P6-3 Naftalia Imanika (1411000224)

Cost January 1, 2011 $270,000

Implied fair value of Sor ($270,000 / 90%) $300,000 Book
value of Sor (240,000) Excess
of fair value over book value - Goodwill $ 60,000
$270,000
Cost January 1, 2011
Add: Income from Stor for 2006
Equity in income ($40,000 90%) $ 36,000
Less: Unrealized inventory profit (10,000)
Less: Unrealized profit on machinery
(selling price $35,000 - book value $28,000) (7,000)
Add: Piecemeal recognition of profit on
machinery ($7,000/3.5 years .5 year) 1,000
Income from Stor for 2006 20,000
Less: Dividends $10,000 90% (9,000)

Investment balance January 1, 2012 281,000

Add: Income from Stor for 2012
Equity in income ($50,000 90%) $ 45,000
Add: Unrealized profit in beginning inventory 10,000
Less: Unrealized profit in ending inventory (12,000)
Add: Piecemeal recognition of profit on
machinery ($7,000/3.5 years) 2,000
Less: Gain on sale of land (5,000)
Income from Stor for 2007 40,000
Less: Dividends ($20,000 90%) (18,000)

Investment balance December 31, 2012 $303,000

a) Sales 72,000
Cost of sale 72,000
b) Investment inSor 10,000
Cost of sale 10,000
c) Cost of sale 12,000
Inventory 12,000
d) Investment in Sor 6,000
Operating expense 2,000
Machine 4,000
e) Gain on land 5,000
Land 5,000
f) Income from Sor 40,000 ((50,000 x 90%)-5,000)
Dividen 18,000 (20,000 x 90%)
Investment in Sor 22,000 (40,000 18,000)
g) Capital stock 150,000
Retained earining 120,000
Goodwill 60,000
Investment in Sor 297,000 (303,000 +10,000+6000-22,000)
Noncontrolling interest 33,000
h) Noncontrolling interest share 5,000 (50,000 x 10%)
Deviden 2,000 (20,000 x 10%)
Noncontrolling interest 3,000 (5,000-2,000)
i) Account payable 10,000
Account receivable 10,000
j) Deviden payable 18,000 (20,000 x 90%)
Deviden receivable 18,000
 Pall Corporation and Subsidiary
Consolidation Working Papers
for the Year Ended December 31, 2012

Adjustments and Consolidated

Pall Stor 90% Eliminations Statements
Income Statement
Sales $ 450,000 $ 190,000 72,000 $ 568,000
Income from Stor 40,000 40,000
Gain on land 5,000 5,000
Cost of sales (200,000) (100,000) 12,000 72,000
10,000 (230,000)
Operating expense (113,000) (40,000) 2,000 (151,000)
Noncontrolling expense 5,000 (5,000)
Net income $ 182,000 $ 50,000 $ 182,000

Retained Earnings
Retained earnings Pall $ 202,000 $ 202,000
Retained earnings Stor $ 120,000 120,000
Net income 182,000 50,000 182,000
Dividends (150,000) (20,000) 18,000
2,000 (150,000)
Retained earnings
December 31 $ 234,000 $ 150,000 $ 234,000

Balance Sheet
Cash $ 133,000 $ 14,000 $ 147,000
Accounts receivable 180,000 100,000 10,000 270,000
Dividends receivable 18,000 18,000
Inventories 60,000 36,000 12,000 84,000
Land 100,000 30,000 5,000 125,000
Buildings net 280,000 80,000 360,000
Machinery net 330,000 140,000 4,000 466,000
Investment in Stor 303,000 10,000 22,000
6,000 297,000
Goodwill 60,000 60,000
Total assets $1,404,000 $ 400,000 $1,512,000

Accounts payable $ 200,000 $ 50,000 10,000 $ 240,000

Dividends payable 30,000 20,000 18,000 32,000
Other liabilities 140,000 30,000 170,000
Capital stock 800,000 150,000 150,000 800,000
Retained earnings 234,000 150,000 234,000
Total equities $1,404,000 $ 400,000
Noncontrolling interest January 1 33,000
Noncontrolling interest December 31 3,000 30,000
$1,512,000