Journal Entry

Investment in Save Company (40,000*17.50) 700,000.00

Common Stock (40,000*10) -
Other Contributed Capital (40,000*(17.50-10) -

Other Contributed Capital 20,000.00 -

Cash - 20,000.00

Case 1 (Implied Value = Book Value) 100% of Stock Acquired

Assume that on January 1, 2015 P Company acquired all the outstandung stock (10,000 shares) of S Company for cash
$160,000. What journal entry would P Company make to record the shares of S Company acquired?

Investment in S Company 160,000

Cash 160,000

Balance Sheet P Company S Company

Cash 40,000 40,000
Other Current Assets 280,000 100,000
Plant and equipment 240,000 80,000
Lamd 80,000 40,000
Investment in S 160,000
Total Assets 800,000 260,000

Liabilities 120,000 100,000

Common Stock 400,000 100,000
Other Contributed Capital 80,000 20,000
Retained Earnings 200,000 40,000
Total Liabilities and Equity 800,000 260,000

The workpaper to consolidate the balance sheets for P and S on Jan 1, 2015, date of acquisition
Elimination
Balance Sheet P Company S Company Debit
Cash 40,000 40,000
Other Current Assets 280,000 100,000
Plant and equipment 240,000 80,000
Lamd 80,000 40,000
Investment in S 160,000
Total Assets 800,000 260,000

Liabilities 120,000 100,000

Common Stock 400,000 100,000
Other Contributed Capital 80,000 20,000
Retained Earnings 200,000 40,000
Total Liabilities and Equity 800,000 260,000

Journal entry to eliminate S Company's stockholders' equity against the investment account is :
Semua equity account di s company dan akun investment di perusahaan p di eliminate
Common Stock 100,000 -
Other Contributed Capital 20,000 -
Retained Earnings 40,000 -
Investment in S Company - 160,000

Case 1 B (Implied Value = Book Value)

Assume that on January 1, 2015, P Company acquired 90% (9,000 shares) of the stock of S Company
for $144,000. What journal entry would P Company make to record the shares of S Company
acquired?

Investment in S Company 144,000 -

Cash - 144,000

Balance Sheet P Company S Company

Cash 56,000 40,000
Other Current Assets 280,000 100,000
Plant and equipment 240,000 80,000
Lamd 80,000 40,000
Investment in S 144,000
Total Assets 800,000 260,000

Liabilities 120,000 100,000

Common Stock 400,000 100,000
Other Contributed Capital 80,000 20,000
Retained Earnings 200,000 40,000
Total Liabilities and Equity 800,000 260,000

Computation and allocation of difference between implied and book values

90% Parent 10% Noncontrolling
Total Value
Share Share
Purchase Price and implied value 144,000 16,000 160,000
Less: Book Value of equity acquired:
Common Stock 90,000.00 10,000.00 100,000
Other contributed capital 18,000.00 2,000.00 20,000
Retained earnings 36,000.00 4,000.00 40,000
Total book value 144,000.00 16,000.00 160,000.00

Difference between implied and book value - - -

Consolidated balance sheets for P and S Eliminations

Balance Sheet P Company S Company Debit
Cash 56,000 40,000
Other Current Assets 280,000 100,000
Plant and equipment 240,000 80,000
Lamd 80,000 40,000
Investment in S 144,000
Total Assets 800,000 260,000

Liabilities 120,000 100,000

Common Stock 400,000 100,000
Other Contributed Capital 80,000 20,000
Retained Earnings 200,000 40,000
Total Liabilities and Equity 800,000 260,000

Journal entry to eliminate s company

Common stock 100,000 -

Other contributed capital 20,000 -
Retained earnings 40,000 -
Investment in s company - 144,000
Noncontrolling interest in equity - 16,000

Case 2 (b) (Implied Value > Book Value)

Assume that on January 1, 2015, P Company acquired 80% (8,000 shares) of the stock of S Company
for $148,000. What journal entry would P Company make to record the shares of S Company
acquired?

Journal Entry
Investment in S Company 148,000 -
Cash - 148,000

Balance Sheet P Company S Company

Cash 52,000 40,000
Other Current Assets 280,000 100,000
Plant and equipment 240,000 80,000
Lamd 80,000 40,000
Investment in S 148,000
Total Assets 800,000 260,000

Liabilities 120,000 100,000

Common Stock 400,000 100,000
Other Contributed Capital 80,000 20,000
Retained Earnings 200,000 40,000
Total Liabilities and Equity 800,000 260,000
Computation and allocation of difference
80% Parent 20% Noncontrolling
Total Value
Share Share
Purchase Price and implied value 148,000 37,000 185,000
Less: Book Value of equity acquired:
Common Stock 80,000.00 20,000.00 100,000
Other contributed capital 16,000.00 4,000.00 20,000
Retained earnings 32,000.00 8,000.00 40,000
Total book value 128,000.00 32,000.00 160,000.00

Difference between implied and book value 20,000.00 5,000.00 25,000.00

Land revaluation (mark to market) (20,000.00) (5,000.00) (25,000.00)
Balance - - -

Consolidated Balance Sheet

Eliminations
Balance Sheet P Company S Company Debit
Cash 52,000 40,000
Other Current Assets 280,000 100,000
Plant and equipment 240,000 80,000
Lamd 80,000 40,000 25,000
Investment in S 148,000
Difference (IV>BV) 25,000
Total Assets 800,000 260,000

Liabilities 120,000 100,000

Common Stock 400,000 100,000 100,000
Other Contributed Capital 80,000 20,000 20,000
Retained Earnings 200,000 40,000 40,000
Noncontrolling Interest
Total Liabilities and Equity 800,000 260,000

Journal Entry
Common Stock 100,000
Other Contributed Capital 20,000
Retained Earnings 40,000
Difference between IV and BV 25,000
Investment in S Company 148,000
Noncontrolling Interest in Equity 37,000

Land 25,000
Difference between IV and BV 25,000
Case 3 (Implied Value < Book Value)
Assume that on January 1, 2015, P Company acquired 80% (8,000 shares) of the stock of S Company for $120,000. Wh
journal entry would P Company make to record the shares of S Company acquired?

