Acquired % 0.

80 NCI
Acquisition cost - 70% 350,000
100% implied 437,500

CV of net assets
common shares 240,000
retained earnings 64,000 304,000
Acquisitional differential 133,500

FV differential
plant assets 44,000
trademark 36,000 80,000
Goodwill 53,500

Amortization table
balance Amort. impairmenbalance
Yr 2 Yr 2 to 5 Yr 6 Yr 6 Dec 31, Yr 6
plant assets 44,000 - 16,500 - 5,500 22,000
trademark 36,000 - 9,000 - 3,000 - 9,650 14,350
80,000 - 25,500 - 8,500 - 9,650 36,350

Goodwill 53,500 - 3,500 50,000

133,500 - 25,500 - 8,500 - 13,150 86,350

Consolidated Net Income

Net income (parent) 108,000

less: dividends income 19,200 dividends paid-sub
88,800

Net income (Sub) 62,000

less: amortization of - 21,650
acquisitional differential 40,350
32,280
121,080

Consolidated R/E

Parent's R/E 150,000

Sub's
Sub's R/E
R/E at the date of 190,000
acq.
increase since acquisition 64,000
date 126,000
Amortization of acq. Diff. - 47,150
increase to recognize 78,850
% ownership of parent 0.80
Parent's share 63,080
Consolidated R/E, end of yr 213,080

Consolidated Net Income

Palm Storm
Sales 910,000 555,000 sales
Cost of goods sold - 658,000 - 380,000 interest income
Gross profit 252,000 175,000
Selling expenses - 26,000 - 39,000
Other expenses - 156,000 - 80,000 COGS
Interest and dividend incom 38,000 6,000 Selling expenses
Profit 108,000 62,000 other expenses

profit
Attributable to
Palms
NCI

Consolidated Balance Sheet

Palm Storm
Assets Assets
Plant assets (net) 270,000 200,000 Trademark
investment in storn 350,000 goodwill
Other investments 86,000 26,000 investment
Notes receivable 14,000 Notes receivable
Inventory 140,000 220,000 Inventory
Accounts receivable 92,000 180,000 Accounts receivab
Cash 24,000 34,000 Cash
962,000 674,000
Shareholders' Equity and Liabilities Shareholders' Equity and Liabilities
Ordinary shares 540,000 240,000 Ordinary shares
Retained earnings 150,000 190,000 Retained earnings
Notes payable 150,000 120,000 NCI
Other current liabilities 14,000 54,000 Notes payable
Accounts payable 108,000 70,000 Other current liabi
962,000 674,000 Accounts payable

Value of NCI on acquisition 87,500

increase since acquisition da 126,000
%ownership of sub 0.20
25,200
less: changes in acquisition diff. - 9,430
NCI-ending 103,270

Part b
plant assets 44,000 - 16,500 - 5,500 22,000
Goodwill 89,500 - - 39,500 50,000
133,500 - 16,500 - 45,000 72,000
 0.20
87,500

remaining life 8
(recoverable amt) remaining life 12

(FV-disposal cost value)

24,000
 1,465,000
24,800
1,489,800

- 1,038,000
- 73,500
- 249,150
- 1,360,650
129,150

121,080
8,070
129,150

492,000
14,350
50,000
112,000
14,000
360,000
272,000
58,000
1,372,350
holders' Equity and Liabilities
540,000
213,080
103,270
270,000
68,000
178,000
1,372,350
Acquired % 80% NCI
Acquisition cost - 70% 310,000
100% implied 387,500

CV of net assets
common shares 200,000
retained earnings 60,000 260,000
Acquisitional differential 127,500

FV differential
plant assets 40,000
trademark 24,000 64,000
Goodwill 63,500

Amortization table
balance Amort. impairmenbalance
Yr 2 Yr 2 to 5 Yr 6 Yr 6 Dec 31, Yr 6
plant assets 40,000 - 15,000 - 5,000 20,000
trademark 24,000 - 6,000 - 2,000 - 2,250 13,750
64,000 - 21,000 - 7,000 - 2,250 33,750

Goodwill 63,500 - 13,500 50,000

127,500 - 21,000 - 7,000 - 15,750 83,750

Consolidated Net Income

Net income (parent) 96,000

less: dividends income 16,000 dividends paid-sub
80,000

Net income (Sub) 50,000

less: amortization of - 22,750
acquisitional differential 27,250
21,800
101,800

Consolidated R/E

Parent's R/E 110,000

Sub's
Sub's R/E
R/E at the date of 150,000
acq.
increase since acquisition 60,000
date 90,000
Amortization of acq. Diff. - 43,750
increase to recognize 46,250
% ownership of parent 0.80
Parent's share 37,000
Consolidated R/E, end of yr 147,000

