NAMA : DIAN SARI

NIM : A031171703

MID AKUNTANSI KEUANGAN LANJUTAN II

Solution P5-7

Preliminary computations

Investment cost $2,700,000

Implied fair value of San $3,000,000

Less: Book value of San 2,500,000

Patents $ 500,000

Patentamortization $500,000/10 years = $50,000 per year

Upstream sales

Unrealized profit in December 31, 2011 inventory of Pol

$280,000 - ($280,000 1.4) = $80,000

Unrealized profit inDecember 31, 2012 inventory of Pol

$420,000 - ($420,000 1.4) = $120,000

Income from San $1,000,000

San's reported net income

Less: Patent amortization (50,000)

Less: Unrealized profit in ending inventory (120,000)

Add: Unrealized profit in beginning inventory 80,000

San’s adjusted and realized income $ 910,000

Pol’s 90% controlling share of San’s income $ 819,000

10% noncontrolling interest share of San’s income $ 91,000

Investment balance

Initial investment cost $2,700,000

Increase in San's net assets from December 31, 2010

Solution P5-7

Preliminary computations

to December 31, 2012 ($700,000 90%) 630,000

Patent amortization for 2 years (90%) ( 90,000)

Unrealized profit in December 31, 2012 inventory (108,000)

Investment balance December 31, 2012 $3,132,000

Pol Corporation and Subsidiary

Consolidation Workpapers

for the year ended

December 31, 2010

Adjustments and Consolidated

Eliminations Statements
Pol San 90%

Income Statement

Sales $8,190 $5,600 a 5,600 $ 8,190

Income from San 819 d. 819

Cost of sales 5,460* 4,000* b. 120 a. 5,600 3,900*

c. 80

Other expenses 1,544* 600* f. 50 2,194*

Consolidated net income $ 2,096

Noncontrolling int.share h. 91 91*

Controlling share of NI $ 2,005 $1,000 $ 2,005

Retained Earnings

Retained earnings— Pol $ 1,200 $ 1,200

Retained earnings— San $ 700 e. 700

Controlling share of NI 2,005 1,000 2,005

Dividends 1,000* 500* d. 450

 Adjustments and Consolidated

Eliminations Statements
Pol San 90%

h. 50 1,000*

Retained earnings
December 31
$ 2,205 $1,200 $ 2,205

Balance Sheet

Cash $ 753 $ 500 $ 1,253

Inventory 420 800 b. 120 1,100

Other current assets 600 200 g. 100 700

Plant assets— net 3,000 3,000 6,000

Investment in San 3,132 c. 72 d. 369

e. 2,835

Patents e. 450 f. 50 400

$7,905 $4,500 $ 9,453

Current liabilities $ 1,700 $1,300 g. 100 $ 2,900

Capital stock 4,000 2,000 e. 2,000 4,000

Retained earnings 2,205 1,200 2,205

$ 7,905 $4,500

Noncontrolling interest January 1 c. 8 e. 315

Noncontrolling interest December 31 h. 41 348

$ 9,453