther
Sandin
Dr.
Cr.
Statement
NCI
Consolidated Net Income..................................................................................................................................................
(173,500)
...............
NCI Share (see distribution schedule) ...............................................................................................................................
2,000
(2,000)
...............
To Controlling Interest (see distribution schedule) ............................................................................................................
171,500
Total NCI .................................................................................................................................................................................................
(109,200)
Retained Earnings—Controlling Interest, December 31, 2012 .........................................................................................................................................
Controlling
Retained
Earnings
...............
...............
(171,500)
...............
(483,300)
Consolidated
Balance
Sheet
...............
...............
...............
(109,200)
(483,300)
0
Eliminations and Adjustments:
(CY1)
Current-year subsidiary income.
(CY2)
Current-year dividend.
(EL)
Eliminate controlling interest in subsidiary.
(D)/(NCI) Distribute excess and NCI adjustment.
(A)
Amortize excess.
(IS)
Eliminate intercompany sales during current period.
(IA)
Eliminate intercompany unpaid trade accounts.
(BI)
Defer beginning inventory profit.
(EI)
Defer ending inventory profit.
(F1)
Fixed asset profit at beginning of year.
(F2)
Fixed asset profit realized.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
210
Ch. 4
PROBLEM 4-6
Plant Corporation and Subsidiary Sand Company
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2011
Cash .......................................................
Accounts Receivable ..............................
Inventory .................................................
Property, Plant, and Equipment (net) ......
Investment in Sand Company .................
Accounts Payable ...................................
Common Stock ($10 par)—Plant ............
Paid-In Capital in Excess of Par—Plant ..
Retained Earnings—Plant .......................
Trial Balance
Plant
Sand
835,000
370,000
400,000
365,000
600,000
275,000
4,000,000
2,300,000
3,410,000
.................
.................
.................
.................
.................
(35,000)
(100,000)
(1,000,000)
.................
(1,500,000)
.................
(5,500,000)
.................
Eliminations
and Adjustments
(D)
(IA)
Dr.
.................
.................
.................
200,000
.................
.................
.................
30,000
.................
.................
.................
Common Stock ($10 par)—Sand ............
Paid-In Capital in Excess of Par—Sand ..
Retained Earnings—Sand.......................
Sales .......................................................
Cost of Goods Sold .................................
Other Expenses ......................................
Subsidiary Income ..................................
Cr.
.................
(IA)
30,000
(EI)
37,500
(A)
20,000
(CY1)
210,000
(EL)
3,000,000
(D)
200,000
.................
.................
.................
.................
Consolidated
Income
Statement
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
(400,000)
(EL)
400,000
.................
.................
.................
(200,000)
(EL)
200,000
.................
.................
.................
(2,400,000)
(EL)
2,400,000
.................
.................
(12,000,000)
(1,000,000)
(IS)
400,000
.................
(12,600,000)
7,000,000
750,000
(EI)
37,500
(IS)
400,000
7,387,500
4,000,000
40,000
(A)
20,000
.................
4,060,000
(210,000)
.................
(CY1)
210,000
.................
.................
0
3,897,500
3,897,500
.................
0
Consolidated Net Income .................................................................................................................................................
(1,152,500)
Retained Earnings—Controlling Interest, December 31, 2011..................................................................................................................
Controlling
Retained
Earnings
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
(5,500,000)
Consolidated
Balance
Sheet
1,205,000
735,000
837,500
6,480,000
.................
.................
.................
(105,000)
(1,000,000)
(1,500,000)
.................
.................
.................
.................
.................
.................
.................
.................
.................
(1,152,500)
(6,652,500)
.................
.................
.................
.................
.................
.................
.................
.................
.................
(6,652,500)
0
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or
posted to a publicly accessible website, in whole or in part.
211
Ch. 4
Problem 4-6, Concluded
Determination and Distribution of Excess Schedule
Fair value of subsidiary ....................
Less book value of interest acquired:
Total equity ................................
Interest acquired ........................
Book value .......................................
Excess of cost over book value ........
Company
Implied
Fair Value
Parent
Price
(100%)
NCI
Value
(0%)
$3,200,000
$3,200,000
N/A
3,000,000
$ 200,000
$3,000,000
100%
$3,000,000
$ 200,000
Adjustment
$ 200,000
Worksheet
Key
debit D
Adjustment of identifiable accounts:
Equipment........................................
Periods
10
Amortization
$20,000
Eliminations and Adjustments:
(CY1) Eliminate the entry recording the parent’s share (100%) of the subsidiary’s net income.
(EL) Eliminate the subsidiary’s equity balances.
(D)
Distribute excess to equipment.
(A)
Increase depreciation expense.
(IS)
Eliminate the intercompany sale of $400,000.
(IA)
Eliminate the intercompany trade balances of $30,000.
(EI)
Eliminate the intercompany profit (25%) applicable to $150,000 ($400,000 – $250,000)
of intercompany goods in Plant’s ending inventory.
Note: An income distribution schedule is not needed because all income goes to the 100%
controlling interest.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
212
Ch. 4
PROBLEM 4-7
Company
Implied
Fair Value
(1)
Value Analysis Schedule
Company fair value ..........................................
Fair value of net assets excluding goodwill ......
Goodwill ...........................................................
$550,000
422,000**
$128,000
Parent
Price
(70%)
$400,000
295,400
$104,600
NCI
Value
(30%)
$150,000*
126,600
$ 23,400
*3,000 NCI shares × $50
**$212,000 + $150,000 + $60,000
Determination and Distribution of Excess Schedule
Company
Implied
Fair Value
Price paid for investment ..........
Less book value of interest acquired:
Common stock.......................
Paid-in capital in excess of par
Retained earnings .................
Total equity ........................
Interest acquired ....................
Book value ................................
Excess of cost over book value .
$550,000
$ 10,000
90,000
112,000
$212,000
$338,000
Parent
Price
(70%)
NCI
Value
(30%)
$400,000
$150,000
$212,000
70%
$148,400
$251,600
$212,000
30%
$ 63,600
$ 86,400
Adjustment of identifiable accounts:
Buildings ...................................
Equipment ................................
Goodwill ....................................
Total adjustments ..................
Adjustment
$150,000
60,000
128,000
$338,000
Worksheet
Key
debit D1
debit D2
debit D3
Periods
20
5
Amortization
$ 7,500
12,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
213
Ch. 4
Problem 4-7, Continued
Amortization Schedule
Account adjustments
to be amortized
Buildings
Equipment
Total amortizations
Life
20
5
Annual
Amount
$ 7,500
12,000
$19,500
Current
Year
$ 7,500
12,000
$19,500
Prior
Years
$ 7,500
12,000
$19,500
Total
$15,000
24,000
$39,000
Key
A1
A2
Sub
Amount
$10,000
6,000
Sub
%
25%
30%
Sub
Profit
$2,500
1,800
Intercompany Inventory Profit Deferral
Beginning
Ending
Parent
Amount
—
—
Parent
%
0%
0%
Parent
Profit
—
—
Subsidiary Stude Corporation Income Distribution
Unrealized profit in ending
inventory .............................
Amortizations ............................
$ 1,800
19,500
Internally generated net
income ................................
Realized profit in beginning
inventory .............................
Adjusted income .......................
NCI share .................................
Controlling share.......................
$20,000
2,500
$ 1,200
30%
$ 360
Parent Packard Corporation Income Distribution
Internally generated net
income .................................
70% of Stude adjusted income
of $1,200 ..............................
Controlling interest .....................
$165,000
840
$165,840
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
214
Ch. 4
Problem 4-7, Continued
(2)
Cash ..............................................................
Accounts Receivable .....................................
Inventory........................................................
Land ..............................................................
Investment in Stude Corporation....................
Buildings ........................................................
Accumulated Depreciation .............................
Equipment .....................................................
Accumulated Depreciation .............................
Goodwill ........................................................
Accounts Payable ..........................................
Bonds Payable ..............................................
Common Stock—Stude .................................
Paid-In Capital in Excess of Par—Stude ........
Retained Earnings, January 1—Stude ...........
Common Stock—Packard..............................
Paid-In Capital in Excess of Par—Packard ....
Retained Earnings, January 1—Packard .......
Sales .............................................................
Cost of Goods Sold........................................
Depreciation Expense—Buildings ..................
Depreciation Expense—Equipment ...............
Other Expenses .............................................
Interest Expense ............................................
Subsidiary Income .........................................
Dividends Declared—Stude ...........................
Dividends Declared—Packard .......................
Packard Corporation and Subsidiary Stude Corporation
Consolidated Income Statement
For Year Ended December 31, 2012
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Packard
Stude
Dr.
Cr.
Statement
66,000
90,000
120,000
100,000
428,000
...........
...........
...........
800,000
(220,000)
150,000
(90,000)
...........
(60,000)
...........
...........
...........
...........
...........
...........
(100,000)
(800,000)
(325,000)
...........
...........
(800,000)
450,000
...........
30,000
15,000
140,000
...........
(14,000)
...........
20,000
0
132,000
45,000
56,000
60,000
...........
...........
...........
...........
200,000
(65,000)
72,000
(46,000)
...........
(102,000)
(100,000)
(10,000)
(90,000)
(142,000)
...........
...........
...........
...........
...........
...........
...........
(350,000)
208,500
...........
7,500
8,000
98,000
8,000
...........
10,000
...........
0
(CY2)
(D1)
(D2)
(D3)
(IA)
(EL)
(EL)
(EL)
(A1–A2)
(BI)
(A1–A2)
(BI)
(IS)
(EI)
(A1)
(A2)
(CY1)
...........
...........
...........
...........
...........
7,000
...........
...........
150,000
...........
60,000
...........
128,000
11,000
...........
7,000
63,000
99,400
5,850
750
...........
...........
13,650
1,750
...........
40,000
...........
1,800
7,500
12,000
...........
...........
14,000
...........
...........
622,700
(IA)
(EI)
(CY1)
(EL)
(D)
(A1)
(A2)
(NCI)
(IS)
(BI)
(CY2)
...........
11,000
1,800
...........
14,000
...........
169,400
251,600
...........
15,000
...........
24,000
...........
...........
...........
...........
...........
86,400
...........
...........
...........
...........
...........
...........
...........
...........
40,000
2,500
...........
...........
...........
...........
...........
7,000
...........
622,700
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
(1,110,000)
...........
617,800
45,000
35,000
238,000
8,000
...........
...........
...........
...........
