Beruflich Dokumente
Kultur Dokumente
b
Calculation of goodwill:
Acquisition cost
Fair value of noncontrolling interest
Total fair value
Book value
Plant and equipment revaluation
Identifiable intangibles
Fair value of identifiable net assets
Goodwill
$13,000,000
(25,000,000)
40,000,000
28,000,000
$ 70,000,000
40,000,000
70,000,000
25,000,000
80,000,000
5,000,000
2.
c
(R)
Identifiable intangibles
Goodwill
24,000,000
68,000,000
3,800,000
b
Starfruit net income
Revaluation write-offs:
Plant and equipment depreciation
Identifiable intangibles amortization
Goodwill impairment loss
4.
20,000,000
68,200,000
2,250,000
(7,200,000)
(475,000)
$ 1,325,000
250,000
(800,000)
(25,000)
$ 175,000
c
10% x $28,000,000.
5.
c
Same calculation as in question 3, except the noncontrolling interest does not share in the
goodwill impairment loss.
6.
d
(E)
Stockholders equity
13,000,000
Investment in Starfruit
Noncontrolling interest in
Starfruit
(R)
Identifiable intangibles
(1)
(2)
11,700,000
1,300,000
40,000,000
7.
a
There is no goodwill when the acquisition is a bargain purchase.
8.
9.
10.
EXERCISES
E5.1
a.
Calculation of goodwill:
Acquisition cost
Fair value of noncontrolling interest
Total fair value
Book value of Sylvan
Goodwill
$ 43,200,000
4,250,000
47,450,000
17,000,000
$ 30,450,000
Princecraft
Sylvan
$ 150,000
43,200
$ 25,000
Goodwill
Total assets
______
$ 193,200
______
$ 25,000
Total liabilities
Common stock
Additional paid-in capital
Retained earnings
Noncontrolling interest
30,000
15,360
87,840
60,000
______
$ 193,200
Eliminations
Dr
Cr
15,300 (E)
27,900 (R)
8,000
5,000
10,000
2,000
______
$ 25,000
(R) 30,450
Consolidate
d
Balances
$ 175,000
-_30,450
$ 205,450
$
(E) 5,000
(E) 10,000
(E) 2,000
1,700 (E)
______
2,550 (R)
$ 47,450 $47,450
38,000
15,360
87,840
60,000
__4,250
$ 205,450
Note: Princecrafts balance sheet above reflects the following acquisition entry (in thousands):
Investment in Sylvan
43,200
Common stock
Additional paid-in capital
360
42,840
c.
Consolidated Balance Sheet, January 1, 2013 (in thousands)
Assets
Total assets
Goodwill
Total assets
Liabilities and stockholders equity
Total liabilities
Stockholders equity
Princecrafts stockholders equity:
Common stock
Additional paid-in capital
Retained earnings
Total Princecrafts stockholders equity
Noncontrolling interest
Total stockholders equity
Total liabilities and stockholders equity
E5.2
a.
$ 175,000
30,450
$ 205,450
$
38,000
15,360
87,840
60,000
163,200
4,250
167,450
$ 205,450
$ 10,000,000
2,000,000
12,000,000
$ 6,000,000
500,000
1,000,000
$
$
$
7,500,000
4,500,000
4,500,000
4,000,000
500,000
b.
6,000,000
Investment in Saylor (80%)
Noncontrolling interest in Saylor (20%)
(R)
Land
IPR&D
Goodwill
4,800,000
1,200,000
500,000
1,000,000
4,500,000
5,200,000
800,000
a.
Acquisition cost
Fair value of noncontrolling interest
Total
Book value of Sparrow
Fair value book value:
Land
Other plant assets
Investments
Long-term debt
Fair value of identifiable net assets
Gain on acquisition
$ 22,000,000
4,000,000
26,000,000
$ 25,000,000
(800,000)
2,000,000
1,500,000
(700,000)
27,000,000
$ (1,000,000)
23,000,000
3,000,000
Cash
Gain on acquisition
25,000,000
1,000,000
b.
25,000,000
Investment in Sparrow (80%)
Noncontrolling interest in
Sparrow (20%)
(R)
Other plant assets, net
Investments
Noncontrolling interest in
Sparrow (1)
20,000,000
5,000,000
2,000,000
1,500,000
1,000,000
Land
Long-term debt
Investment in Sparrow (2)
800,000
700,000
3,000,000
$ 19,000,000
1,800,000
20,800,000
$ 4,500,000
500,000
6,000,000
2,000,000
$
13,000,000
7,800,000
b.
