a.

Differential Calculation

Acquisition Price 792,000

Book Value of Net Assets Acquired 720,000
Differential 72,000

Differential Allocation
Inventory 36,000
Patents 36,000
Total

Differential Amortization in 2017

Patents 7,200
Inventory 36,000
Total amortization 43,200

b. Calculation of Income from Subsidiary

Sales 480,000
Cost of Peteres - 240,000
Depreciation eExpense - 48,000
Other expenses - 72,000
Net income of Peter Corp. 120,000
Pan Inc.'s ownership of Peter Corp. 100%
Income recognized by Pa 120,000
Less: differential amortization - 43,200
Total income from subsidiary 76,800

c. Journal Entries on Pan Inc.'s Books:

Dr. Investment in Peter Corp. Stock 792,000

Cr. Cash 792,000
Record the initial investment in Peter Corp.

Dr. Investment in Peter Corp. Stock 120,000

Cr. Income from Subsidiary 120,000
Record Pan Inc.'s 100% share of Peter Corp.'s 2015 income

Dr. Cash 60,000

Cr. Investment in Peter Corp. Stock 60,000
Record Pan Inc.'s 100% share of Peter Corp.'s 2015 dividend

Dr. Income from Subsidiary 43,200

Cr. Investment in Peter Corp. Stock 43,200
 Record amortization of excess acquisition price

d. Balance of Investment in Peter Corp. Stock on December 31, 2015

Initial investment 792,000

Income recognized from Peter Corp. 120,000
Dividend received - 60,000
Amortization of differential - 43,200
Ending balance of investment 808,800 =

Book Value Calculation

Pan =
Beginning 876,000
+Net Income 120,000
-Dividend - 60,000
Ending 936,000

e. Eliminating Entries

Dr. Common Stock 360,000

Dr. Retained Earnings 516,000
Dr. Income from Subsidiary 120,000
Cr. Dividend Declared 60,000
Cr. Investment in Peter Corp. Stock 936,000
Basic elimination entry

Dr. Cost of Goods Sold 36,000

Dr. Impairment Loss 7,200
Cr. Income from Subsidiary 43,200
Amortized excess value reclassification entry

Dr. Patents 28,800

Cr. Investment in Peter Co. Stock 28,800
Excess value (differential) reclassification entry

Dr. Accounts Payable- Pan 20,400

Cr. Accounts Receivable - Peter 20,400
Eliminate intercompany accounts

Dr. Sales 144,000

Cr. COGS 115200
Cr. Inventory 28800
Dr. Income from subs 28,800
Cr. Investment in subs 28,800
Eliminate 1st year 2018

Dr. Investment in subs 18,000

Cr. COGS 18,000

Dr. Investment in subs 18,000

Cr. Income from subs 18,000
Eliminate 2nd year from 2017
 f. Three-Part Consolidation Worksheet

Pan Inc. Peter Corp.

Income Statement
Sales 960,000 480,000
Less: COGS - 480,000 - 240,000
Less: Depreciation Expense - 132,000 - 48,000
Less: Other Expenses - 230,400 - 72,000
72,000 Income from Subsidiary 122,400
Impairment Loss
Net Income 240,000 120,000

Statement of Retained Earnings

Beginning Balance 720,000 456,000
Net Income 240,000 120,000
Less: Dividends Declared - 120,000 - 60,000
Ending Balance 840,000 516,000

Balance Sheet
Cash 64,800 44,400
Accounts Receivable 108,000 72,000
Inventory 120,000 96,000
Other Assets 84,000 108,000
Land 60,000 60,000
Building 240,000 180,000
Equipment 600,000 480,000
Investment in Peter Corp. 883,200

Patents
Total Assets 2,160,000 1,040,400

Accounts Payable 192,000 56,400

Other Payables 408,000 108,000
Common Stock 720,000 360,000
Retained Earnings 840,000 516,000
Total Liabilities & Equity 2,160,000 1,040,400
 Excess Value (differential) calculation
808,800
Pan =
Beginning 72,000
Amortization - 43,200
C/S R/E Ending 28,800
360,000 516000
120,000
-60000
360,000 576000

2017 Sales Purchased

Sales 120,000 90,000
Cost 48,000
Profit 72,000

2018 Sales Purchased

Sales 144,000 72,000
Cost 86,400
Profit 57,600
investment
 Elimination Entries
Consolidated
DR CR

144,000 1,440,000
36,000 133200 - 622,800
- 180,000
- 302,400
72,000 138,000 188,400
7,200 - 7,200
259,200 271,200 523,200

516,000 660,000
259,200 271,200 372,000
60,000 - 120,000
775,200 331,200 912,000

109,200
20,400 159,600
28800 216,000
192,000
120,000
420,000
1,080,000
36,000 936,000 - 52,800
57,600 - 57,600
28,800 28,800
64,800 1,042,800 2,215,200

20,400 228,000
516,000
360,000 720,000
516,000 840,000
896,400 - 2,304,000
 Inventory Patents
36,000 36,000
- 36,000 - 7,200
- 28800

