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Sheet1

Solution
1 Balance of Investment account
Add: Net Income

624000
36000
660000
9000
651000

Less: Dividend
Balance in Investment account
2 Sale Price
Cost of Goods
Gross Margin Percentage

270000
180000
33.33%

Ending Inventory
Gross Profit
Ownership percentage
Unrealized intra-entity Gross Profit
Equity in Investee Company
Investment in Black and Decker

162000
54000
25.00%
13500
13500

3 Fair value
Purchase Price (20000*66)
Less: Book value of common stock
Allocation to specific account based on difference between
book value and Fair value
Land
Building
Inventory
Liabilities
Goodwill

5 Cost of net assets


Share of Best buy

-240000
120000
96000
84000

300000
60.00%
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Sheet1
Non Controlling Interest percentage
Amount assigned to NCI

40.00%
120000

6 Amount of Goodwill
Book Value of Net Assets
Share of Investor

600000
0.8
480000
540000
60000

Purchase price
Goodwill
7 Value assigned to the non controlling interest
= 500,000/.80*.20
125000
8

Journal Entry
as on December 31st 2011

12/31/11 Investment in Tyson Co.


Equity in Investee Company

107800

Cash
Investment in Tyson Co.

58800

Building
Copyright
Accumulated Depreciation
Amortization Expenses
Investment in Tyson Inc.

28000
80000

9 Equity in Investee Company


Investment in Nook Tablet Inc.

1280

Mark up for Nook Tablet Inc


Sales
Cost of goods sold
Gross Margin Percentage

500000
400000
20.00%

Inventory held by BN Com


Unrealised Profit

8000
1600
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Sheet1
Share of Investor

1280

10 Sale Price
Cost of Goods
Gross Margin Percentage

500000
420000
16.00%

Ending Inventory
Gross Profit
Ownership percentage
Unrealized intra-entity Gross Profit
Equity in Investee Company
Investment in Black and Decker

125000
20000
85.00%
17000
17000

11 Consolidated Net income for 2011


Net Income of Yamaha
Add: Equity in Investee Income
Less: Gain on Sale of Asset
Add: Depreciation Expense
Consolidated Net income for 2011

308000
126000
-70000
14000
378000

Working Notes
Cost of asset
Less: depreciation
Book Value
Sale of asset
Gain on sale of asset

140000
42000
98000
168000
70000

12 Non Controlling Interest is the portion of the subsidiary's stock which is not
owned by parent company. In other words the equity that does not directly or indirectly
belongs to parent entity.
Non Controlling Interest is the ownership of company which does not give shareholders a
right to control the company.
NCI are shown on the balance sheet under the equity shareholder account
In Income Statement, NCI share of income is shown separately.

13 Inter Entity Transaction


Transaction which occurred between parent and its subsidiary are called inter company transaction.
For example inventory sold by parent to subsidiary or by subsidiary to parent. If inventory is sold at pr
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unrealized gain is recognized by passing the following journal entry
Equity in Investee Income
Investment in Subsidiary.
First of all profit margin is calculated
Secondly profit margin in inventory is calculated
Lastly unrealized gains calculated by multiplying the percentage of share held.

For assets that are not fully depreciated


Unrealized gain on sale of asset is recognized, such gain is deducted from the consolidated income stat
charged on the appreciated value is also added back to the consolidated net income

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Sheet1

13500

1320000
1176000
144000

60000
84000

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Sheet1

107800

58800

2800
4000

1280

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Sheet1

17000

ck which is not
s not directly or indirectly
does not give shareholders a

lder account

y are called inter company transaction.


sidiary to parent. If inventory is sold at profit.
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Sheet1

age of share held.

educted from the consolidated income statement. Depreciation


nsolidated net income

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