Consolidated Net Income

Palm Storm
Sales 870,000 515,000 sales
Cost of goods sold - 638,000 - 360,000 interest income
Gross profit 232,000 155,000
Selling expenses - 22,000 - 35,000
Other expenses - 148,000 - 72,000 COGS
Interest and dividend incom 34,000 2,000 Selling expenses
Profit 96,000 50,000 other expenses

profit
Attributable to
Palms
NCI

Consolidated Balance Sheet

Palm Storm
Assets Plant assets (net)
Plant assets (net) 230,000 160,000 Trademark
investment in storn 310,000 goodwill
Other investments 82,000 22,000 investment
Notes receivable 10,000 Notes receivable
Inventory 100,000 180,000 Inventory
Accounts receivable 88,000 160,000 Accounts receivab
Cash 20,000 30,000 Cash
830,000 562,000
Shareholders' Equity and Liabilities Shareholders' Equity and Liabilities
Ordinary shares 500,000 200,000 Ordinary shares
Retained earnings 110,000 150,000 Retained earnings
Notes payable 130,000 100,000 NCI
Other current liabilities 10,000 50,000 Notes payable
Accounts payable 80,000 62,000 Other current liabi
830,000 562,000 Accounts payable

Value of NCI on acquisition 77,500

increase since acquisition da 90,000
%ownership of sub 0.20
18,000
less: changes in acquisition diff. - 8,750
NCI-ending 86,750

Part b
plant assets 40,000 - 15,000 - 5,000 20,000
Goodwill 87,500 - - 37,500 50,000
127,500 - 15,000 - 42,500 70,000
 0.20
77,500

remaining life-PA 8
(recoverable amt) remaining life 12

(FV-disposal cost value)

20,000
 1,385,000
20,000
1,405,000

- 998,000
- 64,000
- 235,750
- 1,297,750
107,250

101,800
5,450
107,250

410,000
13,750
50,000
104,000
10,000
280,000
248,000
50,000
1,165,750
holders' Equity and Liabilities
500,000
147,000
86,750
230,000
60,000
142,000
1,165,750
Acquired % 80% NCI
Acquisition cost - 70% 400,000
100% implied 500,000

CV of net assets
common shares 290,000
retained earnings 69,000 359,000
Acquisitional differential 141,000

FV differential
plant assets 40,000
trademark 27,000 67,000
Goodwill 74,000

Amortization table
balance Amort. impairmenbalance
Yr 2 Yr 2 to 5 Yr 6 Yr 6 Dec 31, Yr 6
plant assets 40,000 - 15,000 - 5,000 20,000
trademark 27,000 - 6,750 - 2,250 - 2,900 15,100
67,000 - 21,750 - 7,250 - 2,900 35,100

Goodwill 74,000 - 19,000 55,000

141,000 - 21,750 - 7,250 - 21,900 90,100

Consolidated Net Income

Net income (parent) 123,000

less: dividends income 23,200 dividends paid-sub
99,800

Net income (Sub) 77,000

less: amortization of - 29,150
acquisitional differential 47,850
38,280
138,080

Consolidated R/E

Parent's R/E 200,000

Sub's
Sub's R/E
R/E at the date of 240,000
acq. 69,000
increase since acquisition
date 171,000
Amortization of acq. Diff. - 50,900
increase to recognize 120,100
% ownership of parent 0.80
Parent's share 96,080
Consolidated R/E, end of yr 296,080

Consolidated Net Income

Palm Storm
Sales 960,000 605,000 sales
Cost of goods sold - 683,000 - 405,000 interest income
Gross profit 277,000 200,000
Selling expenses - 31,000 - 44,000
Other expenses - 166,000 - 90,000 COGS
Interest and dividend incom 43,000 11,000 Selling expenses
Profit 123,000 77,000 other expenses

profit
Attributable to
Palms
NCI

Consolidated Balance Sheet

Palm Storm
Assets Plant assets (net)
Plant assets (net) 320,000 250,000 Trademark
investment in storn 400,000 goodwill
Other investments 91,000 31,000 investment
Notes receivable 19,000 Notes receivable
Inventory 190,000 270,000 Inventory
Accounts receivable 97,000 205,000 Accounts receivab
Cash 29,000 39,000 Cash
1,127,000 814,000
Shareholders' Equity and Liabilities Shareholders' Equity and Liabilities
Ordinary shares 590,000 290,000 Ordinary shares
Retained earnings 200,000 240,000 Retained earnings
Notes payable 175,000 145,000 NCI
Other current liabilities 19,000 59,000 Notes payable
Accounts payable 143,000 80,000 Other current liabi
1,127,000 814,000 Accounts payable
Value of NCI on acquisition 100,000
increase since acquisition da 171,000
%ownership of sub 0.20
34,200
less: changes in acquisition diff. - 10,180
NCI-ending 124,020

Part b
plant assets 40,000 - 15,000 - 5,000 20,000
Goodwill 101,000 - - 46,000 55,000
141,000 - 15,000 - 51,000 75,000
 0.20
100,000

remaining life-PA 8
(recoverable amt) remaining life 12

(FV-disposal cost value)

29,000
 1,565,000
30,800
1,595,800

- 1,088,000
- 82,250
- 277,900
- 1,448,150
147,650

138,080
9,570
147,650

590,000
15,100
55,000
122,000
19,000
460,000
302,000
68,000
1,631,100
holders' Equity and Liabilities
590,000
296,080
124,020
320,000
78,000
223,000
1,631,100