NCI
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
(3,000)
(27,000)
...........
...........
(122,400)
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
3,000
...........
...........
Controlling
Retained
Earnings
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
(309,600)
...........
...........
...........
...........
...........
...........
...........
...........
...........
20,000
...........
Consolidated
Balance
Sheet
198,000
124,000
174,200
160,000
...........
...........
...........
...........
1,150,000
(300,000)
282,000
(160,000)
128,000
(151,000)
(100,000)
...........
...........
...........
...........
...........
(100,000)
(800,000)
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
215
Ch. 4
Problem 4-7, Concluded
(2)
Packard Corporation and Subsidiary Stude Corporation
Consolidated Income Statement
For Year Ended December 31, 2012
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Packard
Stude
Dr.
Cr.
Statement
Consolidated Net Income..................................................................................................................................................
(166,200)
NCI
...........
To NCI (see distribution schedule) ....................................................................................................................................
360
(360)
To Controlling Interest (see distribution schedule) ............................................................................................................
(165,840)
...........
Total NCI .................................................................................................................................................................................................
(149,760)
Retained Earnings—Controlling Interest, December 31, 2012 .........................................................................................................................................
Controlling
Retained
Earnings
Consolidated
Balance
Sheet
...........
...........
...........
(165,840)
.............
(455,440)
...........
...........
(149,760)
(455,440)
0
Eliminations and Adjustments:
(CY1)
Current-year subsidiary income.
(CY2)
Current-year dividend.
(EL)
Eliminate controlling interest in subsidiary equity.
(D/NCI) Distribute excess and NCI adjustment.
(A)
Amortize excess.
(IS)
Eliminate intercompany sales during current period.
(IA)
Eliminate intercompany unpaid trade accounts.
(BI)
Defer beginning inventory profit.
(EI)
Defer ending inventory profit.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
216
Ch. 4
PROBLEM 4-8
Company
Implied
Fair Value
(1)
Value Analysis Schedule
Company fair value ..........................................
Fair value of net assets excluding goodwill ......
Goodwill ...........................................................
$550,000
422,000**
$128,000
Parent
Price
(70%)
$400,000
295,400
$104,600
NCI
Value
(30%)
$150,000*
126,600
$ 23,400
*$3,000 NCI shares × $50
**$212,000 + $150,000 + $60,000
Determination and Distribution of Excess Schedule
Company
Implied
Fair Value
Price paid for investment ..........
Less book value of interest acquired:
Common stock.......................
Paid-in capital in excess of par
Retained earnings .................
Total equity ........................
Interest acquired ....................
Book value of interest ...............
Excess of cost over book value
$550,000
$ 10,000
90,000
112,000
$212,000
$338,000
Parent
Price
(70%)
NCI
Value
(30%)
$400,000
$150,000
$212,000
70%
$148,400
$251,600
$212,000
30%
$ 63,600
$ 86,400
Adjustment of identifiable accounts:
Buildings ...................................
Equipment ................................
Goodwill ....................................
Total adjustments ..................
Adjustment
$150,000
60,000
128,000
$338,000
Worksheet
Key
debit D1
debit D2
debit D3
Periods
20
5
Amortization
$ 7,500
12,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
217
Ch. 4
Problem 4-8, Continued
Amortization Schedule
Account adjustments
to be amortized
Buildings
Equipment
Total amortizations
Life
20
5
Annual
Amount
$ 7,500
12,000
$19,500
Current
Year
$ 7,500
12,000
$19,500
Prior
Years
$ 7,500
12,000
$19,500
Total
$15,000
24,000
$39,000
Key
A1
A2
Parent
Profit
$ 8,000
10,500
Sub
Amount
$10,000
6,000
Sub
%
25%
30%
Sub
Profit
$2,500
1,800
Intercompany Inventory Profit Deferral
Beginning
Ending
Parent
Amount
$20,000
30,000
Parent
%
40%
35%
Subsidiary Stude Corporation Income Distribution
Unrealized profit in ending
inventory .............................
Amortizations ............................
$ 1,800
19,500
Internally generated net
income ................................
Realized profit in beginning
inventory .............................
Adjusted income .......................
NCI share .................................
NCI ...........................................
$20,000
2,500
$ 1,200
30%
$ 360
Parent Packard Corporation Income Distribution
Unrealized profit in ending
inventory .............................
$10,500
Internally generated net
income ................................
70% of Stude adjusted income
of $1,200 .............................
Realized profit in beginning
inventory .............................
Controlling interest ....................
$165,000
840
8,000
$163,340
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
218
Ch. 4
Problem 4-8, Continued
(2)
Cash ..............................................................
Accounts Receivable .....................................
Inventory........................................................
Land ..............................................................
Investment in Stude Corporation....................
Buildings ........................................................
Accumulated Depreciation .............................
Equipment .....................................................
Accumulated Depreciation .............................
Goodwill ........................................................
Accounts Payable ..........................................
Bonds Payable ..............................................
Discount (Premium) .......................................
Common Stock—Stude .................................
Paid-In Capital in Excess of Par—Stude ........
Retained Earnings—Stude ............................
Common Stock—Packard..............................
Paid-In Capital in Excess of Par—Packard ....
Retained Earnings—Packard .........................
Sales .............................................................
Cost of Goods Sold........................................
Depreciation Expense—Buildings ..................
Depreciation Expense—Equipment ...............
Other Expenses .............................................
Interest Expense ............................................
Subsidiary Income .........................................
Dividends Declared—Stude ...........................
Dividends Declared—Packard .......................
Packard Corporation and Subsidiary Stude Corporation
Consolidated Income Statement
For Year Ended December 31, 2012
Eliminations
Consolidated
and Adjustments
Income
Trial Balance
Packard
Stude
Dr.
Cr.
Statement
66,000
90,000
120,000
100,000
428,000
...........
...........
...........
800,000
(220,000)
150,000
(90,000)
...........
(60,000)
...........
...........
...........
...........
...........
...........
...........
(100,000)
(800,000)
(325,000)
...........
...........
(800,000)
450,000
...........
30,000
15,000
140,000
...........
(14,000)
...........
20,000
0
132,000
45,000
56,000
60,000
...........
...........
...........
...........
200,000
(65,000)
72,000
(46,000)
...........
(102,000)
(100,000)
...........
(10,000)
(90,000)
(142,000)
...........
...........
...........
...........
...........
...........
...........
(350,000)
208,500
...........
7,500
8,000
98,000
8,000
...........
10,000
...........
0
(CY2)
(D1)
(D2)
(D3)
(IA)
(EL)
(EL)
(EL)
(A1–A2)
(BI)
(A1–A2)
(BI)
(IS)
(EI)
(A1)
(A2)
(CY1)
...........
...........
...........
...........
...........
7,000
...........
...........
150,000
...........
60,000
...........
128,000
34,000
...........
...........
7,000
63,000
99,400
5,850
750
...........
...........
13,650
9,750
...........
100,000
...........
12,300
7,500
12,000
...........
...........
14,000
...........
...........
724,200
(IA)
(EI)
(CY1)
(EL)
(D)
(A1)
(A2)
(NCI)
(IS)
(BI)
(CY2)
...........
34,000
12,300
...........
14,000
...........
169,400
251,600
...........
15,000
...........
24,000
...........
...........
...........
...........
...........
...........
86,400
...........
...........
...........
...........
...........
...........
...........
...........
100,000
10,500
...........
...........
...........
...........
...........
7,000
...........
724,200
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
(1,050,000)
...........
560,300
45,000
35,000
238,000
8,000
...........
...........
...........
...........
NCI
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
(3,000)
(27,000)
...........
...........
(122,400)
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
3,000
...........
...........
Controlling
Retained
Earnings
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
(301,600)
...........
...........
...........
...........
...........
...........
...........
...........
...........
20,000
...........
Consolidated
Balance
Sheet
198,000
101,000
163,700
160,000
...........
...........
...........
...........
1,150,000
(300,000)
282,000
(160,000)
128,000
(128,000)
(100,000)
...........
...........
...........
...........
...........
...........
(100,000)
(800,000)
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
219
Ch. 4
Problem 4-8, Concluded
(2)
Packard Corporation and Subsidiary Stude Corporation
Consolidated Income Statement
For Year Ended December 31, 2012
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Packard
Stude
Dr.
Cr.
Statement
Consolidated Net Income..................................................................................................................................................
(163,700)
NCI
...........
To NCI (see distribution schedule) ....................................................................................................................................
360
(360)
To Controlling Interest (see distribution schedule) ............................................................................................................
163,340
...........
Total NCI .................................................................................................................................................................................................
(149,760)
Retained Earnings—Controlling Interest, December 31, 2012 .........................................................................................................................................
Controlling
Retained
Earnings
Consolidated
Balance
Sheet
...........
...........
...........
(163,340)
.............
(444,940)
...........
...........
(149,760)
(444,940)
0
Eliminations and Adjustments:
(CY1)
Current-year subsidiary income.
(CY2)
Current-year dividend.
(EL)
Eliminate controlling interest in subsidiary equity.
(D/NCI) Distribute excess and NCI adjustment.
(A)
Amortize excess.
(IS)
Eliminate intercompany sales during current period ($60,000 + $40,000).
(IA)
Eliminate intercompany unpaid trade accounts.
(BI)
Defer beginning inventory profit.
(EI)
Defer ending inventory profit.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
220
Ch. 4
PROBLEM 4-9
Cash ..............................................................
Accounts Receivable (net) .............................
Notes Receivable ...........................................
Inventory, August 31, 2013 ............................
Investment in Sack Corporation .....................
Plant and Equipment......................................
Accumulated Depreciation .............................
Other Assets ..................................................
Accounts Payable .........................................
Notes Payable ...............................................
Bonds Payable...............................................
Common Stock ($10 par)—Parcel .................
Paid-In Capital in Excess of Par—Parcel .......
Retained Earnings, September 1, 2012—
Parcel .........................................................
Common Stock ($10 par)—Sack ...................
Paid-In Capital in Excess of Par—Sack .........
Retained Earnings, September 1, 2012—Sack
Sales ..............................................................
Cost of Goods Sold ........................................
Selling and General Expenses.......................
Subsidiary Income .........................................
Interest Income ..............................................
Interest Expense ............................................
Gain on Sale of Equipment ............................
Dividends Declared ........................................
Parcel Corporation and Subsidiary Sack Corporation
Worksheet for Consolidated Financial Statements
For Year Ended August 31, 2013
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Parcel
Sack
Dr.