Consolidation Working Paper (in thousands)
Accounts Taken From
Books
Microsoft
Current assets
Plant and equipment, net
Investment in Powerline
Brand names
Goodwill
Total assets
Current liabilities
Long-term liabilities
Common stock, par value
Additional paid-in capital
Retained earnings
Noncontrolling interest
Total liabilities and equity
7,000
35,000
19,000
Powerline
$
Consolidate
d
Balances
$ 9,500
48,000
Cr
4,050 (E)
14,950 (R)
______
$ 9,000
______
$ 61,000
Dr
______
$ 61,000
5,000
20,000
5,000
20,000
11,000
Eliminations
1,500
3,000
100
1,400
3,000
______
$ 9,000
-2,000
__7,800
$ 67,300
(R) 2,000
(R) 7,800
6,500
23,000
5,000
20,000
11,000
(E) 100
(E) 1,400
(E) 3,000
450 (E)
______
1,350 (R)
$ 20,800 $ 20,800
__1,800
$ 67,300
Note 1: Microsofts balance sheet above reflects the following acquisition entry (in thousands):
Investment in Powerline
19,000
Cash
Common stock
Additional paid-in capital
Note 2:
3,000
2,000
14,000
c.
Calculation of goodwill:
Acquisition cost
90% x fair value of identifiable net assets
Goodwill
90% x $13,000,000
$ 19,000,000
11,700,000
$ 7,300,000
Microsoft
Current assets
Plant and equipment, net
Investment in Powerline
Brand names
Goodwill
Total assets
Current liabilities
Long-term liabilities
Common stock, par value
Additional paid-in capital
Retained earnings
Noncontrolling interest
Total liabilities and equity
7,000
35,000
19,000
Powerline
$
Dr
Cr
______
$ 61,000
______
$ 9,000
5,000
20,000
5,000
20,000
11,000
_____
61,000
_____
$ 9,000
Eliminations
1,500
3,000
100
1,400
3,000
(R) 2,000
(R) 7,300
Consolidate
d
Balances
$ 9,500
48,000
-2,000
__7,300
$ 66,800
$
(E) 100
(E) 1,400
(E) 3,000
450 (E)
______
__850 (R)
$ 20,300 $ 20,300
6,500
23,000
5,000
20,000
11,000
__1,300
$ 66,800
Note: The IFRS alternative valuation method attributes no goodwill to the noncontrolling
interest.
E5.5
(amounts in thousands)
a.
25,000
500
Cash
Common stock, par value
Additional paid-in capital
500
4,000
21,000
200
8,000
5,000
800
400
10,800
1,200
(R)
Trademarks
Customer lists
Goodwill (1)
1,500
1,000
16,100
b.
200
8,000
5,000
Accumulated OCI
Treasury stock
Investment in Softek
Noncontrolling interest in Softek
(R)
Trademarks
Customer lists
Goodwill (4)
Noncontrolling interest in
Softek (5)
800
400
10,800
1,200
1,500
1,000
14,740
60
3,000
100
14,200
a.
$ 10,300,000
6,500,000
16,800,000
$ 7,200,000
2,000,000
9,200,000
$ 7,600,000
$ 7,600,000
4,780,000
$ 2,820,000
b.
c.
Total
$ 3,000,000
Equity in NI
$ 1,800,000
Noncontrolling
interest in NI
$ 1,200,000
(400,000)
$ 2,600,000
(240,000)
$ 1,560,000
(160,000)
$ 1,040,000
1,560,000
600,000
960,000
7,200,000
Investment in Saddlestone
Noncontrolling interest in
Saddlestone
(R)
Identifiable intangibles
Goodwill
4,320,000
2,880,000
2,000,000
7,600,000
Investment in Saddlestone
(1)
Noncontrolling interest in
Saddlestone (2)
(1) 60% x $2,000,000 + $4,780,000
(2) 40% x $2,000,000 + $2,820,000
(O)
Amortization expense
5,980,000
3,620,000
400,000
Identifiable intangibles
(N)
Noncontrolling interest in
income of Saddlestone
1,040,000
Dividends Saddlestone
Noncontrolling interest in
Saddlestone
400,000
400,000
640,000
E5.7
Calculation of 2014 equity in net income and noncontrolling interest in net income:
Noncontrolling
Total
Equity in NI interest in NI
Silver Nuggets reported NI for 2014
($100,000 $80,000 $14,000 =
$6,000)
$ 6,000
$
4,800
$ 1,200
Revaluation write-off:
Identifiable intangibles ($20,000/5)
(4,000)
(3,200)
(800)
$ 2,000
$
1,600
$
400
b.