Keep on hand
30,000

18,000

Keep on hand
72,000

28,800
ABC --> Parent
XYZ --> Subdisiary -
80%

ABC Corp XYZ Corp

Item
Debit Credit Debit Credit
Cash 66,800 50,000
Accounts Receivable 40,000 65,000
Buildings and Equipment 500,000 180,000
Investment in XYZ 237,600 -
Depreciation Expense 30,000 10,000
Other Expense 150,000 75,000
Dividends Declared 30,000 15,000
Accumulated Depreciation 350,000 35,000
Accounts Payable 30,000 15,000
Common Stock 200,000 100,000
Retained Earnings 200,000 100,000
Sales 240,800 145,000
Income from XYZ 33,600
1,054,400 1,054,400 395,000 395,000

Required:
a. Eliminating Entries
b. Consilidation workpaper

FV of ABC consideration 216,000

Add the FV of the NCI interest 54,000
Total FV of consideration 270,000
BV of XYZ's net assets
C/S--XYZ 100,000
R/E--XYZ 100,000 200,000
Difference between FV dan BV 70,000
Assigned to Buildings and Equipment 50,000
Depreciation 5 years
Depreciate 10,000
Goodwill 20,000
Impairment of goodwill 8,000
Goodwill (new) 12,000

a. Eliminating Entries
Book value calculations:
NCI 20% ABC 80% = C/S R/E
Original book value 40,000 160,000 100,000 100,000
(+) net income 12,000 48,000 60,000
(-) dividends (3,000) (12,000) (15,000)
Ending book value 49,000 196,000 100,000 145,000
245,000 245,000

Basic investment account elimination entry

Common Stock 100,000
Retained Earnings 100,000
Income from XYZ 48,000
NCI in NI of XYZ Co. 12,000
Dividends Declared 15,000
Investment in XYZ 196,000
NCI in NA of XYZ Co. 49,000

Excess value (differential)

calculations:
NCI 20% ABC 80% = B&E Acc Depr
Beginning balance 14,000 56,000 50,000 0
amortization (3,600) (14,400) (10,000)
ending balance 10,400 41,600 50,000 (10,000)
52,000 52,000

Excess value (differential) reclassification entry

Buildings and Equipment 50,000
Goodwill 12,000
Accumulated Depreciation 10,000
Investment in XYZ 41,600
NCI in NA of XYZ Co. 10,400

Amortized excess value reclassification entry

Depreciation expense 10,000
Goodwill impairment loss 8,000
Income from XYZ 14,400
NCI in NI of XYZ Co. 3,600

Optional acc. Depr elimination entry

Accumulated Depreciation 25,000
Buildings and Equipment 25,000
 Elimination Entry
Item ABC XYZ
Dr Cr
Income Statement
Sales 240,800 145,000
Less
Depreciation
Other Expense Expense
(Goodwill impairment (30,000) (10,000) 10,000
loss) (150,000) (75,000) 8,000
Income from Sub 33,600 - 48,000 14,400
Consolidated Net Income 94,400 60,000 66,000 14,400
NCI in NI of XYZ 12,000 3,600
Controlling Interest in NI 94,400 60,000 78,000 18,000

R/E Statement
Beg Balance 200,000 100,000 100,000
+ NI 94,400 60,000 78,000 18,000
- Dividen Declared (30,000) (15,000) 15,000
End Balance 264,400 145,000 178,000 33,000

Statement of Financial Position

Cash 66,800 50,000
Accounts Receivable 40,000 65,000
Buildings and Equipment 500,000 180,000 50,000 25,000
less: accumulated depreciation (350,000) (35,000) 25,000 10,000
Investment in XYZ 237,600 - 196,000
41,600
Goodwill 12,000
Total Assets 494,400 260,000 87,000 272,600

Accounts Payable 30,000 15,000

Common Stock 200,000 100,000 100,000
Retained Earnings 264,400 145,000 178,000 33,000
NCI in NA of XYZ 49,000
10,400
Total Liabilities and Equities 494,400 260,000 278,000 92,400
Operating Income ABC
Net Income XYZ
Depreciation expense
Impairment Loss
 c Consolidated NI
d NI to NCI
e NI to CI

Goodwill
20,000
(8,000)
12,000
Consolidated

385,800

(50,000)
(233,000)
-
102,800
(8,400)
94,400

200,000
94,400
(30,000)
264,400

116,800
105,000
705,000
(370,000)
-

12,000
568,800

45,000
200,000
264,400
59,400

568,800
 60,800
60,000
(10,000)
(8,000)
102,800
(8,400)
94,400
Ali -->Parent
Baba --> subdisiary
90%
31/12/20X8

PT Ali PT Baba
Item
Debit Credit Debit Credit
Cash 150,000 100,000
Accounts Receivable 105,500 40,000
Inventory 225,000 125,000
Land 200,000 85,000
Buildings and Equipment 400,000 150,000
Investment in PT Baba 364,500 -
Cost of Goods Sold 250,000 90,000
Depreciation Expense 40,000 15,000
Interest Expense 6,000 5,000
Other Expense 30,000 20,000
Dividends Declared 50,000 30,000
Accumulated Depreciation 200,000 45,000
Accounts Payable 174,000 90,000
Bonds Payable 120,000 50,000
Common Stock 400,500 150,000
Retained Earnings 350,000 100,000
Sales 500,000 225,000
Income from PT Baba 76,500
1,821,000 1,821,000 660,000 660,000