Cr.
Statement
120,000
50,000
.............
.............
..............
115,000
18,000
.............
.............
..............
..............
10,000
.............
.............
..............
175,000
34,000
.............
.............
..............
217,440
.............
(CY2)
5,600
(CY1)
23,040
..............
..............
.............
.............
(EL) 200,000
..............
990,700
295,000
.............
(F1S)
9,000
..............
..............
.............
.............
(F1P)
63,000
..............
(170,000)
(85,000) (F1S)
3,000
.............
..............
..............
.............
(F2S)
3,000
.............
..............
..............
.............
(F2P)
6,300
.............
..............
28,000
.............
.............
.............
..............
(80,000)
(50,200)
.............
.............
..............
(25,000)
.............
.............
.............
..............
(300,000)
.............
.............
.............
..............
(290,000)
.............
.............
.............
..............
(110,000)
.............
.............
.............
..............
(498,850)
..............
..............
..............
..............
(920,000)
598,000
108,000
..............
(23,040)
..............
37,750
(63,000)
90,000
0
.............
(70,000)
(62,000)
(118,000)
.............
(240,000)
132,000
80,000
.............
.............
(800)
.............
.............
7,000
0
(F1S)
(EL)
(EL)
(EL)
(F1S)
4,800
56,000
49,600
94,400
1,200
.............
.............
.............
.............
(CY1)
23,040
.............
.............
(F1P)
63,000
.............
309,940
.............
.............
.............
.............
.............
.............
.............
(F2S)
3,000
(F2P)
6,300
.............
.............
.............
.............
(CY2)
5,600
309,940
..............
..............
..............
..............
..............
(1,160,000)
730,000
178,700
..............
..............
(800)
37,750
..............
..............
..............
NCI
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
Controlling
Retained
Earnings
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
Consolidated
Balance
Sheet
170,000
133,000
10,000
209,000
..............
..............
1,213,700
..............
..............
(242,700)
..............
28,000
(130,200)
(25,000)
(300,000)
(290,000)
(110,000)
.............
(14,000)
(12,400)
(22,400)
.............
.............
.............
.............
.............
.............
.............
.............
.............
1,400
.............
(494,050)
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
90,000
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or
posted to a publicly accessible website, in whole or in part.
221
Ch. 4
Problem 4-9, Continued
Parcel Corporation and Subsidiary Sack Corporation
Worksheet for Consolidated Financial Statements
For Year Ended August 31, 2013
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Parcel
Sack
Dr.
Cr.
Statement
NCI
Consolidated Net Income......................................................................................................................................
(214,350)
.............
To NCI (see distribution schedule) ........................................................................................................................
6,360
(6,360)
To Controlling Interest (see distribution schedule) ................................................................................................
207,990
.............
Total NCI.....................................................................................................................................................................................
(53,760)
Retained Earnings—Controlling Interest, August 31, 2013 ..............................................................................................................................
Controlling
Retained
Earnings
..............
..............
(207,990)
..............
(612,040)
Consolidated
Balance
Sheet
..............
..............
..............
(53,760)
(612,040)
0
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or
posted to a publicly accessible website, in whole or in part.
222
Ch. 4
Problem 4-9, Concluded
Subsidiary Sack Corporation Income Distribution
Internally generated net
income..................................
$28,800
2013 amortization of
deferred gain on 2011
sale of truck .......................... (F2S) 3,000
Adjusted income.........................
NCI share ...................................
NCI .............................................
$31,800
×
20%
$ 6,360
Parent Parcel Corporation Income Distribution
2013 deferred gain on
sale of equipment ............ (F1P) $63,000
Internally generated net
income..................................
$239,250
2013 amortization of the
deferred gain ........................ (F2P) 6,300
80% × Sack adjusted
income of $31,800 ................
25,440
Controlling interest .....................
$207,990
Eliminations and Adjustments:
(CY1) Eliminate the entry recording the parent’s share of the subsidiary net income.
(CY2) Eliminate the parent’s share of Sack’s dividends declared.
(EL) Eliminate the investment in Sack and the parent’s share (80%) of the subsidiary equity
balances.
(F1S) Eliminate the prior-year intercompany gain ($14,000 – $5,000 = $9,000) less the $3,000
realized gain. Adjust the asset and the accumulated depreciation.
(F2S) Adjust current-year depreciation expense and accumulated depreciation for the intercompany truck sale effect ($9,000 ÷ 3 = $3,000).
(F1P) Eliminate the current-period intercompany gain on the sale of the equipment and reestablish its net book value by reducing the account by $63,000.
(F2P) Adjust current-year depreciation expense and accumulated depreciation for the intercompany sale of equipment effect ($63,000 ÷ 10 = $6,300).
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
223
Ch. 4
PROBLEM 4-10
Value Analysis Schedule
Company fair value .................................................
Fair value of net assets excluding goodwill** ...........
Goodwill ..................................................................
Company
Implied
Fair Value
Parent
Price
(80%)
$250,000*
237,500
$ 12,500
$200,000
190,000
$ 10,000
NCI
Value
(20%)
$50,000
47,500
$ 2,500
*$200,000/80%
**Company value = $200,000 equity + $25,000 + $12,500
Determination and Distribution of Excess Schedule
Company
Implied
Fair Value
Parent
Price
(80%)
$250,000
$200,000
$ 50,000
$200,000
$200,000
80%
$160,000
$ 40,000
$200,000
20%
$ 40,000
$ 10,000
Price paid for investment ..................
Less book value of interest acquired:
Total equity ...........................
Interest acquired ........................
Book value of interest.......................
Excess of cost over book value ........
$ 50,000
NCI
Value
(20%)
Adjustment of identifiable accounts:
Inventory ..........................................
Equipment........................................
Goodwill ...........................................
Total adjustments .....................
Adjustment
$12,500
25,000
12,500
$50,000
Worksheet
Key
debit D1
debit D2
debit D3
Periods
1
4
Amortization
$12,500
6,250
Amortization Schedule
Account adjustments
to be amortized
Inventory
Equipment
Total amortizations
Life
1
4
Annual
Amount
$12,500
6,250
$18,750
Current
Year
$ —
6,250
$6,250
Prior
Years
$12,500
6,250
$18,750
Total
$12,500
12,500
$25,000
Parent
Profit
—
—
Sub
Amount
$20,000
10,000
Sub
%
50%
50%
Key
A1
A2
Intercompany Inventory Profit Deferral
Beginning
Ending
Parent
Amount
—
—
Parent
%
0%
0%
Sub
Profit
$10,000
5,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
224
Ch. 4
Problem 4-10, Continued
Intercompany Fixed Asset Profit Deferral
Parent
$15,000
1
3,000
$12,000
$ 3,000
Original profit .....................................................
Year of sale........................................................
Realized in prior years .......................................
Balance, start of year .........................................
Realized in current year .....................................
Sub
—
—
—
—
—
Subsidiary Salt Company Income Distribution
Unrealized profit in ending
inventory ............................. (EI) $5,000
Amortizations ............................ (A2) 6,250
Internally generated net
income ............................
Realized profit in beginning
inventory..........................
Adjusted income....................
NCI share ..............................
Controlling share ...................
$105,000
(B1)
10,000
$103,750
20%
$ 20,750
Parent Peanut Company Income Distribution
Internally generated net
income ...............................
$100,000
80% of Salt’s adjusted income
of $103,750 ........................
83,000
Realized gain ........................... (F2)
3,000
Controlling interest ...................
$186,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
225
Ch. 4
Problem 4-10, Continued
Peanut Company and Subsidiary Salt Company
Consolidated Income Statement
For Year Ended December 31, 2012
Inventory, December 31 ................................
Other Current Assets .....................................
Investment in Salt Company ..........................
Other Long-Term Investments .......................
Land ..............................................................
Buildings and Equipment ...............................
Accumulated Depreciation .............................
Other Intangible Assets .................................
Goodwill ........................................................
Current Liabilities ...........................................
Bonds Payable ..............................................
Other Long-Term Liabilities............................
Common Stock—Salt ....................................
Paid-In Capital in Excess of Par—Salt ...........
Retained Earnings—Salt ...............................
Common Stock—Peanut ...............................
Paid-In Capital in Excess of Par—Peanut ......
Retained Earnings—Peanut ..........................
Sales .............................................................
Cost of Goods Sold........................................
Operating Expenses ......................................
Subsidiary Income ........................................
Dividends Declared—Salt ..............................
Dividends Declared—Peanut .........................
Trial Balance
Peanut
Salt
130,000
50,000
241,000
235,000
308,000
...............
...............
...............
...............
...............
...............
...............
20,000
...............
140,000
.... 80,000
375,000
200,000
(120,000)
(30,000)
...............
...............
...............
...............
...............
20,000
...............
...............
(150,000)
(70,000)
...............
(100,000)
(200,000)
(50,000)
...............
...............
...............
(50,000)
...............
(50,000)
...............
(150,000)
...............
...............
...............
...............
...............
...............
(200,000)
...............
(100,000)
...............
(320,000)
...............
...............
...............
...............
...............
...............
...............
(600,000)
(315,000)
350,000
150,000
...............
...............
150,000
60,000
...............
...............
(84,000)
...............
...............
20,000
...............
60,000
0
0
Eliminations
and Adjustments
Dr.
...............
...............
...............
(CY2)
16,000
...............
...............
...............
...............
(D2)
25,000
...............
(F1)
3,000
(F2)
3,000
...............
(D3)
12,500
...............
...............
...............
...............
(EL)
40,000
(EL)
40,000
(EL)
120,000
(BI)
2,000
(D1)
2,500
(A2)
1,250
...............
...............
(A2)
5,000
(D1)
10,000
(BI)
8,000
(F1)
12,000
(IS)
40,000
...............
(EI)
5,000
(A2)
6,250
...............
(CY1)
84,000
...............
...............
435,500
(EI)
(CY1)
(EL)
(D)
(F1)
(A2)
(NCI)
(IS)
(BI)
(F2)
(CY2)
Cr.
5,000
...............
84,000
...............
200,000
40,000
...............
...............
15,000
12,500
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
10,000
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
40,000
10,000
...............
3,000
...............
16,000
...............
435,500
Consolidated
Income
Statement
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(875,000)
...............
455,000
...............
213,250
...............
...............
...............
...............
NCI
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(10,000)
(10,000)
...............
...............
...............
(34,250)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
4,000
...............
...............
Controlling
Retained
Earnings
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(285,000)
...............