Consolidation Working Paper, December 31, 2014
Trial Balances Taken
From Books
Dr (Cr)
Current assets
Plant and equipment, net
Intangibles
Investment in Silver Nugget
Goodwill
Current liabilities
Long-term debt
Common stock
Additional paid-in capital
Retained earnings, Jan. 1
Treasury stock
Noncontrolling interest
Dividends
Sales revenue
Equity in income of Silver
Nugget
Cost of goods sold
Operating expenses
Noncontrolling interest in NI
Mirror
Resorts
Silver
Nugget
$ 35,000
215,700
350,000
86,400
5,000
140,000
51,000
--
Eliminations
Consolidated
Dr
Cr
$
(R) 16,000
4,000 (O)
400 (C)
17,200 (E)
68,800 (R)
(R) 68,000
(50,000)
(600,000)
(500)
(6,000)
(25,000)
4,000
(20,000)
(150,000)
(100)
(5,500)
(17,500)
1,600
2,000
1,500
(800,000)
(100,000)
(1,600)
650,000
140,000
-$
-0-
-80,000
14,000
-$
-0-
Balances
(E) 100
(E) 5,500
(E) 17,500
1,600 (E)
4,300 (E)
15,200 (R)
100 (N)
1,200 (C)
300 (N)
40,000
355,700
413,000
-68,000
(70,000)
(750,000)
(500)
(6,000)
(25,000)
4,000
(19,600)
2,000
(900,000)
(C) 1,600
(O) 4,000
(N) 400
$ 113,100
_______
113,100
-730,000
158,000
400
$
-0-
E5.8
a.
Paramounts acquisition cost
Fair value of noncontrolling interest
Total
Fair value of identifiable net assets:
1,500,000 100,000 200,000 400,000 + 200,000
Goodwill
$ 2,910,000
790,000
3,700,000
1,000,000
$ 2,700,000
(E)
Stockholders
equity-Sun
Investment
$ 2,910,000
Noncontrolling
interest
$
790,000
750,000
250,000
255,000
85,000
(560,000)
$ 3,355,000
(140,000)
985,000
2,500,000
Investment in Sun
Noncontrolling interest in Sun
(R)
Goodwill
Equipment, net (1)
Investment in Sun (2)
Noncontrolling interest in Sun (3)
(1) $400,000 (6/10) x $400,000
(2) (80% x 2,000,000) (75% x 160,000)
(3) (20% x 2,000,000) (25% x 160,000)
1,875,000
625,000
2,000,000
160,000
1,480,000
360,000
E5.9
$20,000,000
3,000,000
1,400,000
(80,000)
(680,000)
2,800,000
(2,100,000)
$24,340,000
Note: The $8,000,000 net income reported by the 75%-owned subsidiary is already
included in consolidated income, and is therefore not separately reported.
E5.10 Consolidated Cash Flow from Operations
Consolidated net income (1)
+ Consolidated depreciation expense (2)
+ Consolidated amortization expense (3)
+ Goodwill impairment loss
- Undistributed equity investment income (4)
Cash flow from operating activities
(1)
Calculation of equity in net income:
Ps share of reported income 80% x $240,000
Ps share of revaluation write-offs:
Depreciation
Amortization
Goodwill impairment loss
Equity in net income
Calculation of consolidated net income:
Parents reported income
Subsidiarys reported income
Less equity in net income of subsidiary
Less revaluation writeoffs:
Depreciation
Amortization
Goodwill impairment loss
Consolidated net income
(2)
(3)
(4)
$ 1,036,400
216,000
65,000
40,000
(25,000)
$ 1,332,400
$
192,000
(2,400)
(12,000)
(32,000)
145,600
$ 1,000,000
240,000
(145,600)
(3,000)
(15,000)
(40,000)
$ 1,036,400
Calculation of goodwill:
Acquisition cost
Less 49% fair value of identifiable net assets
Goodwill
67
(11)
78
49% x (22.5)
(E)
Investment in ASTAR
Noncontrolling interest
10
10.5
Stockholders equity-ASTAR
20.5
(R)
Noncurrent financial assets
Goodwill
Noncontrolling interests
2
78
1
Intangible assets
Investment in ASTAR
E5.12
4
77
(in millions)
a.
Calculation of goodwill:
Acquisition cost
Fair value of identifiable net assets:
Book value
Revaluations:
Customer lists
Trade name
Assumed liabilities
Deferred tax assets, net
Total fair value of identifiable net assets
Vivendis share
Goodwill
787
(118)
150
25
(484)
123
(304)
x 85%
(258)
1,045
b.
(E)
Investment in TPS
Noncontrolling interest
100
18
Stockholders equity-TPS
(R)
Goodwill
Customer lists
Trade name
Deferred tax assets, net
Noncontrolling interest
118
1,045
150
25
123
28
Assumed liabilities
Investment in TPS
c.
484
887
Calculation of equity in net loss of TPS and noncontrolling interest in TPS income is as
follows:
Noncontrolling
Equity in NL
interest in NI
TPS reported income for 2007
68.00
12.00
Revaluation write-offs:
Customer lists (150/5)
(25.50)
(4.50)
Goodwill impairment
(100.00)
-Trade name impairment
(4.25)
(0.75)
(61.75)
6.75
(C)
Investment in TPS
61.75
Equity in net loss of TPS
(E)
Investment in TPS
Noncontrolling interest
61.75
100
18
Stockholders equity-TPS
(R)
Goodwill
Customer lists
Trade name
Deferred tax assets, net
Noncontrolling interest
1,045
150
25
123
28
Assumed liabilities
Investment in TPS
118
484
887
(O)
Amortization expense
Impairment losses
30
105
Customer lists
Goodwill
Trade name
30
100
5
(N)
Noncontrolling interest in NI
6.75
Noncontrolling interest
6.75
Calculation of goodwill:
Acquisition cost
Fair value of noncontrolling interest
Total fair value of Sotelma
Fair value of identifiable net assets:
Book value
Revaluations:
License
Customer bases
Deferred tax
Total fair value of identifiable net assets
Goodwill
278
208
486
35
24
2
(3)
58
428
c.