Investment in S Company 120,000 -

Cash - 120,000

Balance Sheet P Company S Company

Cash 80,000 40,000
Other Current Assets 280,000 100,000
Plant and equipment 240,000 80,000
Lamd 80,000 40,000
Investment in S 120,000
Difference (IV<BV)
Total Assets 800,000 260,000

Liabilities 120,000 100,000

Common Stock 400,000 100,000
Other Contributed Capital 80,000 20,000
Retained Earnings 200,000 40,000
Noncontrolling Interest
Total Liabilities and Equity 800,000 260,000

Computation and allocation of difference

80% Parent 20% Noncontrolling
Total Value
Share Share
Purchase Price and implied value 120,000 30,000 150,000
Less: Book Value of equity acquired:
Common Stock 80,000.00 20,000.00 100,000
Other contributed capital 16,000.00 4,000.00 20,000
Retained earnings 32,000.00 8,000.00 40,000
Total book value 128,000.00 32,000.00 160,000.00

Difference between implied and book value (8,000.00) (2,000.00) (10,000.00)

Plant & Equipment (mark to market) 8,000.00 2,000.00 10,000.00
Balance - - -

Eliminations
Balance Sheet P Company S Company Debit
Cash 80,000 40,000
Other Current Assets 280,000 100,000
Plant and equipment 240,000 80,000
Lamd 80,000 40,000
Investment in S 120,000
Difference (IV<BV) 10,000
Total Assets 800,000 260,000

Liabilities 120,000 100,000

Common Stock 400,000 100,000 100,000
Other Contributed Capital 80,000 20,000 20,000
Retained Earnings 200,000 40,000 40,000
Noncontrolling Interest
Total Liabilities and Equity 800,000 260,000 170,000.00

Journal Entry
Common Stock 100,000
Other Contributed Capital 20,000
Retained Earnings 40,000
Difference between IV and BV 10,000
Investment in S Company 120,000
Noncontrolling interest in equity 30,000

Difference between IV and BV 10,000

Plant and Equipment 10,000
 -
400,000.00
300,000.00

res) of S Company for cash of

Company acquired?

Implied Value = Book Value

Price Paid 160,000
% Acquired 100%
Implied Value 160,000.00
Book Value 160,000
Difference $ -

Elimination Consolidated Balances

Credit
 Notes: When parent’s share of
subsidiary’s equity is eliminated against
the investment account, subsidiary’s net
assets are substituted for the investment
account in the consolidated balance sheet.

Implied Value = Book Value

Price Paid 144,000
% Acquired 90%
Implied Value 160,000.00
Book Value 160,000
Difference $ -

Eliminations Consolidated
Balances
 Consolidated
Credit Balances
96,000
380,000
320,000
120,000
144,000
1,060,000

220,000
500,000
100,000
240,000
1,060,000

Implied Value > Book Value

Price Paid 148,000
% Acquired 80%
Implied Value 185,000.00
Book Value 160,000
Difference $ 25,000.00
Eliminations
Consolidated Balances
Credit
92,000
380,000
320,000
145,000
148,000 0
25,000 0
937,000

220,000
400,000
80,000
200,000
37,000 37,000
937,000
Company for $120,000. What
y acquired?

Implied Value < Book Value

Price Paid 120,000
% Acquired 80%
Implied Value 150,000.00
Book Value 160,000
Difference $ (10,000.00)

Eliminations
Consolidated Balances
Credit
120,000
380,000
320,000
10,000 110,000
 120,000 0
10,000 0
930,000

220,000
400,000
80,000
200,000
30,000 30,000
170,000.00 930,000
a) Journal Entry
Investment in S Company 90,000.00
Common Stock 30,000.00
Other Contributed Capital 60,000.00

Other Contributed Capital 1,700

Cash 1,700

b) Computation and allocation difference

Parent Share Non - Controlling Share
Purchase Price and implied value 90,000
Less: Book Value of equity acquired:
Common Stock 40,000
Other contributed capital 24,000
Retained earnings 19,000
Total book value 83,000

Difference between implied and book value 7,000

Goodwill -7,000

c) Consolidated balance sheets for P and S

Balance Sheet P Company

Cash 73,000
Account Receivable 95,000
Inventory 58,000
Plant and equipment 95,000
Land 26,000
Goodwill
Investment in S company
Difference between Implied Value and Book Value
Total Assets 347,000

Accounts Payable 66,000

Notes Payable 82,000
Common Stock 100,000
Other Contributed Capital 60,000
Retained Earnings 39,000
Total Liabilities and Equity 347,000
 Implied Value = Book Value
Purchase Price 90,000
Percentage acquired 100%
Implied Value 90,000.00
Book Value 90,000
Difference -

Total Value
90,000

40,000
24,000
19,000
83,000

7,000
-7,000

Eliminations
Consolidat
ed
S Company Debit Credit Balances
13,000 1,700 84,300
19,000 114,000
25,000 83,000
43,000 138,000
22,000 48,000
7,000 7,000
 90,000 90,000 0
7,000 7,000 0
122,000 474,300

18,000 84,000
21,000 103,000
40,000 40,000 100,000
24,000 25,700.00 58,300
19,000 19,000 39,000
122,000 384,300