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Exercise31
a. CommonStockSaltez
OtherContributedCapitalSaltez
RetainedEarningsSaltez
Property,Plant,andEquipment
InvestmentinSaltez
160,000
92,000
43,000
56,000
b. CommonStockSaltez
OtherContributedCapitalSaltez
Property,Plant,andEquipment
($232,000/0.9[$190,000+$75,000$29,000])
RetainedEarningsSaltez
InvestmentinSaltez
NoncontrollingInterest
190,000
75,000
21,778
351,000
29,000
232,000
25,778
c. CommonStockSaltez
180,000
OtherContributedCapitalSaltez
40,000
RetainedEarningsSaltez
InvestmentinSaltez
GainonPurchaseofBusinessPrancer**
NoncontrollingInterest(.2)($198,750)+$3,450*
4,000
159,000
13,800
43,200
**TheordinarygaintoPranceris$159,000(.80)($216,000)=$13,800
*Noncontrollinginterestreflectsthenoncontrollingshareofimpliedvalue(.20x$198,750,or
$39,750),plustheNCIportionofthebargain(.20x$17,250)
NOTE:Weknowthisisabargainacquisitioninpartcbecausetheinvestmentcostof$159,000implies
atotalvalueof$198,750.Sincethisvalueislessthanthebookvalueofequityof$216,000
[$180,000+$40,000$4,000],thedifferenceisabargainof$17,250.Thisbargainisallocatedbetween
theparent(thisportionisreflectedasagain)andtheNCI.
Exercise33
PartA InvestmentinSunCompany
Cash
PartB
192,000
192,000
PRUNCECOMPANYANDSUBSIDIARY
ConsolidatedBalanceSheet
January2,2014
Assets
Cash($260,000+$64,000$192,000)
AccountsReceivable
Inventory
PlantandEquipment(net)
Land($63,000+$32,000+$28,333*)
TotalAssets
$132,000
165,000
171,000
484,000
123,333
$1,075,333
LiabilitiesandStockholdersEquity
AccountsPayable
MortgagePayable
TotalLiabilities
$151,000
111,000
262,000
NoncontrollingInterest($192,000/0.90.1)
CommonStock
OtherContributedCapital
RetainedEarnings
TotalStockholdersEquity
TotalLiabilitiesandStockholdersEquity
*[$192,000/0.9($70,000+$20,000+$95,000)]=$28,333
$21,333
400,000
208,000
184,000
813,333
$1,075,333
Exercise34
PartA InvestmentinSwartzCompany($601,500)
CommonStock($201,500)
OtherContributedCapital($401,500)
90,000
30,000
60,000
OtherContributedCapital
Cash
1,700
PartBComputationandAllocationofDifference
Purchasepriceandimpliedvalue
Less:Bookvalueofequityacquired
Differencebetweenimpliedandbookvalue
Goodwill
Balance
*$40,000+$24,000+$19,000=$83,000
PartC
Parent
Share
1,700
Non
Controlling
Share
$90,000
0
83,000*
0
7,000
0
(7,000)
(0)
0
0
Entire
Value
90,000
83,000
7,000
(7,000)
0
PeachCompanyandSubsidiary
ConsolidatedBalanceSheet
January1,2010
Assets
Cash($73,000+$13,000$1,700)
AccountsReceivable
Inventory
PlantandEquipment
Land
Goodwill*
TotalAssets
LiabilitiesandStockholdersEquity
AccountsPayable
NotesPayable
TotalLiabilities
CommonStock($100,000+$30,000)
OtherContributedCapital($60,000+$60,000$1,700)
RetainedEarnings
TotalStockholdersEquity
TotalLiabilitiesandStockholdersEquity
$84,300
114,000
83,000
138,000
48,000
7,000
$474,300
$130,000
118,300
39,000
* Costofinvestmentlessfairvalueacquiredequalsgoodwillor($90,000$83,000=$7,000).