(E)
Stockholders equity-Sotelma
35
Investment in Sotelma
Noncontrolling interest
(R)
License
Customer bases
Goodwill
24
2
428
Deferred tax
Investment in Sotelma
Noncontrolling interest
260 = (51% x 23) + 248; 191 = (49% x 23) + 180.
d.
18
17
3
260
191
PROBLEMS
P5.1 Consolidation Working Paper, Date of Acquisition
(all numbers in millions)
a.
Calculation of goodwill:
Acquisition cost
Fair value of noncontrolling interest
Total fair value
Book value of Bagota
Fair value book value:
Property, plant and equipment
Patents and trademarks
Customer-related intangibles
Long-term liabilities
Goodwill
$ 1,200
_375
1,575
$ 500
(200)
45
30
__25
_400
$ 1,175
$ 1,175
900
$ 275
b.
Consolidation Working Paper (in millions)
Accounts Taken From Books
Current assets
PP&E, net
Investment in Bagota
Patents and trademarks
Customer-related intangs
Goodwill
Total assets
Current liabilities
Long-term liabilities
Common stock, par value
Additional paid-in capital
Retained earnings
Treasury stock
Accumulated OCI
Noncontrolling interest
Total liabilities and equity
Hershey
$ 1,500
1,600
1,200
Bagota
$ 325
600
--
1,300
-_____
$ 5,600
$ 1,600
1,900
300
1,950
3,900
(4,000)
(50)
_____
$ 1,000
$ 100
400
10
200
300
-(10)
_____
$ 5,600
_____
$ 1,000
75
Eliminations
Dr
Cr
200 (R)
375 (E)
825 (R)
(R)
45
(R)
30
(R) 1,175
(R)
(E)
(E)
(E)
25
10
200
300
_____
$ 1,785
10 (E)
125 (E)
250 (R)
$ 1,785
Consolidated
Balances
$ 1,825
2,000
-1,420
30
1,175
$ 6,450
$ 1,700
2,275
300
1,950
3,900
(4,000)
(50)
375
$ 6,450
c.
Consolidated Balance Sheet, July 1, 2013
Assets
Current assets
Property, plant and equipment, net
Goodwill
Other intangibles
Total assets
Liabilities and stockholders equity
Current liabilities
Long-term liabilities
Total liabilities
Stockholders equity
Hersheys stockholders equity:
Common stock
Additional paid-in capital
Retained earnings
Treasury stock
Accumulated other comprehensive loss
Total Hershey stockholders equity
Noncontrolling interest
Total stockholders equity
Total liabilities and stockholders equity
$
$
1,825
2,000
1,175
1,450
6,450
1,700
2,275
3,975
300
1,950
3,900
(4,000)
(50)
2,100
375
2,475
$ 6,450
P5.2
a.
(amounts in millions)
Acquisition cost
Fair value of noncontrolling interest
Total
Book value of Saxon
Fair value book value:
Inventory
Long-term marketable securities
Land
Buildings and equipment, net
Long-term debt
Fair value of identifiable net assets
Gain on acquisition
Paxons acquisition entry:
Investment in Saxon
$ 1,295
100
(50)
245
300
110
2,000
$ (800)
1,800
Cash
Gain on acquisition
Solutions Manual, Chapter 5
$ 1,000
200
$ 1,200
1,000
800
Cambridge Business Publishers, 2013
21
b.
Consolidation Working Paper (in millions)
Accounts Taken From Books
Paxon
$ 1,860
1,700
-1,800
Land
Buildings and equipment
Accumulated depreciation
Total assets
Current liabilities
Long-term debt
Common stock, par value
Additional paid-in capital
Retained earnings
Noncontrolling interest
Total liabilities and equity
650
3,400
(1,000)
$ 8,410
$ 1,500
2,000
500
1,200
3,210
-$ 8,410
Eliminations
Saxon
$ 720
900
300
175
600
-$ 2,695
$ 1,000
400
100
350
845
-$ 2,695
Dr
Cr
(R) 100
50 (R)
1,036 (E)
764 (R)
(R) 245
(R) 300
(R) 110
(E) 100
(E) 350
(E) 845
(R) 59
259 (E)
$ 2,109 $ 2,109
Consolidated
Balances
$ 2,580
2,700
250
-1,070
4,300
(1,000)
$ 9,900
$ 2,500
2,290
500
1,200
3,210
200
$ 9,900
100
350
845
Investment in Saxon
Noncontrolling interest
(R)
Inventory
Land
Buildings and equipment
Long-term debt
Noncontrolling interest
1,036
259
100
245
300
110
59
Marketable securities
Investment in Saxon
50
764
The adjustment to noncontrolling interest brings its balance to fair value at the acquisition
date. The adjustment to the investment eliminates the remaining balance.
c.