...............
...............
...............
...............
...............
...............
60,000
...............
Consolidated
Balance
Sheet
175,000
476,000
...............
...............
...............
...............
20,000
220,000
585,000
...............
...............
(156,500)
20,000
12,500
(220,000)
(100,000)
(250,000)
...............
...............
...............
...............
...............
...............
...............
(200,000)
(100,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
226
Ch. 4
Problem 4-10, Concluded
Peanut Company and Subsidiary Salt Company
Consolidated Income Statement
For Year Ended December 31, 2012
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Peanut
Salt
Dr.
Cr.
Statement
NCI
Consolidated Net Income..................................................................................................................................................
(206,750)
...............
To NCI (see distribution schedule) ....................................................................................................................................
20,750
(20,750)
...............
To Controlling Interest (see distribution schedule) ............................................................................................................
186,000
Total NCI .................................................................................................................................................................................................
(71,000)
Retained Earnings—Controlling Interest, December 31, 2012 .........................................................................................................................................
Controlling
Retained
Earnings
...............
...............
(186,000)
...............
(411,000)
Consolidated
Balance
Sheet
...............
...............
...............
(71,000)
(411,000)
0
Eliminations and Adjustments:
(CY1)
Current-year subsidiary income.
(CY2)
Current-year dividend.
(EL)
Eliminate controlling interest in subsidiary equity.
(D)/(NCI) Distribute excess and NCI adjustment.
(A)
Amortize excess, (A1) includes $12,500 inventory adjustment.
(IS)
Eliminate intercompany sales during current period.
(BI)
Eliminate beginning inventory profit.
(EI)
Defer ending inventory profit.
(F1)
Fixed asset profit at beginning of year.
(F2)
Fixed asset profit realized.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
227
Ch. 4
PROBLEM 4-11
Value Analysis Schedule
Company fair value .................................................
Fair value of net assets excluding goodwill** ...........
Goodwill ..................................................................
Company
Implied
Fair Value
Parent
Price
(80%)
$250,000*
237,500
$ 12,500
$200,000
190,000
$ 10,000
NCI
Value
(20%)
$50,000
47,500
$ 2,500
*$200,000/80%
**Company value = $200,000 equity + $25,000 + $12,500
Determination and Distribution of Excess Schedule
Price paid for investment ..................
Less book value of interest acquired:
Total equity ...........................
Interest acquired ........................
Book value of interest.......................
Excess of cost over book value ........
Company
Implied
Fair Value
Parent
Price
(80%)
$250,000
$200,000
$ 50,000
$200,000
80%
$160,000
$ 40,000
$200,000
20%
$ 40,000
$ 10,000
200,000
$ 50,000
NCI
Value
(20%)
Adjustment of identifiable accounts:
Inventory ..........................................
Equipment........................................
Goodwill ...........................................
Total adjustments .....................
Adjustment
$ 12,500
25,000
12,500
$ 50,000
Equity Conversion
Retained earnings, January 1 current year.........
Retained earnings, acquisition ...........................
Increase .............................................................
Ownership interest .............................................
Cost-to-equity conversion ..................................
Worksheet
Key
debit D1
debit D2
debit D3
Periods
1
4
Amortization
$12,500
6,250
$150,000
100,000
$ 50,000
80%
$ 40,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
228
Ch. 4
Problem 4-11, Continued
Amortization Schedule
Account adjustments
to be amortized
Inventory
Equipment
Total amortizations
Life
1
4
Annual
Amount
$12,500
6,250
$18,750
Current
Year
$
—
6,250
$ 6,250
Prior
Years
$12,500
6,250
$18,750
Total
$12,500
12,500
$25,000
Parent
Profit
—
—
Sub
Amount
$20,000
10,000
Sub
%
50%
50%
Parent
$15,000
1
3,000
$12,000
$ 3,000
Sub
—
—
—
—
—
Key
A1
A2
Intercompany Inventory Profit Deferral
Beginning
Ending
Parent
Amount
—
—
Parent
%
0%
0%
Sub
Profit
$10,000
5,000
Intercompany Fixed Asset Profit Deferral
Original profit .....................................................
Year of sale........................................................
Realized in prior years .......................................
Balance, start of year .........................................
Realized in current year .....................................
Subsidiary Salt Company Income Distribution
Unrealized profit in ending
inventory ........................... (EI) $5,000
Amortizations .......................... (A2) 6,250
Internally generated net
income ...........................
$105,000
Realized profit in beginning
inventory......................... (BI)
10,000
Adjusted income...................
NCI share .............................
NCI.......................................
$103,750
20%
$ 20,750
Parent Peanut Company Income Distribution
Internally generated net
income .............................
80% of Salt adjusted income
of $103,750 ......................
Realized gain .........................
Controlling interest .................
$100,000
(F2)
83,000
3,000
$186,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
229
Ch. 4
Problem 4-11, Continued
Peanut Company and Subsidiary Salt Company
Consolidated Income Statement
For Year Ended December 31, 2012
Trial Balance
Peanut
Salt
Inventory, December 31 ................................
Other Current Assets .....................................
Investment in Salt Company ..........................
Other Long-Term Investments .......................
Land ..............................................................
Buildings and Equipment ...............................
Accumulated Depreciation .............................
Other Intangible Assets .................................
Goodwill ........................................................
Current Liabilities ...........................................
Bonds Payable ..............................................
Other Long-Term Liabilities............................
Common Stock—Salt ....................................
Paid-In Capital in Excess of Par—Salt ...........
Retained Earnings—Salt ...............................
Common Stock—Peanut ...............................
Paid-In Capital in Excess of Par—Peanut ......
Retained Earnings—Peanut ..........................
Sales .............................................................
Cost of Goods Sold........................................
Operating Expenses ......................................
Subsidiary Income ........................................
Dividends Declared—Salt ..............................
Dividends Declared—Peanut .........................
130,000
241,000
200,000
...............
...............
20,000
140,000
375,000
(120,000)
...............
...............
...............
...............
(150,000)
...............
(200,000)
...............
...............
...............
...............
...............
...............
...............
(200,000)
(100,000)
(280,000)
...............
...............
...............
(600,000)
350,000
...............
150,000
...............
(16,000)
...............
60,000
0
50,000
235,000
...............
...............
...............
...............
80,000
200,000
(30,000)
...............
...............
20,000
...............
(70,000)
(100,000)
(50,000)
...............
(50,000)
(50,000)
(150,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
(315,000)
150,000
...............
60,000
...............
...............
20,000
...............
0
Eliminations
and Adjustments
Dr.
...............
...............
(CV)
40,000
...............
...............
...............
...............
(D2)
25,000
...............
(F1)
3,000
(F2)
3,000
...............
(D3)
12,500
...............
...............
...............
...............
(EL)
40,000
(EL)
40,000
(EL)
120,000
(BI)
2,000
(D1)
2,500
(A2)
1,250
...............
...............
(A2)
5,000
(D1)
10,000
(BI)
8,000
(F1)
12,000
(IS)
40,000
...............
(EI)
5,000
(A2)
6,250
...............
(CY2)
16,000
...............
...............
391,500
(EI)
(EL)
(D)
(F1)
(A2)
(NCI)
(CV)
(IS)
(BI)
(F2)
(CY2)
Cr.
Consolidated
Income
Statement
5,000
...............
...............
200,000
40,000
...............
...............
15,000
12,500
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
10,000
...............
...............
...............
...............
...............
40,000
...............
...............
...............
...............
40,000
10,000
...............
3,000
...............
16,000
...............
391,500
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(875,000)
...............
455,000
...............
213,250
...............
...............
...............
...............
NCI
Controlling
Retained
Earnings
Consolidated
Balance
Sheet
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(10,000)
(10,000)
...............
...............
...............
(34,250)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
4,000
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(285,000)
...............
...............
...............
...............
...............
...............
...............
60,000
...............
175,000
476,000
...............
...............
...............
20,000
220,000
585,000
...............
...............
(156,500)
20,000
12,500
(220,000)
(100,000)
(250,000)
...............
...............
...............
...............
...............
...............
...............
(200,000)
(100,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
230
Ch. 4
Problem 4-11, Concluded
Peanut Company and Subsidiary Salt Company
Consolidated Income Statement
For Year Ended December 31, 2012
Eliminations
Consolidated
Trial Balance
and Adjustments
Income
Peanut
Salt
Dr.
Cr.
Statement
NCI
...............
Consolidated Net Income..................................................................................................................................................
(206,750)
To NCI (see distribution schedule) ....................................................................................................................................
20,750
(20,750)
To Controlling Interest (see distribution schedule) ............................................................................................................
186,000
...............
Total NCI .................................................................................................................................................................................................
(71,000)
Retained Earnings—Controlling Interest, December 31, 2012 .........................................................................................................................................
Controlling
Retained
Earnings
...............
...............
(186,000)
...............
(411,000)
Consolidated
Balance
Sheet
...............
...............
...............
(71,000)
(411,000)
0
Eliminations and Adjustments:
(CV)
Convert from cost to equity.
(CY1)
Current-year subsidiary income.
(CY2)
Current-year dividend.
(EL)
Eliminate controlling interest in subsidiary equity.
(D)/(NCI) Distribute excess and NCI adjustment.
(A)
Amortize excess, (A1) includes $12,500 inventory adjustment.
(IS)
Eliminate intercompany sales during current period.
(BI)
Eliminate beginning inventory profit.
(EI)
Defer ending inventory profit.
(F1)
Fixed asset profit at beginning of year.
(F2)
Fixed asset profit realized.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
231
Ch. 4
PROBLEM 4-12
Company
Implied
Fair Value
Value Analysis Schedule
Company fair value .................................................
Fair value of net assets excluding goodwill .............
Goodwill ..................................................................
$250,000*
237,500**
$ 12,500
Parent
Price
(80%)
$200,000
190,000
$ 10,000
NCI
Value
(20%)
$50,000
47,500
$ 2,500
*$200,000/80%
**Company value = $200,000 equity + $25,000 + $12,500
Determination and Distribution of Excess Schedule
Price paid for investment ..................
Less book value of interest acquired:
Total equity ...........................
Interest acquired ........................
Book value of interest.......................
Excess of cost over book value ........
Company
Implied
Fair Value
Parent
Price
(80%)
$250,000
$200,000
$ 50,000
$200,000
80%
$160,000
$ 40,000
$200,000
20%
$ 40,000
$ 10,000
200,000
$ 50,000
NCI
Value
(20%)
Adjustment of identifiable accounts:
Inventory ..........................................
