Supporting Komputations

Ownership Percentage 13,500/15,000 shares = 90%

Investment cost (13,500 shares x $15) $202,500

Impiled fair value of syn ($202,500 / 90%) $225,000

Book value of syn 165,000

Excess fair value over book value $ 60,000

Excess allocated to

Land $ 20,000

Remainder to patents 40,000

Excess fair value over book value $ 60,000

Income from syn

Syn’s reported net income $ 24,000

Less: Patent amortization (4,000)

Syn’s adjusted income $ 20,000

Pen’s share of syn’s income (90%) $ 18,000

Noncontroling interest share (10%) $ 2,000

Investment in syn December 31, 2012

Cost January 1, 2011 $202,500

Pen’s share of the change in syn’s retained earnings

($42,000 - $15,000) x 90% 24,300

Less: Pen’s share (90%) of patent amortization for 2 years (7,200)

Investment in syn December 31 $219,600

 Pen Corporation and Subsidiay

Consolidation Workpapers

For the year ended December 31, 2012

Consoidated
Pen 90% Syn Adjustments and eliminations
Statements
Income Statement
Sales $400 $100 $500
Income from syn 18 a 18
Cost of sales 250* 50* 300*
Other expenses 100,6* 26* c4 130,6*
Consolidated NI $69,4
Noncontroling share g2 2*
Controling share of NI $67,4 $24 $67,4

Retained earnings
Retained earnings – Pen $177 $177
Retained earnings – Syn $34 b 34
Net income 67,4 24 67,4
Devidends 50* 16* a 14,4
g 1,6 50*
Retained earnigs – Dec 31 194,4 $42 $194,4

Balance Sheet
Cash $18 $15 $33
Account receivable 80 $20 r5 95
Deviden receivable – Syn 7,2 d 7,2
Inventories 95 10 105
Notereceivable – Pen 5 e5
Investment in syn 219,6 a 3,6
b 216
Land 65 30 b 20 115
Buildings --- net 170 80 250
Equipment --- net 130 50 180
Patents b 36 c4 32
$784,8 $210 $810
Accounts payable $85,4 $10 f5 $90,4
Note payable to syn 5 e5
Devident payable 8 d5 .8
Capital stock 500 150 b 150 500
Retained earnings 194,4 42 194,4
$784,8 $210
Noncontroling interest January 1 b 24
Noncontroling interest December 31 g ,4 24,4
281,2 281,2 $810
Pen Corporation and Subsidiay

Consolidation Workpapers

For the year ended December 31, 2012