Consolidated Balance Sheet, December 31, 2012 (amounts in millions)
Assets
Cash and receivables
Inventory
Current assets
Long-term marketable securities
Land
Buildings and equipment, net of $1,000 accumulated depreciation
Total assets
Liabilities and stockholders equity
Current liabilities
Long-term debt
Total liabilities
Stockholders equity
Paxon stockholders equity:
Common stock
Additional paid-in capital
Retained earnings
Total Paxon stockholders equity
Noncontrolling interest
Total stockholders equity
Total liabilities and stockholders equity
P5.3
2,580
2,700
5,280
250
1,070
3,300
$ 9,900
$
500
1,200
3,210
4,910
200
5,110
$ 9,900
8,800
300
Cash
Earnings contingency liability
b.
2,500
2,290
4,790
8,300
800
500
3,000
Investment in Summer
Noncontrolling interest
2,625
875
(R)
In-process research and
development
Goodwill (1)
Noncurrent liabilities
1,500
9,300
100
Cash and receivables
Inventories
Plant assets, net
Intangibles
Lawsuit liability
Investment in Summer (2)
Noncontrolling interest (3)
200
500
1,000
1,000
400
6,175
1,625
$ 8,800
2,500
11,300
$ 3,500
(200)
(500)
(1,000)
(1,000)
100
1,500
(400)
2,000
$ 9,300
$ 9,300
7,300
$ 2,000
P5.4
Consolidated Working Paper One Year after Acquisition, Bargain Purchase (see
related P4.4)
$ 1,620
180
1,800
$ 1,295
100
(50)
245
300
110
2,000
$ (200)
b.
Total
Saxons reported net income for
2013 ($10,000 + 10 8,000 40
25 1,600 = $345)
Revaluation writeoffs:
Inventory
Marketable securities
Buildings and equipment
($300/20)
Long-term debt ($110/5)
$ 345
Equity in NI
Noncontrolling
interest in NI
$ 310.5
$ 34.5
(100)
50
(15)
(90)
45
(13.5)
(10)
5
(1.5)
(22)
$ 258
(19.8)
$ 232.2
(2.2)
$ 25.8
c.
Consolidation Working Paper, December 31, 2013
Trial Balances Taken
From Books
Dr (Cr)
Eliminations
Consolidated
Paxon
Cash and receivables
Inventory
Marketable securities
Investment in Saxon
Land
Buildings and equipment, net
Current liabilities
Long-term debt
Common stock
Additional paid-in capital
Retained earnings, Jan. 1
Noncontrolling interest
Dividends
Sales revenue
Equity in income of Saxon
Gain on sale of securities
Cost of goods sold
Depreciation expense
Interest expense
Other operating expenses
Noncontrolling interest in NI
3,270
2,260
-1,962.2
650
3,600
(2,020)
(5,000)
(500)
(1,200)
(2,610)
-500
(30,000)
(232.2)
-26,000
300
250
2,770
____-$
-0-
Saxon
$
800
940
--300
1,150
(1,200)
(450)
(100)
(350)
(845)
--
Dr
(R) 100
(O-2) 50
(R) 245
(R) 300
(R) 110
(E) 100
(E) 350
(E) 845
100 (O-1)
50 (R)
142.2 (C)
1,165.5 (E)
654.5 (R)
15 (O-3)
22 (O-4)
129.5 (E)
50.5 (R)
15.8 (N)
90 (C)
10 (N)
100
(10,000)
-(10)
8,000
40
25
1,600
____-$
-0-
Balances
Cr
(C) 232.2
50 (O-2)
(O-1) 100
(O-3) 15
(O-4) 22
(N) 25.8
$ 2,495
_______
$ 2,495
$ 4,070
3,200
--1,195
5,035
(3,220)
(5,362)
(500)
(1,200)
(2,610)
(195.8)
500
(40,000)
-(60)
34,100
355
297
4,370
__25.8
$ -0-
P5.5
Consolidated Working Paper Two Years after Acquisition, Bargain Purchase (see
related P5.4)
Total
Saxons reported net income for 2014
($12,000 9,500 60 40 2,200 =
$200)
Revaluation writeoffs:
Buildings and equipment ($300/20)
Long-term debt ($110/5)
$ 200
180
Noncontrolling
interest in NI
$
20
(15)
(13.5)
(1.5)
(22)
(19.8)
(2.2)
$ 163
$ 146.7
$ 16.3
Note: Inventory (FIFO) and marketable securities revaluations were realized through sale in
2013.
b.
