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Student Name:

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)

Retained earnings, 1/1


Net income
Dividends declared
Retained earnings, 12/31

(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

Adjustments & Eliminations


Debit
Credit

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)

Parentheses indicate a credit balance.

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

* NCI at beginning of year


Common stock-subsidiary
APIC-subsidiary
Retained earnings-subsidiary 1/1
Total
Noncontrolling interest percentage
Noncontrolling share of subsidiary book value
Noncontrolling share of 1/1 customer base excess
Noncontrolling share of goodwill (below)
Noncontrolling interest 1/1

Controlling Noncontrolling
Interest
Interest
Fair value at acquisition date
Relative fair values of identifiable net assets
Goodwill

Consolidated
Totals

Given Data P04-35


San Marco company outstanding common stock
acquired by Paloma Corporation
Cash paid by Paloma Corporation. for
San Marco Company shares

90%

San Marco owners equity amounts on 1/1/14:


Common stock
Additional paid-in capital
Retained earnings
Assessed fair value of San Marco's customer base
Fair-value allocation schedule:
Fair value of San Marco Company
Book value of San Marco Company
Excess fair value
to customer base (10-year remaining life)
to goodwill

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)

Retained earnings, 1/1


Net income
Dividends declared
Retained earnings, 12/31

$ (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

Note: Credits are indicated by parentheses.

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

PADRE, INC. AND SIERRA CORPORATION


- Purchase price allocation and annual amortization
Acquisition-date subsidiary fair value
Book value of subsidiary
Fair value in excess of book value
Allocations to specific accounts based on difference
between fair value and book value:
Land
Buildings and equipment
Copyright
Notes payable
Total

Life
(years)

Annual excess amortizations:


Buildings and equipment
Copyright
Notes payable
Total

Excess
Amortizations

Totals for the business combination for the year ending December 31, 2015
PADRE, INC. AND SIERRA CORPORATION
Account Name
Revenues

Cost of goods sold

Depreciation expense

Amortization expense

Interest expense

Equity in income of Sierra

Consolidated net income

Net income attributable to NCI

Balance

Explanation

Student Name:
Class:
Problem 04-37

Net income to Padre Company

Retained earnings, 1/1

Dividends declared

Retained earnings, 12/31

Student Name:
Class:
Problem 04-37

Current assets

Investment in Sierra

Land

Buildings and equipment (net)

Copyright

Total assets
Accounts payable

Notes payable

Noncontrolling interest in Sierra

Common stock

Additional paid-in capital

Retained earnings, 12/31

Total liabilities & equities

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

for the year ending December 31, 2015


ERRA CORPORATION

ERRA CORPORATION
on Worksheet
Noncontrolling
Interest

Consolidated
Totals

Given Data P04-37


Sierra Corporation outstanding common stock
acquired by Padre, Inc.
Cash paid by Padre, Inc. for
Sierra Corporation shares
Sierra's assessed fair value
Book value of Sierra Corporation

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)

Sierra accounts values on 1/1/15

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)

Retained earnings, 1/1/15


Net income
Dividends paid
Retained earnings, 12/31/15

$ (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

Note: Credits are indicated by parentheses.

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)

Total liabilities and equity

(3,055,000)

(800,000)

Parentheses indicate a credit balance.

ON AND BARSTOW, INC.


eet - Acquisition Method
December 31, 2015

Consolidated
Totals

Given Data P04-38


Barstow, Inc. outstanding voting shares
acquired by Adams Corporation
Cash paid by Adams Corporation for
Barstow, Inc. shares
Fair value of 10% NCI - B4 & after acquisition

90%
$

603,000

67,000

Barstow account values on 12/31/13

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)

Adjusted Trial Balances


December 31, 2015
Adams
Corporation

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)
-

Retained earnings, 1/1


Net income
Dividends paid
Retained earnings, 12/31

Liabilities
Common stock
Additional paid-in capital
Additional paid-in capital - step acquisition

Consolidation Entries
Debit
Credit

Retained earnings 12/31


Non-controlling interest 1/1
Non-controlling interest 12/31
Total liabilities and equity
Parentheses indicate a credit balance.

(1,000,000)

(620,000)

(1,914,500)

(1,200,000)

Noncontrolling
Interest

Consolidated
Totals

Given Data P04-42


Keane Company outstanding shares
acquired by Bretz, Inc.
Cash paid by Bretz, Inc. for
Keane Company shares
Book value of Keane Company
Keane copyright undervalued (6-year remaining live)
Keane's net income for 2014
Cash dividends paid by Keane during 2014
Additional Keane shares purchased by Bretz on 1/1/15
Amount paid by Bretz for Keane shares

60%
$
$
$
$
$
$

573,000
810,000
120,000
150,000
80,000
30%
300,000

Financial Information for 2015

Revenues
Operating expenses
Equity in Keane earnings
Net income

Retained earnings, 1/1


Net income
Dividends paid
Retained earnings, 12/31

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

Note: Credits are indicated by parentheses.

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)