Recallthatthebookvalueofnetassetsequalsthefairvalueofnetassetsinthisproblem.
$84,000
103,000
$187,000
287,300
$474,300
Exercise36
PartA
$37,41
2
$249,4
12
Noncontrolling Interest
=15%NoncontrollingInterest
ImpliedValue*
*ImpliedValue=Parentsvalue$212,000+NCI$37,412=$249,412
CommonStockShipley
OtherContributedCapitalShipley
RetainedEarningsShipley
Land$249,412$236,000
InvestmentinShipleyCompany
NoncontrollingInterest
PartB
90,000
90,000
56,000
13,412
212,000
37,412
SHIPLEYCOMPANY
BalanceSheet
December31,2013
Cash
AccountsReceivable
Inventory
PlantandEquipment
Land($220,412$13,412$120,000)
TotalAssets
$15,900
22,000
34,600
147,000
87,000
$306,500
AccountsPayable
CommonStock
OtherContributedCapital
RetainedEarnings
TotalEquities
$70,500
90,000
90,000
56,000
$306,500
Exercise38
InvestmentinShyInc.[$2,500,000+(15,000$40)]
Cash
CommonStock
OtherContributedCapital($40$2)15,000
3,100,000
2,500,000
30,000
570,000
Problem31
PartA
PCOMPANYANDSUBSIDIARY
ConsolidatedBalanceSheetWorkpaper
November30,2014
CaseI
CurrentAssets
InvestmentinSCompany
DifferencebetweenImpliedandBook
Value
LongtermAssets
OtherAssets
TotalAssets
CurrentLiabilities
LongtermLiabilities
CommonStock:
PCompany
SCompany
RetainedEarnings
PCompany
SCompany
NoncontrollingInterest
TotalLiabilitiesandEquity
CaseII
CurrentAssets
InvestmentinSCompany
DifferencebetweenImplied&Book
Value
LongtermAssets
OtherAssets
TotalAssets
CurrentLiabilities
LongtermLiabilities
CommonStock:
PCompany
SCompany
RetainedEarnings
PCompany
SCompany
NoncontrollingInterest
TotalLiabilitiesandEquity
P
S
Eliminations
Noncontrolling Consolidated
Company Company
Dr.
Cr.
Interest
Balance
880,000 260,000
1,140,000
190,000
(1)190,000
(1)71,111 (2)71,111
1,871,111
130,000
3,141,111
910,000
1,140,000
640,000 270,000
850,000 290,000
600,000
180,000 (1)180,000
600,000
470,000
470,000
(40,000)
2,560,000 700,000
780,000 280,000
190,000
(1)40,000
(1)21,111
322,222 322,222
21,111
21,111
3,141,111
1,060,000
(1)190,000
(2)8,889 (1)8,889
1,200,000 400,000
70,000 70,000
2,240,000 750,000
(2)8,889
1,591,111
140,000
2,791,111
700,000 260,000
920,000 270,000
960,000
1,190,000
600,000
600,000
180,000 (1)180,000
20,000
20,000
40,000 (1)40,000
(1)21,111
2,240,000 750,000 228,889 228,889
21,111
(1)Toeliminateinvestmentaccountandcreatenoncontrollinginterestaccount
(2)Toallocatethedifferencebetweenimpliedvalueandbookvaluetolongtermassets.