Required:
a. Equity method entries & Eliminating Entries
b. Consilidation workpapaer

FV of Ali consideration 315,000

Add the FV of the NCI interest 35,000
Total FV of consideration 350,000
BV of Baba's net assets
C/S--Baba 150,000
R/E--Baba 100,000 250,000
Difference between FV dan BV 100,000
Assigned to Inventory (5,000)
Land 90,000
Bonds Payable (25,000)
Goodwill 40,000
Impairment of goodwill 20,000
Goodwill (new) 20,000
a. Equity method entries & Eliminating Entries
Book value calculations:
NCI 10% Ali 90% = C/S R/E
Original book value 25,000 225,000 150,000 100,000
(+) net income 9,500 85,500 95,000
(-) dividends (3,000) (27,000) (30,000)
Ending book value 31,500 283,500 150,000 165,000
315,000 315,000

Equity method entries

Investment in PT. Baba 315,000
Cash 315,000
Investment in PT. Baba 85,500
Income from PT. Baba 85,500
Cash 27,000
Investment in PT. Baba 27,000
Investment in PT. Baba 4500
Income from PT. Baba 4500
Investment in PT. Baba 4,500
Income from PT. Baba 4,500
Income from PT. Baba 18,000
Investment in PT. Baba 18,000

Basic investment account elimination entry

Common Stock 150,000
Retained Earnings 100,000
Income from PT Baba 85,500
NCI in NI of PT Baba 9,500
Dividends Declared 30,000
Investment in PT Baba 283,500
NCI in NA of PT Baba 31,500

Excess value (differential)

calculations:
NCI 10% Ali 90% = Inventory Land Bonds Payable
Beginning balance 10,000 90,000 (5,000) 90,000 (25,000)
amortization (1,000) (9,000) 5000 - 5,000
ending balance 9,000 81,000 - 90,000 (20,000)
90,000 90,000

Excess value (differential) reclassification entry

Land 90,000
Goodwill 20,000
 Bonds Payable 20,000
Investment in PT Baba 81,000
NCI in NA of PT Baba 9,000

Amortized excess value reclassification entry

Goodwill impairment loss 20,000
Interest Expense 5,000
Cost of Goods Sold 5000
Income from PT Baba 9,000
NCI in NI of PT Baba 1,000

Optional acc. Depr elimination entry

Accumulated Depreciation 30,000
Buildings and Equipment 30,000

Elimination entries
Item PT. Ali PT. Baba Consolidated
Debit Credit
Sales 500,000 225,000 725,000
Income from PT. Baba 76,500 - 85,500 9,000 -
COGS (250,000) (90,000) 5,000 (335,000)
Depretiation Expense (40,000) (15,000) (55,000)
Other Operating Expense (30,000) (20,000) 20,000 (70,000)
Interest Expense (6,000) (5,000) 5,000 (6,000)

Net Income 250,500 95,000 105,500 19,000 259,000

NCI in NI of PT Baba 9,500 1,000 (8,500)
CI in NI of PT Baba 250,500 95,000 115,000 20,000 250,500

Retained Earning, Jan 1 350,000 100,000 100,000 350,000

Net Income 250,500 95,000 115,000 20,000 250,500
Dividend declared (50,000) (30,000) 30,000 (50,000)
Retained Earning, Dec 31 550,500 165,000 215,000 50,000 550,500

ASSET
Cash 150,000 100,000 250,000
Accounts Receivable 105,500 40,000 145,500
Inventory 225,000 125,000 350,000
Land 200,000 85,000 90,000 375,000
Building 400,000 150,000 30,000 520,000
Accumulated Depretiation (200,000) (45,000) 30,000 (215,000)
Investment in PT Baba 364,500 - 283,500
-
 -
81,000
Goodwill 20,000 20,000
Total Asset 1,245,000 455,000 120,000 313,500 1,445,500

LIABILITIES AND EQUITY

Accounts Payable 174,000 90,000 264,000
Bonds Payable 120,000 50,000 20,000 190,000
Common Stock 400,500 150,000 150,000 400,500
Retained Earning, Dec 31 550,500 165,000 215,000 50,000 550,500
NCI in NA of PT. Baba 31,500
40,500
9,000
Total Liabilities & Equity 1,245,000 455,000 365,000 70,000 1,445,500
 Operating Income in Ali
Income frome Baba
Inventory
Sales 225,000 Impairment Loss
Cost of Goods Sold (90,000) B/P
Depreciation Expense (15,000) C. Consolidated NI
Interest Expense (5,000) D. NI to NCI
Other Expense (20,000) E. NI to CI
Net Income PT Baba 95,000
F. Saldo Investasi Akhir Tahun
G. NCI in NA

Goodwill
40,000
(20,000)
20,000
174,000
95,000
5,000
(20,000)
5000
259,000
(8,500)
250,500

364,500
40,500