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Class:
Problem 04-35
Acquisition Method
Consolidated Balances
Part a.
Accounts
Revenues
Cost of goods sold
Depreciation expense
Amortization expense
Interest expense
Equity in San Marco income
Separate company net income
Consolidated net income
To noncontrolling interest
To Paloma Company
Paloma
(1,843,000)
1,100,000
125,000
275,000
27,500
(121,500)
(437,000)
San Marco
(675,000)
322,000
120,000
11,000
7,000
(215,000)
(2,625,000)
(437,000)
350,000
(2,712,000)
(395,000)
(215,000)
25,000
(585,000)
Current assets
Investment in San Marco
1,204,000
1,854,000
430,000
-
Customer base
Buildings and equipment
Copyrights
Goodwill
Total assets
931,000
950,000
4,939,000
863,000
107,000
1,400,000
(485,000)
(542,000)
(200,000)
(155,000)
Accounts payable
Notes payable
NCI in San Marco
Noncontrolling
Interest
Common stock
Additional paid-in capital
Retained earnings, 12/31
Total liabilities and stockholders' equity
(900,000)
(300,000)
(2,712,000)
(4,939,000)
(400,000)
(60,000)
(585,000)
(1,400,000)
Controlling Noncontrolling
Interest
Interest
Fair value at acquisition date
Relative fair values of identifiable net assets
Goodwill
Part b.
If the acquisition-date fair value of the noncontrolling interest was $167,500 both goodwill (NCI
portion) and the noncontrolling interest balance would be reduced as follows:
Fair value of San Marco Company
Carrying amount acquired
Excess fair value
to customer base
to goodwill
Noncontrolling interest balance beginning of year*
Net income attributable to noncontrolling interest
Dividends declared to noncontrolling interest
Noncontrolling interest end of year
Controlling Noncontrolling
Interest
Interest
Fair value at acquisition date
Relative fair values of identifiable net assets
Goodwill
Consolidated
Totals
90%
1,710,000
400,000
60,000
265,000
800,000
1,900,000
725,000
1,175,000
800,000
375,000
Account Balances
December 31, 2015
Revenues
Cost of goods sold
Depreciation expense
Amortization expense
Interest expense
Equity in income of San Marco
Net income
Paloma
San Marco
$ (1,843,000) $
(675,000)
1,100,000
322,000
125,000
120,000
275,000
11,000
27,500
7,000
(121,500)
$
(437,000) $
(215,000)
$ (2,625,000) $
(437,000)
350,000
$ (2,712,000) $
Current assets
Investment in San Marco
Buildings and equipment
Copyrights
Total assets
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings, 12/31
Total liabilities and equity
1,204,000 $
1,854,000
931,000
950,000
4,939,000 $
(395,000)
(215,000)
25,000
(585,000)
430,000
863,000
107,000
1,400,000
(485,000) $
(200,000)
(542,000)
(155,000)
(900,000)
(400,000)
(300,000)
(60,000)
(2,712,000)
(585,000)
$ (4,939,000) $ (1,400,000)
Student Name:
Class:
Problem 04-37
Life
(years)
Excess
Amortizations
Totals for the business combination for the year ending December 31, 2015
PADRE, INC. AND SIERRA CORPORATION
Account Name
Revenues
Depreciation expense
Amortization expense
Interest expense
Balance
Explanation
Student Name:
Class:
Problem 04-37
Dividends declared
Student Name:
Class:
Problem 04-37
Current assets
Investment in Sierra
Land
Copyright
Total assets
Accounts payable
Notes payable
Common stock
Student Name:
Class:
Problem 04-37
PADRE, INC. AND SIERRA CORPORATION
Consolidation Worksheet
Accounts
Revenues
Cost of goods sold
Depreciation expense
Amortization expense
Interest expense
Equity in income of Sierra
Separate company net income
Consolidated net income
Padre
Sierra
(1,394,980)
774,000
274,000
52,100
(177,120)
(684,900)
432,000
11,600
6,100
9,200
-
(472,000)
(226,000)
(1,275,000)
(472,000)
260,000
(530,000)
(226,000)
65,000
(1,487,000)
(691,000)
Current assets
Investment in Sierra
856,160
927,840
764,700
Land
Buildings and equipment (net)
Copyright
Total assets
360,000
909,000
-
65,000
275,400
115,900
3,053,000
1,221,000
(275,000)
(541,000)
(194,000)
(176,000)
(300,000)
(450,000)
(1,487,000)
(100,000)
(60,000)
(691,000)
(3,053,000)
(1,221,000)
NI to noncontrolling interest
NI to Padre Company
Retained earnings, 1/1
Net income
Dividends declared
Retained earnings, 12/31
Accounts payable
Notes payable
NCI in Sierra 1/1
NCI in Sierra 12/31
Common stock
Additional paid-in capital
Retained earnings, 12/31
Total liabilities and stockholders' equity
Parentheses indicate a credit balance.
Consolidation Entries
Debit
Credit
ERRA CORPORATION
on Worksheet
Noncontrolling
Interest
Consolidated
Totals
80%
$
$
$
680,000
1,003,400
690,000
Book
Value
65,000 $
287,000
122,000
(176,000)
Fair
Value
290,000
263,000
216,000
(157,600)
Land
Buildings and equipment (10-year remaining life)
Copyright (20-year life)
Notes payable (due in 8 years)
Revenues
Cost of goods sold
Depreciation expense
Amortization expense
Interest expense
Equity in income of Sierra
Net income
Padre,
Sierra
12/31/2015
12/31/2015
$ (1,394,980) $
(684,900)
774,000
432,000
274,000
11,600
6,100
52,100
9,200
(177,120)
$
(472,000) $
(226,000)
$ (1,275,000) $
(472,000)
260,000
$ (1,487,000) $
Current assets
Investment in Sierra
Land
Buildings and equipment (net)
Copyright
Total assets
Accounts payable
Notes payable
Common stock
Additional paid-in capital
Retained earnings
Total liabilities and equity
856,160 $
927,840
360,000
909,000
3,053,000 $
(530,000)
(226,000)
65,000
(691,000)
764,700
65,000
275,400
115,900
1,221,000
(275,000) $
(194,000)
(541,000)
(176,000)
(300,000)
(100,000)
(450,000)
(60,000)
(1,487,000)
(691,000)
$ (3,053,000) $ (1,221,000)
Student Name:
Class:
Problem 04-38
Part a.
