ACCT 8130, Prof.

Siva Nathan, Class Problem for Chapter 4 (Hoyle)

On January 1, 2013, Parflex Corporation exchanged $344,000 cash for 90

percent of Eagle Corporation's outstanding voting stock. Eagle's acquisition date
balance sheet follows:

On January 1, 2013, Parflex prepared the following fair-value allocation schedule:

The companies' financial statements for the year ending December 31, 2015,
follow:

Assume Parflex uses the Equity Method to account for its investment in Eagle

1
a. Compute the goodwill allocation to the controlling and noncontrolling interest.
b. Do the Equity Method journal entries for 2015
c. Verify the balance in Equity in Eagle’s earnings of $79,200 shown above
(Hint: use the Equity Method journal entries)
d. Show how Parflex determined its “Investment in Eagle” account balance of $488,900
e. Calculate the Net Income Attributable to NCI that would appear on the 2015
Consolidated Income Statement
f. Calculate the balance in NCI that would appear on the 12/31/2015 Consolidated Balance
Sheet
g. Do the worksheet journal entries for 2015. After you do the journal entries verify that the
“Investment in Eagle” account balance is zero.
h. Prepare the consolidation worksheet for 2015. In the consolidation worksheet you need
to manually insert into the Consolidated Income Statement the “Net Income Attributable
to NCI” that you calculated in (e) above. Also the NCI balance on the Consolidated
Balance Sheet has to match what you calculated in (f).