Equipment........................................
Goodwill ...........................................
Total adjustments .....................
Adjustment
$ 12,500
25,000
12,500
$ 50,000
Worksheet
Key
debit D1
debit D2
debit D3
Periods
1
4
Amortization
$12,500
6,250
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
232
Ch. 4
Problem 4-12, Continued
Amortization Schedule
Account adjustments
to be amortized
Inventory
Equipment
Total amortizations
Life
1
4
Annual
Amount
$12,500
6,250
$18,750
Current
Year
$
—
6,250
$ 6,250
Prior
Years
$12,500
6,250
$18,750
Total
$12,500
12,500
$25,000
Parent
Profit
—
—
Sub
Amount
$20,000
10,000
Sub
%
50%
50%
Parent
$15,000
1
3,000
$12,000
$ 3,000
Sub
—
—
—
—
—
Key
A1
A2
Intercompany Inventory Profit Deferral
Beginning
Ending
Parent
Amount
—
—
Parent
%
0%
0%
Sub
Profit
$10,000
5,000
Intercompany Fixed Asset Profit Deferral
Original profit .....................................................
Year of sale........................................................
Realized in prior years .......................................
Balance, start of year .........................................
Realized in current year .....................................
Subsidiary Salt Company Income Distribution
Unrealized profit in ending
inventory ............................. (EI) $5,000
Amortizations ............................ (A2) 6,250
Internally generated net
income ............................
Realized profit in beginning
inventory..........................
Adjusted income....................
NCI share ..............................
NCI........................................
$105,000
(Adj) 10,000
$103,750
20%
$ 20,750
Parent Peanut Company Income Distribution
Internally generated net
income ...............................
$100,000
80% of Salt adjusted income
of $103,750 ........................
83,000
Realized gain ........................... (F2)
3,000
Controlling interest ...................
$186,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
233
Ch. 4
Problem 4-12, Continued
Peanut Company and Subsidiary Salt Company
Consolidated Income Statement
For Year Ended December 31, 2012
Trial Balance
Peanut
Salt
Eliminations
and Adjustments
Dr.
Inventory, December 31 ................................
Other Current Assets .....................................
Investment in Salt Company ..........................
Cr.
Consolidated
Income
Statement
NCI
130,000
50,000
...............
(EI)
5,000
...............
...............
241,000
235,000
...............
...............
...............
...............
284,000
...............
...............
(CY1)
83,000
...............
...............
...............
...............
(CY2)
16,000
...............
...............
...............
...............
...............
...............
(EL)
192,000
...............
...............
...............
...............
...............
(D)
25,000
...............
...............
Other Long-Term Investments .......................
20,000
...............
...............
...............
...............
...............
Land ..............................................................
140,000
80,000
...............
...............
...............
...............
Buildings and Equipment ...............................
375,000
200,000
(D2)
18,750
(F1)
15,000
...............
...............
Accumulated Depreciation .............................
(120,000)
(30,000)
...............
(A2)
6,250
...............
...............
...............
...............
(F1)
3,000
...............
...............
...............
...............
...............
(F2)
3,000
...............
...............
...............
Other Intangible Assets ................................. ...............
20,000
...............
...............
...............
...............
Goodwill ........................................................ ...............
...............
(D3)
12,500
...............
...............
...............
Current Liabilities ...........................................
(150,000)
(70,000)
...............
...............
...............
...............
Bonds Payable .............................................. ...............
(100,000)
...............
...............
...............
...............
Other Long-Term Liabilities............................
(200,000)
(50,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
Common Stock—Salt .................................... ...............
(50,000)
(EL)
40,000
...............
...............
(10,000)
Paid-In Capital in Excess of Par—Salt ........... ...............
(50,000)
(EL)
40,000
...............
...............
(10,000)
Retained Earnings—Salt ............................... ...............
(150,000)
(Adj)
10,000
(NCI)
6,250
...............
...............
...............
...............
(EL)
112,000
...............
...............
(34,250)
Common Stock—Peanut ...............................
(200,000)
...............
...............
...............
...............
...............
Paid-In Capital in Excess of Par—Peanut ......
(100,000)
...............
...............
...............
...............
...............
Retained Earnings—Peanut ..........................
(297,000)
...............
(F1)
12,000
...............
...............
...............
Sales .............................................................
(600,000)
(315,000)
(IS)
40,000
...............
(875,000)
...............
Cost of Goods Sold........................................
350,000
150,000
...............
(IS)
40,000
...............
...............
...............
...............
(EI)
5,000
(Adj)
10,000
455,000
...............
Operating Expenses ......................................
150,000
60,000
(A2)
6,250
...............
...............
...............
...............
...............
...............
(F2)
3,000
213,250
...............
Subsidiary Income ........................................
(83,000)
...............
(CY1)
83,000
...............
...............
...............
Dividends Declared—Salt .............................. ...............
20,000
...............
(CY2)
16,000
...............
4,000
...............
...............
...............
...............
...............
Dividends Declared—Peanut .........................
60,000
0
0
401,500
401,500
...............
...............
...............
Consolidated Net Income..................................................................................................................................................
(206,750)
To NCI (see distribution schedule) ....................................................................................................................................
20,750
(20,750)
To Controlling Interest (see distribution schedule) ............................................................................................................
186,000
...............
Total NCI .................................................................................................................................................................................................
(71,000)
Retained Earnings—Controlling Interest, December 31, 2012 .........................................................................................................................................
Controlling
Retained
Earnings
Consolidated
Balance
Sheet
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(285,000)
...............
...............
...............
...............
...............
...............
...............
60,000
...............
...............
...............
(186,000)
...............
(411,000)
175,000
476,000
...............
...............
...............
...............
20,000
220,000
578,750
...............
...............
(150,250)
20,000
12,500
(220,000)
(100,000)
(250,000)
...............
...............
...............
...............
...............
(200,000)
(100,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(71,000)
(411,000)
0
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
234
Ch. 4
Problem 4-12, Concluded
Eliminations and Adjustments:
(Adj)
Adjust subsidiary for $10,000 beginning inventory profit.
(CY1)
Current-year subsidiary income.
(CY2)
Current-year dividend.
(EL)
Eliminate controlling interest in subsidiary equity. The subsidiary retained earnings is
adjusted for beginning inventory profit.
(D/NCI) Distribute unamortized excess and NCI adjustment.
(A)
Amortize excess only for current year.
(IS)
Eliminate intercompany sales during current period.
(EI)
Defer ending inventory profit.
(F1)
Fixed asset profit at beginning of year.
(F2)
Fixed asset profit realized.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
235
Ch. 4
PROBLEM 4-13
Value Analysis Schedule
Company fair value ..................................................
Fair value of net assets excluding goodwill ..............
Goodwill ...................................................................
Company
Implied
Fair Value
Parent
Price
(90%)
$1,400,000*
800,000
$ 600,000
$1,260,000
720,000
$ 540,000
NCI
Value
(10%)
$140,000
80,000
$ 60,000
*$1,260,000/90%
Based on the above information, the following D&D schedule is prepared:
Determination and Distribution of Excess Schedule
Fair value of subsidiary .....................
Less book value of interest acquired:
Common stock ............................
Retained earnings .......................
Total equity ...........................
Interest acquired .........................
Book value of interest .......................
Excess of cost over book value .........
Company
Implied
Fair Value
Parent
Price
(90%)
NCI
Value
(10%)
$1,400,000
$1,260,000
$140,000
$ 800,000
90%
$ 720,000
$ 540,000
$800,000
10%
$ 80,000
$ 60,000
$ 200,000
600,000
$ 800,000
$ 600,000
Adjustment of identifiable accounts:
Goodwill ............................................
Adjustment
$ 600,000
Worksheet
Key
debit D1
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S.
Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
236
Ch. 4
Problem 4-13, Continued
Cash ..........................................................
Accounts and Other Current Receivables ..
Inventory ....................................................
Property, Plant, and Equipment (net) .........
Investment in Sunco Corporation ...............
Goodwill .....................................................
Accounts Payable and Other
Current Liabilities ....................................
Common Stock—Pettie ..............................
Retained Earnings, January 1,
2012—Pettie .......................................
Common Stock—Sunco .............................
Retained Earnings, January 1,
2012—Sunco ......................................
Dividends Declared ....................................
Sales ..........................................................
Dividend Income ........................................
Interest Expense ........................................
Interest Income ..........................................
Cost of Goods Sold ....................................
Other Expenses .........................................
Pettie Corporation and Subsidiary Sunco Corporation
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2012
Eliminations
and Adjustments
Trial Balance
Pettie
Sunco
Dr.
Cr.
15,000
45,500
.............
.............
410,900
170,000
.............
(CY3)
900
..............
.............
.............
(LN1)
5,000
..............
.............
.............
(LN1) 100,000
..............
.............
.............
(IA)
90,000
920,000
739,400
.............
(EI)
7,500
1,000,000
400,000
.............
.............
1,260,000
.............
(CV)
45,000
(EL) 765,000
..............
.............
.............
(D)
540,000
..............
.............
(D)
600,000
.............
(140,000)
..............
..............
..............
(500,000)
(305,900)
.............
.............
.............
.............
(2,800,000)
..............
.............
(200,000)
(CY3)
(LN1)
(LN1)
(IA)
(EL)
900
5,000
100,000
90,000
.............
.............
180,000
(CV)
Consolidated
Income
Statement
..............
..............
..............
..............
..............
..............
..............
..............
..............
..............
Controlling Consolidated
Retained
Balance
Earnings
Sheet
..............
60,500
..............
.............
..............
.............
..............
.............
..............
385,000
..............
1,651,900
..............
1,400,000
..............
.............
..............
.............
..............
600,000
NCI
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
..............
..............
..............
..............
..............
.............
.............
.............
.............
.............
45,000
.............
..............
..............
............. (2,845,000)
(20,000)
..............
..............
..............
..............
..............
..............
.............
.............
.............
(250,000)
(500,000)
.............
.............
..............
(650,000)
(EL) 585,000
(NCI)
60,000
..............
(125,000)
..............
.............
..............
1,000
.............
(CY2)
900
..............
100
..............
.............
(2,000,000)
(650,000)
(IS)
300,000
............. (2,350,000)
.............
..............
.............
(900)
.............
(CY2)
900
.............
..............
.............
..............
.............
..............
5,000
.............
(LN2)
5,000
..............
.............
..............
.............