21,111
2,791,111
Problem31(continued)
ComputationandAllocationofDifference(CaseI)
Purchasepriceandimpliedvalue
Less:Bookvalueofequityacquired
190,000
126,000
Non
Entire
Controlling
Value
Share
21,111
211,111*
14,000
140,000
Differencebetweenimpliedandbookvalue
Increaselongtermassetstofairvalue
Balance
64,000
(64,000)
0
7,111
(7,111)
0
Parent
Share
Non
Entire
Controlling
Value
Share
21,111
211,111*
22,000
220,000
*$190,000/.90
ComputationandAllocationofDifference(CaseII)
Purchasepriceandimpliedvalue
Less:Bookvalueofequityacquired
Differencebetweenimpliedandbookvalue
Decreaselongtermassetstofairvalue
Balance
Parent
Share
190,000
198,000
(8,000)
8,000
0
(889)
889
0
71,111
(71,111)
0
(8,889)
8,889
0
*$190,000/.90
PartB
ComputationandAllocationofDifference
Parent
Share
Purchasepriceandimpliedvalue**
Less:Bookvalueofequityacquired
202,500
126,000
Non
Entire
Controlling
Value
Share
21,250
223,750
14,000
140,000
Differencebetweenimpliedandbookvalue
Increaselongtermassetstofairvalue
Balance
76,500
(76,500)
0
7,250
(7,250)
0
83,750
(83,750)
0
**Parentshare=.90*50,000*$4.50=$202,500
Noncontrollingshare=.10*50,000*$4.25=$21,250.
Thisassumesthattherewasa$0.25persharecontrolpremiumpaidtoacquirethe90%interest.
Problem32
PartA$100,000SohoTotalPar/$10Parpershare=10,000sharesofSohoissued
8,000sharesacquired/10,000totalshares=80%
ImpliedValueofSoho(100%)=$120,000/80%=$150,000.
ImpliedValueofNoncontrollingshare=$150,000x20%=$30,000.
ComputationandAllocationofDifferenceSchedule
Purchasepriceandimpliedvalue
Less:Bookvalueofequityacquired:
Commonstock
Othercontributedcapital
Retainedearnings
Total bookvalue
Differencebetweenimpliedandbookvalue
PlantAssets
Balance
Parent
Share
120,000
Non
Controlling
Share
30,000
150,000*
80,000
13,200
18,800
112,000
20,000
3,300
4,700
28,000
100,000
16,500
23,500
140,000
2,000
(2,000)
0
10,000
(10,000)
0
8,000
(8,000)
0
Entire
Value
*$120,000/.80
PartC$100,000SohoTotalPar/$10Parpershare=10,000sharesofSohoissued
8,000sharesacquired/10,000totalshares=80%
ImpliedValueofSoho(100%)=$120,000/80%=$150,000.
ImpliedValueofNoncontrollingshare=$150,000x20%=$30,000.
ComputationandAllocationofDifferenceSchedule
Purchasepriceandimpliedvalue
Less:Bookvalueofequityacquired:
Commonstock
Othercontributedcapital
Retainedearnings
Total bookvalue
Parent
Share
160,000
Non
Controlling
Share
30,000
190,000*
80,000
13,200
18,800
112,000
20,000
3,300
4,700
28,000
100,000
16,500
23,500
140,000
2,000
(2,000)
0
50,000
(50,000)
0
Differencebetweenimpliedandbookvalue 48,000
PlantAssets
(48,000)
Balance
0
8,000sharesat$20pershareplus2,000sharesat$15equals$190,000
Entire
Value
Problem32(continued)
Part B
Cash
AccountsReceivable
Inventory
InvestmentinSoho
DifferencebetweenImplied
andBookValue
PlantAssets
AccumulatedDepreciation
Total
CurrentLiabilities
Mortgage Note Payable
CommonStock:
PerryCompany
SohoCompany
OtherContributedCapital
PerryCompany
SohoCompany
RetainedEarnings:
PerryCompany
SohoCompany
NoncontrollingInterest
Total
PERRYCOMPANYANDSUBSIDIARYSOHO
Consolidated Balance Sheet Workpaper
January1,2014
Perry
Company
39,000
53,000
42,000
120,000
Soho
Company
19,000
31,000
25,000
Eliminations
Debit
Credit
Noncontrolling
Interest
(1)120,000
160,000
(52,000)
362,000
110,500
(19,500)
166,000
18,500
40,000
26,000
(1)10,000
(2)10,000
(2)10,000
280,500
(71,500)
418,000
44,500
40,000
120,000
120,000
100,000
(1)100,000
16,500
(1)16,500
135,000
135,000
48,500
362,000
Consolidated
Balance
58,000
84,000
67,000
48,500
23,500
166,000
(1)23,500
160,000
(1)30,000
160,000
(1)Toeliminateinvestmentaccountandcreatenoncontrollinginterestaccount.
