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CHAPTER3

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

1,400,000 400,000 (2)71,111


90,000 40,000
2,560,000 700,000

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

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