(5,000)
.............
(LN2)
5,000
.............
..............
.............
..............
.............
1,500,000
400,000
(EI)
7,500
(IS)
300,000
1,607,500
.............
..............
.............
340,000
45,000
.............
.............
385,000
.............
..............
.............
0
0
1,919,300
1,919,300
..............
.............
..............
.............
.............
..............
.............
Consolidated Net Income ......................................................................................................................................
(357,500)
To NCI (see distribution schedule) ........................................................................................................................
20,000
(20,000)
..............
.............
To Controlling Interest (see distribution schedule) ................................................................................................
337,500
.............
(337,500)
.............
Total NCI .....................................................................................................................................................................................
(164,900)
..............
(164,900)
Retained Earnings—Controlling Interest, December 31, 2012......................................................................................................................... (3,182,500) (3,182,500)
0
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or
posted to a publicly accessible website, in whole or in part.
237
Ch. 4
Problem 4-13, Concluded
Eliminations and Adjustments:
(CV)
(CY2)
(CY3)
(EL)
Adjust investment for change in Sunco retained earnings, 90% × $50,000 = $45,000.
Eliminate the entry recording the parent’s share of the subsidiary’s cash dividend.
Eliminate the intercompany dividend payable and receivable.
Eliminate the parent’s (90%) share of Sunco Corporation equity against the investment.
(D)/(NCI) Distribute excess and NCI adjustment according to the determination and distribution
of excess schedule.
(LN1)
Eliminate intercompany note, interest payable, and receivable.
(LN2)
Eliminate intercompany interest expense and income (10% × 1/2 × $100,000).
(IS)
Eliminate intercompany sales of $300,000.
(EI)
Eliminate intercompany profit of $7,500 (10% × $75,000) in the ending inventory.
(IA)
Eliminate intercompany trade debt of $90,000.
Subsidiary Sunco Corporation Income Distribution
Internally generated net
income .................................
$200,000
Adjusted income ........................
NCI share ..................................
NCI ............................................
$200,000
×
10%
$ 20,000
Parent Pettie Corporation Income Distribution
Unrealized profit in ending
inventory ........................ (EI) $7,500
Internally generated net
income ................................... $165,000
90% × Sunco adjusted income
of $200,000 ............................ 180,000
Controlling interest ..................... $337,500
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
238
Ch. 4
PROBLEM 4-14
(1)
Company
Implied
Fair Value
Value Analysis Schedule
Company fair value ..........................................
Fair value of net assets excluding goodwill ......
Goodwill ...........................................................
$375,000*
270,000**
$105,000
Parent
Price
(80%)
$300,000
216,000
$ 84,000
NCI
Value
(20%)
$75,000
54,000
$21,000
*$300,000/80%
**$160,000 + $100,000 + $50,000 – $40,000 existing goodwill
Determination and Distribution of Excess Schedule
Price paid for investment ............
Less book value of interest acquired:
Common stock .....................
Paid-in capital in excess of par
Retained earnings ................
Total equity .....................
Interest acquired...................
Book value of interest .................
Excess of cost over book value ..
Company
Implied
Fair Value
Parent
Price
(80%)
$375,000
$300,000
$ 75,000
$160,000
80%
$128,000
$172,000
$160,000
20%
$ 32,000
$ 43,000
$ 10,000
90,000
60,000
$160,000
$215,000
NCI
Value
(20%)
Adjustment of identifiable accounts:
Buildings ...................................
Equipment ................................
Goodwill ($105,000 – $40,000
book value) ............................
Total adjustments ..................
Adjustment
$100,000
50,000
65,000
$215,000
Worksheet
Key
debit D1
debit D2
Periods
20
5
Amortization
$ 5,000
10,000
debit D3
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
239
Ch. 4
Problem 4-14, Continued
(2) Amortization Schedule
Account adjustments
to be amortized
Buildings
Equipment
Total amortizations
Life
20
5
Annual
Amount
$ 5,000
10,000
$15,000
Current
Year
$ 5,000
10,000
$15,000
Prior
Years
$ 5,000
10,000
$15,000
Total
$10,000
20,000
$30,000
Sub
Profit
$12,000
16,000
Sub
Sub
Amount
%Profit
25%
$3,000
30%
4,800
Key
A1
A2
Intercompany Inventory Profit Deferral
Beginning
Ending
Parent
$14,000
12,000
Parent
Amount
40%
35%
Parent
%
$5,600
4,200
Intercompany Fixed Asset Profit Deferral
Original profit ..............................................
Year of sale ................................................
Realized in prior years ................................
Balance, start of year ..................................
Realized in current year ..............................
Parent
$40,000
1
5,000
$35,000
$ 5,000
Sub
$24,000
2
—
$24,000
$ 4,000
Subsidiary Salmon Company Income Distribution
Unrealized profit in
ending inventory.... (EI)
$ 4,800
Equipment gain ........... (F1)
24,000
Amortizations .............. (A1–A2) 15,000
Adjusted loss ..............
NCI share ...................
NCI .............................
Internally generated net
income ......................
Realized profit in beginning
inventory.................... (BI)
Realized gain .................. (F2)
$ 29,500
3,000
4,000
$ 7,300
20%
$ 1,460
Parent Purple Company Income Distribution
Unrealized profit in ending
inventory .................... (EI)
80% of Salmon adjusted
loss of $7,300.............
Internally generated net
income ......................
$155,000
Realized profit in beginning
inventory.................... (BI)
5,600
Realized gain .................. (F2)
5,000
$ 4,200
5,840
Controlling interest ..........
$155,560
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
240
Ch. 4
Problem 4-14, Continued
Purple Company and Subsidiary Salmon Company
Consolidated Income Statement
For Year Ended December 31, 2012
Cash ..............................................................
Accounts Receivable .....................................
Inventory........................................................
Land ..............................................................
Investment in Salmon Company ....................
Buildings ........................................................
Accumulated Depreciation .............................
Equipment .....................................................
Accumulated Depreciation .............................
Goodwill ........................................................
Accounts Payable ..........................................
Bonds Payable ..............................................
Common Stock—Salmon...............................
Paid-In Capital in Excess of Par—Salmon .....
Retained Earnings—Salmon..........................
Common Stock—Purple ................................
Paid-In Capital in Excess of Par—Purple .......
Retained Earnings—Purple ...........................
Sales .............................................................
Cost of Goods Sold........................................
Depreciation Expense—Buildings ..................
Depreciation Expense—Equipment ...............
Other Expenses .............................................
Interest Expense ............................................
Gain on Sale of Fixed Assets .........................
Subsidiary Income .........................................
Dividends Declared—Salmon ........................
Dividends Declared—Purple ..........................
Trial Balance
Purple
Salmon
92,400
57,500
130,000
36,000
105,000
76,000
100,000
100,000
381,200
...............
...............
...............
...............
...............
...............
...............
800,000
150,000
(250,000)
(60,000)
210,000
220,000
(115,000)
(80,000)
...............
...............
...............
...............
...............
40,000
(70,000)
(78,000)
...............
(200,000)
...............
(10,000)
...............
(90,000)
...............
(142,000)
...............
...............
...............
...............
...............
...............
(100,000)
...............
(800,000)
...............
(325,000)
...............
...............
...............
...............
...............
(800,000)
(350,000)
450,000
208,500
...............
...............
30,000
5,000
25,000
23,000
...............
...............
140,000
92,000
...............
16,000
...............
(24,000)
(23,600)
...............
...............
10,000
20,000
...............
0
0
Eliminations
and Adjustments
(CY2)
(D1)
(D2)
(F1)
(F2)
(D3)
(IA)
(EL)
(EL)
(EL)
(BI)
(A1–A2)
(A1–A2)
(BI)
(F1)
(IS)
(EI)
(A1)
(A2)
(F1)
(CY1)
Dr.
...............
...............
...............
...............
...............
8,000
...............
...............
100,000
...............
50,000
...............
5,000
9,000
65,000
14,000
...............
8,000
72,000
113,600
600
...............
3,000
...............
...............
12,000
8,000
35,000
90,000
...............
9,000
5,000
10,000
...............
...............
...............
24,000
23,600
...............
...............
664,800
(IA)
(EI)
(CY1)
(EL)
(D)
(A1)
(F1)
(A2)
(NCI)
(IS)
(BI)
(F2)
(CY2)
Cr.
...............
14,000
9,000
...............
23,600
...............
193,600
172,000
...............
10,000
64,000
20,000
...............
...............
...............
...............
...............
...............
...............
43,000
...............
...............
...............
...............
...............
...............
...............
...............
...............
90,000
8,600
...............
...............
9,000
...............
...............
...............
...............
8,000
...............
664,800
Consolidated
Income
Statement
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(1,060,000)
...............
568,900
40,000
...............
49,000
232,000
16,000
...............
...............
...............
...............
...............
NCI
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(2,000)
(18,000)
...............
...............
...............
(67,800)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
2,000
...............
...............
Controlling
Retained
Earnings
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(270,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
20,000
...............
Consolidated
Balance
Sheet
149,900
152,000
172,000
200,000
...............
...............
...............
...............
1,050,000
(320,000)
416,000
...............
...............
(201,000)
105,000
(134,000)
(200,000)
...............
...............
...............
...............
...............
...............
(100,000)
(800,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
241
Ch. 4
Problem 4-14, Concluded
Purple Company and Subsidiary Salmon Company
Consolidated Income Statement
For Year Ended December 31, 2012
Eliminations
Consolidated
and Adjustments
Income
Trial Balance
Purple
Salmon
Dr.
Cr.
Statement
NCI
Consolidated Net Income..................................................................................................................................................
(154,100)
...............
1,460
To NCI (see distribution schedule) ....................................................................................................................................
(1,460)
To Controlling Interest (see distribution schedule) ............................................................................................................
155,560
...............
Total NCI .................................................................................................................................................................................................
(84,340)
Retained Earnings—Controlling Interest, December 31, 2012 .........................................................................................................................................
Controlling
Retained
Earnings
...............
...............
(155,560)
...............
(405,560)
Consolidated
Balance
Sheet
...............
...............
...............
(84,340)
(405,560)
0
Eliminations and Adjustments:
(CY1)
Current-year subsidiary income.
(CY2)
Current-year dividend.
(EL)
Eliminate controlling interest in subsidiary equity.
(D)/(NCI) Distribute excess and NCI adjustment.
(A)
Amortize excess.
(IS)
Eliminate intercompany sales during current period ($30,000 + $60,000).