Consolidation Working Paper, December 31, 2014
Trial Balances
Taken From Books
Dr (Cr)
Eliminations
Consolidated
Paxon
Cash and receivables
Inventory
Investment in Saxon
$ 3,000
2,500
2,063.9
Land
Buildings and equipment, net
Current liabilities
Long-term debt
Common stock
Additional paid-in capital
Retained earnings, Jan. 1
Noncontrolling interest
650
5,905
(2,500)
(6,000)
(500)
(1,200)
(3,022.2)
--
Dividends
Sales revenue
Equity in income of Saxon
Cost of goods sold
Depreciation expense
Interest expense
Other operating expenses
Noncontrolling interest in NI
500
(35,000)
(146.7)
30,000
450
300
3,000
___-$ -0-
Saxon
$
Dr
Cr
850
950
-250
1,440
(1,000)
(800)
(100)
(350)
(1,090)
--
$
101.7 (C)
1,386 (E)
576.2 (R)
(R) 245
(R) 285
(R) 88
(E) 100
(E) 350
(E) 1,090
15 (O-1)
22 (O-2)
154 (E)
41.8 (R)
11.3 (N)
45 (C)
5 (N)
50
(12,000)
-9,500
60
40
2,200
___-$ -0-
Balances
(C) 146.7
(O-1) 15
(O-2) 22
$
(N) 16.3
2,358
_______
$ 2,358
3,850
3,450
-1,145
7,615
(3,500)
(6,734)
(500)
(1,200)
(3,022.2)
(207.1)
500
(47,000)
-39,500
525
362
5,200
___16.3
$ -0-
P5.6
(amounts in millions)
a.
$ 600
225
825
$ 580
100
680
$ 145
$ 145
124
$ 21
Calculation of 2008 equity in net loss and noncontrolling interest in net loss:
Total
Emerald Safari Resort reported income
($2,200 + 300 + 200 1,670 1,000 = $30)
Revaluation writeoffs:
Identifiable intangibles
Goodwill
30
( 8)
(145)
$ (123)
Equity in
NL
$
21
(5.6)
(124)
$ (108.6)
Noncontrolling
interest in NL
$
9
(2.4)
(21)
$ (14.4)
c.
Consolidation Working Paper, December 31, 2008
Trial Balances
Taken From Books
Dr (Cr)
Current assets
Land, buildings, riverboats and
equipment, net
Intangible assets
Investment in Emerald
Harrahs
Emerald
Safari
Resort
1,400
17,696.2
2,500
515.2
Goodwill
Current liabilities
Long-term liabilities
Common stock
Capital surplus
Retained earnings, Jan. 1
Noncontrolling interest
-(300)
(2,600)
(4)
(320)
(300)
--
100
Casino revenues
Food and beverage revenues
Rooms revenues
Equity in net loss of Emerald
Direct casino, food and beverage,
rooms expenses
General and administrative expenses
Amortization expense
Goodwill impairment loss
Noncontrolling interest in net loss
$
Dr
(2,200)
(300)
(200)
-1,670
1,400
1,000
Cr
--0-
Balances
$
(R) 95
(C) 112.1
(R) 145
(E)
4
(E) 320
(E) 300
(N) 15.9
(6,600)
(1,400)
(1,000)
108.6
7,200
--0-
Consolidated
200
2,549
800
--
-(1,500)
(14,000)
(20)
(5,500)
(900)
--
Dividends
Eliminations
8 (O)
436.8 (E)
190.5 (R)
145 (O)
3,387
--(1,800)
(16,600)
(20)
(5,500)
(900)
(220.8)
187.2 (E)
49.5 (R)
3.5 (C)
1.5 (N)
100
(8,800)
(1,700)
(1,200)
-8,870
108.6 (C)
(O) 8
(O) 145
_____
$ 1,145
14.4 (N)
$ 1,145
1,600
20,245.2
2,400
8
145
(14.4)
-0-
P5.7
Equity Method and Eliminating Entries Three Years after Acquisition (see related
P4.2)
a.
Calculation of equity in net income and noncontrolling interest in net income for 2014:
Total
Equity in
NI
$ 200,000
$ 180,000
100,000
(180,000)
90,000
(162,000)
Noncontrolling
interest in NI
$ 20,000
10,000
(18,000)
$ 120,000
$ 108,000
$ 12,000
$3,600,000 = $3,150,000 + 350,000 (1,400,000 500,000 1,000,000)
$3,150,000
765,000
(382,500)
270,000
(486,000)
$3,316,500
Note: Under LIFO and increasing inventory, the revalued inventory is assumed to still be
on hand.
c.
$350,000
85,000
(42,500)
30,000
(54,000)
$368,500
d.
108,000
DividendsSunset Coast
(.5 x $200,000 x 90%)
Investment in Sunset
Coast
90,000
18,000
(E)
Stockholders equitySunset Coast,
1/1
1,725,000
Investment in Sunset
Coast
1,552,500
Noncontrolling interest
in Sunset Coast
172,500
Sunset Coasts stockholders equity, January 1, 2014 = $1,400,000 + (1 - .5)(850,000
200,000) = $1,725,000.