ADAMS CORPORATION AND BARSTOW, INC.
- Purchase price allocation and excess amortizations
Consideration transferred by Adams
Noncontrolling interest fair value
Acquisition-date total fair value
Book value of Barstow
Excess fair value over book value
Life
(years)
Land
Buildings
Equipment
Patents
Notes payable
Goodwill
Total
Annual
Excess
Amortizations
indefinite
Parts c. and d.
ADAMS CORPORATION AND BARSTOW, INC.
Consolidation Worksheet - Acquisition Method
For Year Ending December 31, 2015
Accounts
Revenues
Cost of goods sold
Depreciation expense
Amortization expense
Interest expense
Investment income
Separate company net income
Consolidated net income
NI to noncontrolling interest
NI to Adams Corporation
Retained earnings, 1/1
Net income
Adams
Corp.
(940,000)
480,000
100,000
40,000
(108,000)
(428,000)
Barstow
Inc.
(280,000)
90,000
55,000
(1,367,000)
(340,000)
(428,000)
(120,000)
15,000
(120,000)
Debit
Credit
Noncontrolling
Interest
Student Name:
Class:
Problem 04-38
Dividends declared
Retained earnings, 12/31
(110,000)
(1,685,000)
70,000
(390,000)
Current assets
Investment in Barstow
610,000
702,000
250,000
Land
Buildings
Equipment
Patents
Goodwill
Total assets
380,000
490,000
873,000
150,000
250,000
150,000
3,055,000
800,000
Notes payable
Common stock
Retained earnings, 12/31
Noncontrolling interest
(860,000)
(510,000)
(1,685,000)
(230,000)
(180,000)
(390,000)
(3,055,000)
(800,000)
Consolidated
Totals
90%
$
603,000
67,000
Current assets
Land
Buildings (10-year life)
Equipment (5-year life)
Patents (10-year life)
Notes Payable (5-year life)
Common stock
Retained earnings, 12/31/13
Book
Fair Market
Value
Value
160,000 $
160,000
120,000
150,000
220,000
200,000
160,000
200,000
50,000
(200,000)
(180,000)
(180,000)
(280,000)
Barstow,
Inc.
Debits
Current assets
Land
Buildings
Equipment
Investment in Barstow, Inc.
Cost of goods sold
Depreciation expense
Interest expense
Dividends paid
Total debits
610,000 $
380,000
490,000
873,000
702,000
480,000
100,000
40,000
110,000
3,785,000 $
250,000
150,000
250,000
150,000
90,000
55,000
15,000
70,000
1,030,000
860,000 $
510,000
1,367,000
940,000
108,000
3,785,000 $
230,000
180,000
340,000
280,000
1,030,000
Credits
Notes payable
Common stock
Retained earnings, 1/1/15
Revenues
Investment income
Total credits
Student Name:
Class:
Problem 04-42
Part c. only
BRETZ, INC. AND KEANE COMPANY
Consolidation Worksheet
Year Ending December 31, 2015
Accounts
Revenues
Operating expenses
Equity in Keane earnings
Separate company net income
Consolidated net income
NI attributable to noncontrolling interest
NI attributable to Bretz, Inc.
Bretz,
Inc.
Keane
Company
(402,000)
200,000
(144,000)
(346,000)
(300,000)
120,000
(180,000)
(797,000)
(346,000)
143,000
(1,000,000)
(500,000)
(180,000)
60,000
(620,000)
Current assets
Investment in Keane Company
224,000
994,500
190,000
-
Trademarks
Copyrights
Equipment (net)
Goodwill
Total assets
106,000
210,000
380,000
600,000
300,000
110,000
1,914,500
1,200,000
(453,000)
(400,000)
(60,000)
(1,500)
(200,000)
(300,000)
(80,000)
-
Liabilities
Common stock
Additional paid-in capital
Additional paid-in capital - step acquisition
Consolidation Entries
Debit
Credit
(1,000,000)
(620,000)
(1,914,500)
(1,200,000)
Noncontrolling
Interest
Consolidated
Totals
60%
$
$
$
$
$
$
573,000
810,000
120,000
150,000
80,000
30%
300,000
Revenues
Operating expenses
Equity in Keane earnings
Net income
Current assets
Investment in Keane Company
Trademarks
Copyrights
Equipment (net)
Total assets
Liabilities
Common stock
Additional paid-in capital
Additional paid-in capital - step acquisition
Retained earnings 12/31
Total liabilities and equity
Bretz,
Keane
Inc.
Company
(402,000) $
(300,000)
200,000
120,000
(144,000)
(346,000) $
(180,000)
(797,000) $
(346,000)
143,000
$ (1,000,000) $
224,000 $
994,500
106,000
210,000
380,000
1,914,500 $
(500,000)
(180,000)
60,000
(620,000)
190,000
600,000
300,000
110,000
1,200,000
(453,000) $
(200,000)
(400,000)
(300,000)
(60,000)
(80,000)
(1,500)
(1,000,000)
(620,000)
$ (1,914,500) $ (1,200,000)