(IA)
Eliminate intercompany unpaid trade accounts ($8,000 + $6,000).
(BI)
Eliminate beginning inventory profit ($5,600 + $3,000).
(EI)
Defer ending inventory profit ($4,800 + $4,200).
(F1)
Fixed asset profit at beginning of year.
(F2)
Fixed asset profit realized ($5,000 + $4,000).
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
242
Ch. 4
PROBLEM 4-15
(1)
Company
Implied
Fair Value
Value Analysis Schedule
Company fair value ..........................................
Fair value of net assets excluding goodwill ......
Goodwill ...........................................................
$375,000*
270,000**
$105,000
Parent
Price
(80%)
$300,000
216,000
$ 84,000
NCI
Value
(20%)
$75,000
54,000
$21,000
*$300,000/80%
**$160,000 + $100,000 + $50,000 – $40,000 existing goodwill
Determination and Distribution of Excess Schedule
Price paid for investment ............
Less book value of interest acquired:
Common stock .....................
Paid-in capital in excess of par
Retained earnings ................
Total equity .....................
Interest acquired...................
Book value of interest .................
Excess of cost over book value ..
Company
Implied
Fair Value
Parent
Price
(80%)
$375,000
$300,000
$ 75,000
$160,000
80%
$128,000
$172,000
$160,000
20%
$ 32,000
$ 43,000
$ 10,000
90,000
60,000
$160,000
$215,000
NCI
Value
(20%)
Adjustment of identifiable accounts:
Buildings ...................................
Equipment ................................
Goodwill ($105,000 – $40,000
book value) ............................
Total adjustments ..................
Adjustment
$100,000
50,000
65,000
$215,000
Worksheet
Key
debit D1
debit D2
Periods
20
5
Amortization
$ 5,000
10,000
debit D3
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
243
Ch. 4
Problem 4-15, Continued
(2) Amortization Schedule
Year of consolidation 3
Account adjustments
to be amortized
Buildings
Equipment
Total amortizations
Life
20
5
Annual
Amount
$ 5,000
10,000
$15,000
Current
Year
$ 5,000
10,000
$15,000
Prior
Years
$10,000
20,000
$30,000
Total
$15,000
30,000
$45,000
Key
A1
A2
Intercompany Inventory Profit Deferral
Parent
Beginning
Ending
$12,000
10,000
Parent
Amount
35%
40%
Parent
%
$4,200
4,000
Sub
Profit
$16,000
20,000
Sub
Amount
30%
35%
Sub
% Profit
$4,800
7,000
Intercompany Fixed Asset Profit Deferral
Original profit ..............................................
Year of sale ................................................
Realized in prior years ................................
Balance, start of year ..................................
Realized in current year ..............................
Parent
$40,000
1
10,000
$30,000
$ 5,000
Sub
$24,000
2
4,000
$20,000
$ 4,000
Subsidiary Salmon Company Income Distribution
Ending inventory profit ... (EI)
$ 7,000 Internally generated net
Amortizations ................. (A1–A2) 15,000
income .............................
$80,000
Beginning inventory profit ...... (BI)
4,800
Realized gain on equipment .. (F2)
Adjusted income ....................
NCI share ..............................
NCI ........................................
4,000
$66,800
20%
$13,360
Parent Purple Company Income Distribution
Unrealized profit in ending
inventory .................. (EI)
$4,000
Internally generated net
income ..............................
$115,000
80% of Salmon adjusted income
of $66,800 .........................
53,440
Realized profit in beginning
inventory............................ (BI)
4,200
Realized gain .......................... (F2)
5,000
Controlling interest ..................
$173,640
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
244
Ch. 4
Problem 4-15, Continued
Purple Company and Subsidiary Salmon Company
Consolidated Income Statement
For Year Ended December 31, 2013
Cash ..............................................................
Accounts Receivable .....................................
Inventory........................................................
Land ..............................................................
Investment in Salmon Company ....................
Buildings ........................................................
Accumulated Depreciation .............................
Equipment .....................................................
Accumulated Depreciation .............................
Goodwill ........................................................
Accounts Payable ..........................................
Bonds Payable ..............................................
Common Stock—Salmon...............................
Paid-In Capital in Excess of Par—Salmon .....
Retained Earnings—Salmon..........................
Common Stock—Purple ................................
Paid-In Capital in Excess of Par—Purple .......
Retained Earnings—Purple ...........................
Sales .............................................................
Cost of Goods Sold........................................
Depreciation Expense—Buildings ..................
Depreciation Expense—Equipment ...............
Other Expenses .............................................
Interest Expense ............................................
Subsidiary Income .........................................
Dividends Declared—Salmon ........................
Dividends Declared—Purple ..........................
Trial Balance
Purple
Salmon
195,400
53,500
140,000
53,000
140,000
81,000
100,000
60,000
443,600
...............
...............
...............
...............
...............
...............
...............
800,000
150,000
(280,000)
(65,000)
150,000
220,000
(115,000)
(103,000)
...............
...............
...............
...............
...............
40,000
(25,000)
(50,000)
...............
(100,000)
...............
(10,000)
...............
(90,000)
...............
(169,500)
...............
...............
...............
...............
...............
...............
(100,000)
...............
(800,000)
...............
(510,000)
...............
...............
...............
...............
...............
(850,000)
(500,000)
480,000
290,000
...............
...............
30,000
5,000
15,000
23,000
...............
...............
210,000
94,000
...............
8,000
(64,000)
...............
...............
10,000
40,000
...............
0
0
Eliminations
and Adjustments
(CY2)
(D1)
(D2)
(F1)
(F2)
(D3)
(IA)
(EL)
(EL)
(EL)
(BI)
(F1)
(A1–A2)
(A1–A2)
(BI)
(F1)
(IS)
(EI)
(A1)
(A2)
(CY1)
Dr.
...............
...............
...............
...............
...............
8,000
...............
...............
100,000
...............
50,000
...............
14,000
9,000
65,000
14,000
...............
8,000
72,000
135,600
960
4,000
6,000
...............
...............
24,000
8,040
46,000
90,000
...............
11,000
5,000
10,000
...............
...............
...............
64,000
...............
...............
744,600
(IA)
(EI)
(CY1)
(EL)
(D)
(A1)
(F1)
(A2)
(NCI)
(IS)
(BI)
(F2)
(CY2)
Cr.
...............
14,000
11,000
...............
64,000
...............
215,600
172,000
...............
15,000
64,000
30,000
...............
...............
...............
...............
...............
...............
...............
43,000
...............
...............
...............
...............
...............
...............
...............
...............
...............
90,000
9,000
...............
...............
9,000
...............
...............
...............
8,000
...............
744,600
Consolidated
Income
Statement
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(1,260,000)
...............
682,000
40,000
...............
39,000
304,000
8,000
...............
...............
...............
...............
NCI
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
(2,000)
(18,000)
...........
...........
...........
(65,940)
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
...........
2,000
...........
...........
Controlling
Retained
Earnings
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
(431,960)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
40,000
...............
Consolidated
Balance
Sheet
248,900
179,000
210,000
160,000
...............
...............
...............
...............
1,050,000
(360,000)
356,000
...............
...............
(225,000)
105,000
(61,000)
(100,000)
...............
...............
...............
...............
...............
...............
(100,000)
(800,000)
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
...............
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
245
Ch. 4
Problem 4-15, Concluded
Purple Company and Subsidiary Salmon Company
Consolidated Income Statement
For Year Ended December 31, 2013
Eliminations
Consolidated
and Adjustments
Income
Trial Balance
Purple
Salmon
Dr.
Cr.
Statement
NCI
Consolidated Net Income..................................................................................................................................................
(187,000)
...........
To NCI (see distribution schedule) ....................................................................................................................................
13,360
(13,360)
...........
To Controlling Interest (see distribution schedule) ............................................................................................................
173,640
Total NCI .................................................................................................................................................................................................
(97,300)
Retained Earnings—Controlling Interest, December 31, 2013 .........................................................................................................................................
(CY1)
(CY2)
(EL)
(D)/(NCI)
(A)
(IS)
(IA)
(BI)
(EI)
(F1)
(F2)
Controlling
Retained
Earnings
...............
...............
(173,640)
.............
(565,600)
Consolidated
Balance
Sheet
...............
...............
...............
(97,300)
(565,600)
0
Current-year subsidiary income.
Current-year dividend.
Eliminate controlling interest in subsidiary equity.
Distribute excess and NCI adjustment.
Amortize excess.
Eliminate intercompany sales during current period.
Eliminate intercompany unpaid trade accounts.
Eliminate beginning inventory profit ($4,200 + $4,800).
Defer ending inventory profit.
Fixed asset profit at beginning of year ($35,000 + $20,000).
Fixed asset profit realized.
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
246
Ch. 4
APPENDIX PROBLEMS
PROBLEM 4A-1
Determination and Distribution of Excess Schedule
Fair value of subsidiary ....................
Less book value of interest acquired:
Common stock ...........................
Paid-in capital in excess of par ...
Retained earnings ......................
Total equity ...........................
Interest acquired ........................
Book value .......................................
Excess of fair value over book value
Company
Implied
Fair Value
Parent
Price
(100%)
$750,000
$750,000
$400,000
80,000
156,000
$636,000
$114,000
NCI
Value
$636,000
100%
$636,000
$114,000
Adjustment of identifiable accounts:
Machinery ........................................
Goodwill ...........................................
Total adjustments .....................
Adjustment
$ 54,000
60,000
$114,000
Worksheet
Key
debit D1
debit D2
Periods
6
Amortization
$9,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
247
Ch. 4
Problem 4A-1, Continued
Arther Corporation and Subsidiary Trent, Inc.
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2014
Eliminations
and Adjustments
Trial Balance
Arther
Trent
Income Statement:
Net Sales ..........................................
Divided Income (from Trent) .............
Cost of Goods Sold ..........................
Operating Expenses (including
depreciation) ..................................
Consolidated Net Income .................
Retained Earnings Statement:
Balance, January 1, 2014 .................
Net Income .......................................
Dividends Paid ..................................
Balance, December 31, 2014 ...........
Balance Sheet:
Cash .................................................
Accounts Receivable (net) ................
Inventories ........................................
Land, Building, and Equipment .........
Accumulated Depreciation ................
Investment in Trent, Inc. ...................
Dr.
(1,900,000)
(40,000)
1,180,000
(1,500,000)
................
870,000
550,000
(210,000)
440,000
(190,000)
(A1)
9,000
................