(R)
Identifiable intangibles
3,240,000
Inventory
500,000
Plant assets, net
800,000
Investment in Sunset
Coast
1,746,000
Noncontrolling interest
in Sunset Coast
194,000
Revaluations at January 1, 2014 = original revaluations less writeoffs for 2012 and 2013.
(O)
Plant assets, net
Amortization expense
100,000
180,000
Depreciation expense
Identifiable intangibles
(N)
Noncontrolling interest in NI of
Sunset Coast
12,000
Dividends Sunset Coast
(.5 x $200,000 x 10%)
Noncontrolling interest in
Sunset Coast
100,000
180,000
10,000
2,000
P5.8
(amounts in thousands)
a.
Calculation of goodwill:
Acquisition cost
Fair value of noncontrolling interest
Total fair value
Book value of Piedmont
Fair value book value of franchise rights
Goodwill
$ 70,000
15,000
85,000
$ 25,000
5,000
30,000
$ 55,000
Calculation of equity in net loss and noncontrolling interest in net loss for 2012:
Equity
Noncontrolling
Total
in NL
interest in NL
Piedmonts reported net income for
2012 (1)
$ 3,000
$ 2,250
$ 750
Revaluation write-offs:
Franchise rights impairment
(2,500)
(1,875)
(625)
Goodwill impairment (47.5: 7.5 ratio)
(6,000)
(5,182)
__(818)
$ (5,500)
$ (4,807)
$ (693)
(1)
$3,000 = $300,000 (175,000 + 114,000 + 8,000)
c.
$ 70,000
4,350
(750)
(4,807)
$ 68,793
d.
Consolidation Working Paper, December 31, 2012
Trial Balances
Taken From Books
Dr (Cr)
Current assets
Property, plant & equipment, net
Franchise rights, net
Investment in Piedmont
Piedmont
$ 160,000
250,000
466,400
68,793
$ 30,000
233,800
---
-(120,000)
(700,000)
(12,000)
(100,000)
(50,500)
12,000
-(20,000)
(210,000)
(1,000)
(12,000)
(18,000)
--
30,000
--
200
--
2,000
(1,200,000)
4,807
760,000
400,000
-(300,000)
-175,000
114,000
500
28,000
-___ --0-
-8,000
-___--0-
Consolidated
Coca-Cola
Consolidated
Goodwill
Current liabilities
Long-term debt
Common stock
Additional paid-in capital
Retained earnings, Jan. 1
Accumulated other
comprehensive loss
Treasury stock
Noncontrolling interest
Dividends
Net sales
Equity in loss of Piedmont
Cost of sales
Selling, delivery and
administrative expenses
Amortization expense
Interest expense
Goodwill impairment loss
Noncontrolling interest in NI
Eliminations
Dr
Cr
(R) 4,000
(C) 4,807
(R) 55,000
2,500 (O)
23,100 (E)
50,500 (R)
6,000 (O)
(E) 1,000
(E) 12,000
(E) 18,000
(N)
693
200 (E)
7,700 (E)
8,500 (R)
4,807 (C)
(O) 2,500
(O) 6,000
_____
$ 104,000
__693 (N)
$104,000
Balances
$ 190,000
483,800
467,900
-49,000
(140,000)
(910,000)
(12,000)
(100,000)
(50,500)
12,000
30,000
(15,507)
2,000
(1,500,000)
-935,000
514,000
3,000
36,000
6,000
(693)
$
-0-
e.
Consolidated Income Statement and Statement of Retained Earnings,
Year Ended December 31, 2012
Net sales
$ 1,500,000
Cost of sales
(935,000)
Gross profit
565,000
Selling, delivery and administrative expenses
(514,000)
Amortization expense
(3,000)
Interest expense
(36,000)
Goodwill impairment loss
(6,000)
Consolidated net income
6,000
Plus: Net loss attributable to noncontrolling interest
___693
Net income attributable to Coca-Cola Consolidated
6,693
Plus retained earnings, January 1
50,500
Less dividends
_(2,000)
Retained earnings, December 31
$
55,193
Consolidated Balance Sheet, December 31, 2012
Assets
Current assets
Property, plant and equipment, net
Franchise rights, net
Goodwill
Total assets
Liabilities and stockholders equity
Current liabilities
Long-term liabilities
Total liabilities
Stockholders equity
Coca-Cola Consolidated stockholders equity:
Common stock
Additional paid-in capital
Retained earnings
Treasury stock
Accumulated other comprehensive loss
Total Coca-Cola Consolidated stockholders equity
Noncontrolling interest
Total stockholders equity
Total liabilities and stockholders equity
190,000
483,800
467,900
49,000
$ 1,190,700
$
140,000
910,000
1,050,000
12,000
100,000
55,193
(30,000)
(12,000)
125,193
15,507
140,700
$ 1,190,700
P5.9
$ 424,000
430,000
(668,000)
186,000
(300,000)
14,000
(100,000)
700,000
$ 600,000
$ 612
$ 250
25
10
(100)
250
15
(675)
150
200
(435)
(2)
285
150
1,047
(660)
(87)
300
200
$ 500
b.
