NAMA : ANDI MAULINA

NIM : A031181329
MATA KULIAH : AKUNTANSI KEUANGAN LANJUTAN II
PROBLEM 8-9

Supporting computations:
Fair value-book value differential
Investment coat $ 175,000
Implied total fair value of Sid ($175,000/70%) $ 250,000
Less : Book value of Sid ($250,000 equity on Jan 1 plus $ 250,000
$10,000 net income (1/4 year) less $10,000 dividends)
Fair value-book value defferential 0
Allocation of Sid’s reported net income
Pal company ($40,000 × ¾ year × 70%) $ 21,000
Preacquisition income (40,000 × ¼ year × 100%) $ 10,000
Noncontrolling interest share ($40,000 ×1 year × 30% × ¾ ) $ 9,000
Sid’s net income $ 40,000
Pal’s income from Sid
Equity in Sid’s income $ 21,000
Constructive gain on Pal’s bonds
Note that bonds payable has a book value of $105,400 on Dec
21, 200. A half-year of premium amortization ($300) yields a
book value of $105,700 at July 1, 2011 2,850
($105,700 book value on July 1 less $102,850 on Dec 31)
Recognition of constructive gain on separate books
($2,850 × 6/114 months) (150)
Gain on intercompany sale of equipment-downstream
[$30,000 – ($36,000/2)] (12,000)
Piecemeal recognition of gain on equipment-downstream
($12,000/3 years × ½ year) 2,000
Gain on intercompany sale of land-upstream
(10,000 - $8,000 cost) × 70% (1,400)
Income from Sid $ 12,300
 NAMA : ANDI MAULINA
NIM : A031181329
MATA KULIAH : AKUNTANSI KEUANGAN LANJUTAN II
Worksheet entries in journal form
a Income from Sid 12,300
Dividends – Sid 7,000
Investment in Sid common 5,300
Eliminate intercompany post – acquisition earnings and dividends and return
Investment to beginning balance.
b Sales 37,500
Cost of sales 27,500
Dividends – Sid 10,000
Retained earnings – Sid 50,000
Common stock – Sid 200,000
Investment in Sid – common 175,000
Noncontrolling interest 75,000
Eliminate preacquisition earnings and dividends. Eliminate Sid’s equity accounts, the
investment account and establish beginning noncontrolling interest.
c Gain on plant assets 12,000
Plant assets 12,000
Eliminate intercompany gain on sale of equipment.
d Gain on plant assets 2,000
Plant assets 2,000
Eliminate intercompany gain on sale of land.
e Interest income 5,850
Interest expense 5,700
Gain on bond retirement 2,850
Investment in Pal bonds 102,700
Bonds payable 100,000
Premium on bonds 5,400
Record constructive retirement of bonds payable.
f Interest payable 6,000
Interest receivable 6,000
Eliminate reciprocal interest accounts.
g Other current liabilities 7,000
Other current assets 7,000
Eliminate reciprocal for unpaid intercompany dividends.
h Noncontrolling interest share 8,400
Dividends – Sid 3,000
Noncontrolling interest 5,400
Record noncontrolling interest share of earnings and post – acquisition dividends.
i Plant assets 2,000
Expenses 2,000
Eliminate excess depreciation on equipment.
 NAMA : ANDI MAULINA
NIM : A031181329
MATA KULIAH : AKUNTANSI KEUANGAN LANJUTAN II
Pad Corporation and Subsidiary
Consolidation Working Papers
For the year ended December 31, 2011
Adjustment and Consolidated
Pal Sid 70%
Eliminations Statements
Income Statement
Sales $ 287,100 $ 150,000 b 37,500 $ 399,600
Income from Sid a 12,300
Gain on bonds e 2,850 2,850
Gain on plant assets 12,000 2,000 c 12,000
d 2,000
Interest income 5,850 e 5,850
Interest expense 11,400 e 5,700 5,700
Expenses – includes cost b27,500
of goods sold 200,000 117,850 i 2,000 288,350
Consolidated NI 108,400
Noncontrolling int. share h 8,400 8,400
Controlling share of NI $ 100,000 $ 40,000 $ 100,000

Retained Earnings
Retained earnings – Pal $ 250,000 $ 250,000
Retained earnings – Sid $ 50,000 b 50,000
Net income 100,000 40,000 100,000
Dividends 50,000 20,000 a 7,000
b 10,000
h 3,000 50,000
Retained earnings Dec $ 300,000 $ 70,000 $ 300,000
31

Balance Sheet
Cash $ 17,000 $ 4,000 $ 21,000
Interest receivable 6,000 f 6,000
Inventories 140,000 60,000 200,000
Other current assets 110,000 20,000 g 7,000 123,000
Plant assets – net 502,700 107,300 i 2,000 c 12,000
d 2,000 598,000
Investment – Sid 180,300 a 5,300
common b 175,000

Investment – Pal bonds 102,700 e 102,700

$ 950,000 $ 300,000 $ 942,000
Interest payable $ 6,000 f 6,000
Other current liabilities 38,600 $ 30,000 g 7,000 $ 61,600
12% bonds payable 100,000 e100,000
Premium on bonds 5,400 e 5,400
Common stock 500,000 200,000 b200,000 500,000
 NAMA : ANDI MAULINA
NIM : A031181329
MATA KULIAH : AKUNTANSI KEUANGAN LANJUTAN II
Retained earnings 300,000 70,000 300,000
$ 950,000 $ 300,000
Noncontrolling interest ($250,000 × 30%) b 75,000
Noncontrolling interest Dec 31 ($268,000 × 30%) h 5,400 80,400
$ 942,000