(2)Toallocatethedifferencebetweenimpliedandbookvaluetoplantassets.
30,000
30,000
418,000
Problem37
ConsolidatedBalanceSheet
January1,2014
Cash($700,000$594,000+$111,000)
AccountsReceivable(net)
Inventory
PropertyandEquipment(net)
Land
TotalAssets
(PartA)
$217,000
1,122,000
604,000
2,395,000
214,000
$4,552,000
(PartB)
$811,000
1,122,000
604,000
2,395,000
214,000
$5,146,000
AccountsPayable
NotesPayable
LongtermDebt
NoncontrollingInterest($500,000+$80,000+$80,000)0.10)
Common
TotalStock
OtherContributedCapital(partB,$543,000+[($50$20)11,880]
RetainedEarningsEquities
$454,000
649,000
440,000
66,000
600,000
1,800,000
543,000
$4,552,000
$454,000
649,000
440,000
66,000
600,000
2,037,600
899,400
$5,146,000
Problem39
PartA
ComputationandAllocationofDifferenceSchedule
$5,800,000
Non
Total
Controlling
Value
Share
644,444 6,444,444*
4,725,000
356,400
1,732,500
(1,080,000)
5,733,900
525,000
39,600
192,500
(120,000)
637,100
5,250,000
396,000
1,925,000
(1,200,000)
6,371,000
Differencebetweenimpliedandbookvalue 66,100
Plantassets
(66,100)
Balance
0
7,344
(7,344)
0
73,444
(73,444)
0
Purchasepriceandimpliedvalue
Less:Bookvalueofequityacquired:
Commonstock(5,250,000x.90)
Othercontributedcapital
Retainedearnings
Less:Treasurystock
Total bookvalue
*$5,800,000/.90
Parent
Share
Problem39(continued)
Part B
Cash
AccountsReceivable
NotesReceivable
Inventory
InvestmentinSunCompany
DifferencebetweenImplied
&BookValue
PlantandEquipment(net)
Land
AccountsPayable
Notes Payable
CommonStock($15par):
PopeCompany
SunCompany
OtherContributedCapital
PopeCompany
SunCompany
TreasuryStockHeld:
SunCompany
RetainedEarnings
PopeCompany
SunCompany
NoncontrollingInterest
Total
Pope
Company
297,000
432,000
90,000
1,980,000
5,800,000
Sun
Company
165,000
468,000
Eliminations
Debit
(1)90,000
1,447,000
Noncontrolling Consolidated
Interest
Balances
462,000
900,000
3,427,000
(2)5,800,000
(2)73,444 (3)73,444
5,730,000 3,740,000 (3)73,444
1,575,000
908,000
$15,904,000 $6,728,000
698,000
2,250,000
4,500,000
5,198,000
247,000
110,000
945,000
2,270,000
(1)90,000
4,500,000
5,250,000 (2)5,250,000
5,198,000
396,000 (2)396,000
(1,200,000)
3,258,000
9,543,444
2,483,000
$16,815,444
(2)1,200,000
3,258,000
1,925,000 (2)1,925,000
(2)644,444
$15,904,000 $6,728,000 7,807,888 7,807,888
644,444
(1)Toeliminateintercompanynotereceivableandnotepayable
(2)ToeliminateInvestmentinSunCompanyandcreatenoncontrollinginterestaccount
(3)Toallocatethedifferencebetweenimpliedandbookvaluetosubsidiaryplantandequipment.
644,444
$16,815,444