4,000
1,000
(100)
400
300
1,600
x 80%
1,280
2,720
Calculation of equity in net income and noncontrolling interest in net income for 2013:
Equity
Noncontrolling
Total
in NI
interest in NI
Monacos reported net income for 2013 (1) 600
480
120
Revaluation writeoffs:
Property, plant and equipment $400/10
(40)
(32)
(8)
Identifiable intangibles $300/3
(100)
(80)
(20)
Goodwill
(200)
(200)
__- 260
168
92
(1) $600 = $3,500 (2,500 + 400)
c.
Consolidation Working Paper, December 31, 2013
Trial Balances
Taken From Books
Dr (Cr)
Rendezvous
Current assets
Property, plant and equipment, net
Investment in Monaco
Identifiable intangibles
Goodwill
Liabilities
Capital stock
Retained earnings, Jan. 1
Noncontrolling interest
Monaco
900
2,000
--
--(4,648)
(1,500)
(1,000)
--
Dividends
200
-(1,150)
(800)
(600)
--
--
Sales revenue
Equity in net income of Monaco
Cost of sales
Goodwill impairment loss
Administrative and other operating
expenses
Noncontrolling interest in NI
500
3,000
4,316
Eliminations
Dr
Cr
(R) 360
(R) 200
(R) 2,620
(E)
(E)
800
600
280 (E)
112 (R)
82 (N)
40 (C)
10 (N)
50
(5,000)
(168)
4,200
--
(3,500)
-2,500
--
300
--0-
400
--0-
40 (O)
128 (C)
1,120 (E)
3,068 (R)
100 (O)
200 (O)
(C)
168
(O) 200
(O)
40
(O) 100
(N) __92
____
5,180 5,180
Consolidated
Balances
1,400
5,320
-300
2,420
(5,798)
(1,500)
(1,000)
(474)
-(8,500)
-6,700
200
840
92
-0-
b.
150,000
70,000
(50,000)
40,000
2,000
62,000
x 75%
46,500
103,500
Calculation of equity in net income and noncontrolling interest in net income for 2014:
Noncontrolling
Total
Equity in NI
interest in NI
Heartys reported net income for 2014
(1)
15,000
11,250
3,750
Revaluation writeoffs:
Property, plant and equipment
(50,000/10)
5,000
3,750
1,250
Identifiable intangibles (40,000/10)
(4,000)
(3,000)
(1,000)
Goodwill
(750)
(750)
- 15,250
11,250
4,000
(1) 15,000 = 140,000 (80,000 + 45,000)
c.
Consolidation Working Paper, December 31, 2014
Trial Balances
Taken From Books
Dr (Cr)
Current assets
Property, plant and equipment, net
Investment in Hearty
Identifiable intangibles
Lily
35,000
226,500
Hearty
20,000
202,000
176,750
--
100,000
10,000
--
--
(30,000)
(350,000)
(80,000)
(60,000)
--
(25,000)
(100,000)
(54,000)
(38,000)
--
Goodwill
Current liabilities
Long-term debt
Capital stock
Retained earnings, Jan. 1
Noncontrolling interest
Sales revenue
Equity in net income of Hearty
Eliminations
(400,000)
(11,250)
250,000
-143,000
-
-0-
(140,000)
-80,000
-45,000
-
-0-
Dr
Cr
Consolidated
Balances
(O)
5,000
30,000
(R)
11,250 (C)
69,000 (E)
96,500
(R)
(R) 4,000 (O)
24,000
(R)
750 (O)
101,000
(E) 54,000
(E) 38,000
(R) 1,500 23,000 (E)
4,000 (N)
(C) 11,250
(O)
750
(O) 4,000 5,000 (O)
(N) 4,000 ______
243,500 243,500
55,000
403,500
-130,000
100,250
(55,000)
(450,000)
(80,000)
(60,000)
(25,500)
(540,000)
-330,000
750
187,000
4,000
-0-
b.
Verizon Wireless reported a net loss in OCI for 2010, but Verizon Communications
reported a net gain in OCI. Verizon Wireless total OCI loss for 2010 must have been $78
(= $35/.45), and Verizons share is $43. Consolidated OCI for 2010 is a gain of $2,363.
Therefore Verizons separate OCI for 2010 is a gain of $2,441 (= $2,363 + $78).
c.
(N)
Noncontrolling interest in
income of Verizon Wireless
7,668
Noncontrolling interest in
other comprehensive loss of
Verizon Wireless
Dividends Verizon
Wireless
Noncontrolling interest in
Verizon Wireless
35
2,051
5,582