(F2)
(250,000)
................
................
(210,000)
................
(460,000)
(206,000)
................
................
(190,000)
40,000
(356,000)
(EL)
(A1)
(F1)
206,000
18,000
24,000
................
................
................
(CV)
285,000
430,000
530,000
660,000
(185,000)
................
750,000
................
................
150,000
350,000
410,000
680,000
(210,000)
................
................
................
................
Goodwill ............................................
Accounts Payable and Accrued
Expenses .......................................
(670,000)
Common Stock ($10 par) .................
(1,200,000)
Paid-In Capital in Excess of Par .......
(140,000)
Retained Earnings, December 31, 2014 (460,000)
0
(IS)
(CY2)
(EI)
(D1)
(F1)
(F2)
(CV)
(544,000)
(400,000)
(80,000)
(356,000)
0
(D2)
(IA)
(EL)
(EL)
180,000
40,000
18,000
Cr.
................
................
................
54,000
6,000
4,000
50,000
................
60,000
75,000
400,000
80,000
................
1,224,000
Consolidated
Balance
...............
...............
180,000
(3,220,000)
...............
1,888,000
4,000
...............
995,000
(337,000)
50,000
...............
...............
...............
(CY2)
40,000
...............
...............
...............
(258,000)
(337,000)
...............
(595,000)
...............
75,000
18,000
30,000
27,000
...............
686,000
114,000
...............
435,000
705,000
922,000
1,364,000
...............
(412,000)
...............
...............
60,000
...............
...............
...............
...............
1,224,000
(1,139,000)
(1,200,000)
(140,000)
(595,000)
0
(IS)
(IA)
(EI)
(F1)
(A1)
(EL)
(D)
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
248
Ch. 4
Problem 4A-1, Concluded
Eliminations and Adjustments:
(CV)
Convert to equity method as of January 1, 2014, 100% × $50,000 increase.
(CY2)
Eliminate intercompany dividends.
(EL)
Eliminate subsidiary equity against investment account.
(D)
Distribute excess $54,000 to land, building, and equipment and $60,000 to goodwill.
(A1)
Amortize excess applicable to machine for two prior years and current year.
(F1)
Eliminate intercompany profit on warehouse at start of year: $10,000 for land $20,000 for
building less one and one-half-years’ amortization of $4,000 per year (or $6,000).
(F2)
Correct depreciation for intercompany profit, $4,000.
(IS)
Eliminate intercompany sales, $180,000.
(EI)
Eliminate intercompany profit in ending inventory, 50% × $36,000.
(IA)
Eliminate intercompany trade debt.
Subsidiary Trent, Inc.. Income Distribution
Unrealized profit in ending
inventory ......................... (EI)
Amortization of excess
attributed to machinery ... (A1)
$18,000
Internally generated net
income ...........................
$190,000
Adjusted income ..................
$163,000
9,000
Parent Arther Corporation Income Distribution
Internally generated net
income ...........................
100% × Trent adjusted income
of $163,000....................
Gain realized through use
of warehouse ................. (F2)
Controlling interest...............
$170,000
163,000
4,000
$337,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the
U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
249
Ch. 4
PROBLEM 4-A2
Peanut Company and Subsidiary Salt Company
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2012
Financial
Statements
Peanut
Salt
Eliminations
and Adjustments
Dr.
Cr.
NCI
Income Statement:
Net Sales .....................................
Cost of Goods Sold .....................
(600,000) (315,000) (IS)
40,000
..............
.............
350,000
150,000 (EI)
5,000 (BI)
10,000
.............
............... ...............
............. (IS)
40,000
.............
Operating Expenses ....................
150,000
60,000 (A2)
6,250 (F2)
3,000
.............
84,000
..............
.............
Subsidiary Income .......................
(84,000) ............... (CY1)
Net Income (Loss)...........................
(184,000) (105,000)
.............
..............
.............
NCI .....................................................................................................................................................
(20,750)
Controlling Interest ..................................................................................................................................................
Retained Earnings:
Retained Earnings, January 1,
2012—Peanut ..........................
Retained Earnings, January 1,
2012—Salt ...............................
Net Income (from above) .............
Dividends Declared—Peanut ......
Dividends Declared—Salt............
Balance, December 31, 2012..........
Consolidated Balance Sheet:
Inventory, December 31 ..............
Other Current Assets ...................
Investment in Salt ........................
Other Long-Term Investments.....
Land ............................................
Building and Equipment...............
Accumulated Depreciation...........
Goodwill.......................................
Other Intangibles .........................
Current Liabilities .........................
Bonds Payable ............................
Other Long-Term Liabilities .........
Common Stock—Peanut .............
Other Paid-In Capital
in Excess of Par—Peanut ........
Common Stock—Salt ..................
Other Paid-In Capital
in Excess of Par—Salt .............
Retained Earnings, December 31,
2012 (from above) ...................
Total NCI .....................................
Balance ...........................................
(320,000)
...............
...............
...............
...............
...............
...............
...............
(A2)
(D1)
(BI)
(F1)
...............
...............
...............
...............
(184,000)
60,000
...............
(444,000)
(150,000)
...............
...............
...............
(105,000)
...............
20,000
(235,000)
(EL)
(BI)
(A2)
(D1)
130,000
241,000
308,000
...............
...............
20,000
140,000
375,000
(120,000)
...............
...............
...............
...............
(150,000)
...............
(200,000)
(200,000)
50,000
235,000
...............
...............
...............
...............
80,000
200,000
(30,000)
...............
...............
...............
20,000
(70,000)
(100,000)
(50,000)
...............
...............
(875,000)
455,000
...............
213,250
206,750
................
................
(186,000)
..............
..............
..............
..............
.............
.............
.............
.............
(285,000)
...............
................
................
120,000 (NCI)
2,000
1,250
2,500
.............
.............
............. (CY2)
.............
10,000
..............
..............
..............
..............
..............
16,000
..............
.............
(34,250)
.............
.............
(20,750)
.............
4,000
(51,000)
................
................
...............
...............
(186,000)
60,000
...............
(411,000)
............. (EI)
.............
(CY2)
16,000 (CY1)
............. (EL)
.............
(D)
.............
.............
(D2)
25,000 (F1)
............. (A2)
(F1)
3,000
(F2)
3,000
(D3)
12,500
.............
.............
.............
.............
.............
5,000
..............
84,000
200,000
40,000
..............
..............
15,000
12,500
..............
..............
..............
..............
..............
..............
..............
..............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
.............
175,000
476,000
................
................
................
20,000
220,000
585,000
(156,500)
...............
...............
12,500
20,000
(220,000)
(100,000)
(250,000)
(200,000)
.............
40,000
..............
..............
.............
(10,000)
(100,000)
...............
40,000
..............
(10,000)
...............
.............
.............
435,500
..............
..............
435,500
(51,000)
71,000
0
(100,000) ...............
...............
(50,000) (EL)
(50,000) (EL)
(444,000) (235,000)
............... ...............
0
0
5,000
10,000
8,000
12,000
Consolidated
Balance
(411,000)
(71,000)
0
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the
U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
250
Ch. 4
Problem 4A-2, Continued
Eliminations and Adjustments:
(CY1)
Eliminate the current-year subsidiary income recorded by the parent.
(CY2)
Eliminate intercompany dividends.
(EL)
Eliminate 80% of the subsidiary company equity balances at the beginning of the year
against the investment account.
(D)/(NCI) Allocate the $50,000 excess of cost over book value to inventory, equipment, and
goodwill. The $10,000 (80% of $12,500) write-up to inventory is charged to the parent’s retained earnings and $2,500 to the subsidiary’s retained earnings (for NCI) because FIFO is used. The $25,000 write-up to equipment is charged to buildings and
equipment. The $12,500 remaining excess is charged to goodwill.
(A2)
Amortize the equipment write-up over four years, with $5,000 (80% × $6,250) for 2011
charged to the parent’s retained earnings and $1,250 to the subsidiary’s retained
earnings, and $6,250 for 2012 to operating expenses.
(BI)
Eliminate the $10,000 of gross profit in the beginning inventory (80% × $10,000 =
$8,000 charged to the parent’s retained earnings and $2,000 to the subsidiary’s retained earnings).
(IS)
Eliminate the entire intercompany sales of $40,000.
(EI)
Eliminate the $5,000 of gross profit in the ending inventory.
(F1)
Eliminate the $15,000 2011 gain on sale of equipment and restore the equipment account to cost; adjust for $3,000 realized in 2013.
(F2)
Eliminate the $3,000 of excess depreciation for 2012 on the transferred equipment.
Company
Implied
Fair Value
Value Analysis Schedule
Company fair value .................................................
Fair value of net assets excluding goodwill .............
Goodwill ..................................................................
$250,000*
237,500**
$ 12,500
Parent
Price
(80%)
$200,000
190,000
$ 10,000
NCI
Value
(20%)
$50,000
47,500
$ 2,500
*$200,000/80%
**Company value = $200,000 equity + $25,000 + $12,500
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
251
Ch. 4
Problem 4A-2, Concluded
Determination and Distribution of Excess Schedule
Price paid for investment ..................
Less book value of interest acquired:
Total equity ...........................
Interest acquired ........................
Book value of interest.......................
Excess of cost over book value ........
Company
Implied
Fair Value
Parent
Price
(80%)
$250,000
$200,000
$ 50,000
$200,000
80%
$160,000
$ 40,000
$200,000
20%
$ 40,000
$ 10,000
200,000
$ 50,000
NCI
Value
(20%)
Adjustment of identifiable accounts:
Inventory ..........................................
Equipment........................................
Goodwill ...........................................
Total adjustments .....................
Adjustment
$12,500
25,000
12,500
$50,000
Worksheet
Key
debit D1
debit D2
debit D3
Amortization
$12,500
6,250
Periods
1
4
Subsidiary Salt Company Income Distribution
Ending inventory profit ................ (EI) $5,000
Amortizations .............................. (A2) 6,250
Internally generated net
income ...........................
$105,000
Beginning inventory profit ..... (BI) 10,000
Adjusted income...................
NCI share .............................
NCI.......................................
$103,750
×
20%
$ 20,750
Parent Peanut Company Income Distribution
Internally generated net
income ............................
Realized gain on equipment
Sale ................................. (F2)
80% × Salt adjusted
income of $103,750 .........
Controlling interest ................
$100,000
3,000
83,000
$186,000
© 2012 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from
the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
252
Related papers
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