PROBLEM IX

1) Schedule of Determination and Allocation of Excess:

Date of Acquisition January 1, 20x4

Fair value of Subsidiary (100%)
Consideration transferred:
Common stock: 24,000 sh x P14/sh 336,000
Less: BV of Sia's SHE:
Common stock 240,000
Paid in capital in excess of par 24,000
Retained earnings 96,000 360,000
Allocated excess (excess of BV over cost) - 24,000
Less: Over/undervaluation of assets & liabilities
Increase in inventory 18,000
Increase in land 72,000
Decrease in buildings and equipment - 12,000
Increase in patent 24,000
Increase in contingent liability - 18,000
Increase in bonds payable - 42,000 42,000
Negative excess: Bargain Purchase Gain - 66,000

2) The gain on acquisition is the bargain purchase gain of 66,000.

PROBLEM X

1) (1) Investment in Sia Company 432,000

Cash 288,000
Common stock, P10 par 120,000
Add'l Paid-in capital 24,000

(2) Retained earnings 12,000

Cash 12,000

(3) Add'l Paid-in capital 8,400

Cash 8,400
2) Schedule of Determination and Allocation of Excess:

Date of Acquisition January 1, 20x4

Fair value of Subsidiary (100%)
Consideration transferred:
Cash 288,000
Common stock: 12,000 sh x P12/sh 144,000 432,000
Less: BV of Sia's SHE:
Common stock 240,000
Add'l Paid-in capital 24,000
Retained earnings 96,000 360,000
Allocated excess (excess of BV over cost) 72,000
Add: Existing Goodwill of Sia Co. 6,000
Adjusted allocated excess 78,000
Less: Over/undervaluation of assets & liabilities
Increase in inventory 18,000
Increase in land 72,000
Decrease in buildings and equipment - 12,000
Increase in bonds payable - 42,000 36,000
Positive excess: Goodwill 42,000

3) Eliminating entries:
(1) Common stock 240,000
Add'l Paid-in capital 24,000
Retained earnings 96,000
Investment in Sia Company 360,000

(2) Inventory 18,000

Land 72,000
Goodwill 36,000
Buildings and equipment 12,000
Premium on bonds payable 42,000
Investment in Sia Company 72,000
4) Eliminations
Assets Per Co. Sia Co. Dr. Cr.
Cash* 111,600 54,000
Accounts receivable 90,000 60,000
Inventory 120,000 72,000 18,000
Land 210,000 48,000 72,000
Buildings and equipment (net) 480,000 360,000 12,000
Goodwill 6,000 36,000
Investment in Sia Company 432,000 360,000
72,000
Total Assets 1,443,600 600,000

Liabilities and Stockholders' Equity

Accounts payable 120,000
### 120,000
Bonds payable 240,000 120,000
Premium on Bonds payable 42,000
Common stock, P10 par** 720,000
Common stock, P10 par 240,000 240,000
Add'l Paid-in capital*** 75,600
Add'l Paid-in capital 24,000 24,000
Retained earnings**** 288,000
Retained earnings 96,000 96,000
Total Liabilities and Stockholders' Equity 1,443,600 600,000 486,000 486,000
Consolidated
165,600 * 420,000 - 288,000 - 12,000 - 8,400
150,000 ** 600,000 + 120,000 (12,000 sh x 10)
210,000 *** 60,000 + 24,000 - 8,400
330,000 **** 300000 - 12,000
828,000
42,000

-
1,725,600

240,000
360,000
42,000
720,000
-
75,600
-
288,000
-
1,725,600
5) Persia Company
Statement of Consolidated Financial Position
As of December 31, 20x4

Assets
Cash 165,600
Accounts receivable 150,000
Inventories 210,000
Land 330,000
Buildings and equipment (net) 828,000
Goodwill 42,000
Total Assets 1,725,600

Liabilities and Stockholders' Equity

Liabilities
Accounts payable 240,000
Bonds payable 360,000
Premium on bonds payable 42,000 402,000
Total Liabilities 642,000
Stockholders' Equity
Common stock, P10 par 720,000
Additional paid in capital 75,600
Retained earnings 288,000
Total Stockholders' Equity 1,083,600
Total Liabilities and Stockholders' Equity 1,725,600