Omma Co purchases 80% of Agee Co shares on 31 December

2017 for 32.000 shares of Omma Co €10 par with the market
value of €15. Excess fair value over book value is assigned to
identifiable net assets and goodwill. Balance per the time before
acquisition stated as follows:

Omma Agee
Book Value Fair Value
Cash € 112,000 € 20,000 € 20,000
Net receivable 210,000 100,000 100,000
Inventory 34,000 80,000 80,000
Land 110,000 150,000 200,000
Equipment (3y life remains) 100,000 100,000 130,000
Buildings (10y life remains) 115,000 120,000 170,000
Patents 10,000 - -
Total assets € 691,000 € 570,000 € 700,000
Accounts payable € 41,000 € 130,000 € 300,000
Capital stock, $10 par 450,000 270,000
Retained earnings 200,000 170,000
Total liab. and equity € 691,000 € 570,000 € 300,000

BV FV Cost
ANSWERS: 440,000 400,000 600,000
Computations
Cost of 80% Agee 480,000
Implied value 600,000
Book value 440,000
Excess 160,000
Identifiable assets
Land 50,000
Equipment 30,000
Buildings 50,000 130,000
Remainder to goodwill 30,000

Noncontrolling interest 120,000

Journal Entries
to record issuance of shares in acquisition of Agee Co.
Investment in Agee 480,000
Capital stock 320,000
 Additional paid-in capital 160,000
to eliminate reciprocal subs. investment and equity balances,
establish NCI and enter unamortized excess
Capital stock 270,000
Retained earnings 170,000
Unamortized excess 160,000
Investment in Agee 480,000
Noncontrolling interest 120,000
to allocate the unamortized excess to identifiable assets and
goodwill
Land 50,000
Equipment 30,000
Buildings 50,000
Goodwill 30,000
Unamortized excess 160,000

Balance Sheet Workpapers at Date of Acquisition

ASSETS Omma 80% Agee Adjust. & Eliminat. Consolidated
Cash 112,000 20,000 132,000
Net receivable 210,000 100,000 310,000
Inventory 34,000 80,000 - 114,000
Land 110,000 150,000 50,000 310,000
Equipment 100,000 100,000 30,000 230,000
Buildings 115,000 120,000 50,000 285,000
Patents 10,000 10,000
Investment in Agee 480,000 480,000 -
Goodwill 30,000 30,000
Unamortized excess - - 160,000 160,000 -
1,171,000 570,000 1,421,000
LIAB. & EQUITY
Accounts payable 41,000 130,000 171,000
Capital stock, $10 pa 770,000 270,000 270,000 770,000
Additional paid-in ca 160,000 160,000 -
Retained earnings 200,000 170,000 170,000 200,000
1,171,000 570,000
Noncontrolling interest - 120,000 120,000
760,000 760,000 1,421,000
 Agee reports €38.000 net income for 2018 and declares dividends of €10.000 which
remains unpaid at Dec 31 2018 while Omma has paid all €6.000 dividends for the
year.
During 2018, Omma also sold merch that cost €64.000 to Agee for €80.000. Agee sold
all but €20.000 of this merch to its customer for €100.000.

ANSWERS:
Computations
Cost of 80% Agee 480,000
Implied value 600,000
Book value 440,000
Excess of BFV over BV 160,000
Identifiable assets
Land 50,000
Equipment 30,000
Buildings 50,000 130,000
Remainder to goodwill 30,000

Excess 2017 Amortization Excess 2018

Land 50,000 - 50,000
Equipment 30,000 10,000 20,000
Buildings 50,000 5,000 45,000
Goodwill 30,000 - 30,000
160,000 15,000 145,000

Omma 80% NCI 20% Total

Agee's net income 30,400 7,600 38,000
Amortization 12,000 3,000 15,000
Adjusted income 18,400 4,600 23,000
Dividends 8,000 2,000 10,000
Deferred profits 4,000
2018 2019
Sales 80,000 100,000
Cost of sales 64,000 80,000
Gross profit 16,000 20,000
Mark up 25% 25%
Remainder 20,000 30,000

Journal Entries
0 to record Agee's amortization, net income, and intercompany profits for 2018
 0
Investment in Agee 30,400 Noncontrolling interest
Income from Agee 30,400
Income from Agee 12,000 Noncontrolling interest share
Investment in Agee 12,000
Income from Agee 4,000
Investment in Agee 4,000
1 to adjust for errors & record the unpaid dividends
Dividend receivable 8,000
Investment in Agee 8,000
2 to eliminate intercompany sales and cost of sales
Sales 80,000
Cost of sales 80,000
to eliminate intercompany profit from cost of sales and inventory
Cost of sales 4,000
Inventory 4,000
3 to eliminate income & dividends from Agee and bring investment account to its beginning balance
Income from Agee 14,400
Dividends 8,000
Investment in Agee 6,400
4 to record NCI in Agee's earnings & dividends
Noncontrolling interest share 4,600
Dividends 2,000
Noncontrolling interest 2,600
5 to eliminate reciprocal investment & Agee's equity balances
Capital stock 270,000
Retained earnings 170,000
Unamortized excess 160,000
Investment in Agee 480,000
Noncontrolling interest 120,000
to allocate unamortized excess according to beginning-of-year balances
Land 50,000
Equipment 30,000
Buildings 50,000
Goodwill 30,000
Unamortized excess 160,000
6 to amortize FV over BV differentials
Expenses 15,000
Equipment 10,000
Buildings 5,000
7 to eliminate other reciprocal balances
Dividends payable 8,000
Dividends receivable 8,000
894,000 894,000

CONSOLIDATION WORKPAPERS ONE YEAR AFTER ACQUISITION

Income statement Omma Agee Adjust. & Eliminat. Consolidated
Sales 80,000 100,000 80,000 100,000
Income from Agee 18,400 14,400 4,000
Cost of sales - 64,000 - 60,000 4,000 80,000 - 48,000
Expenses - 10,000 - 2,000 15,000 - 27,000
Noncontrolling interest share 4,600 - 4,600
Controlling share o 24,400 38,000 24,400

Retained earnings statement

Retained earnings 200,000 200,000
Retained earnings - Agee 170,000 170,000 -
Controlling share o 24,400 38,000 24,400
Dividends - 6,000 - 10,000 10,000 - 6,000
Retained earnings - 218,400 198,000 218,400

Balance sheet
ASSETS
Cash 116,000 118,000 234,000
Net receivable 210,000 100,000 310,000
Inventory 34,000 20,000 4,000 50,000
Land 110,000 150,000 50,000 310,000
Equipment 100,000 100,000 30,000 10,000 220,000
Buildings 115,000 120,000 50,000 5,000 280,000
Patents 10,000 - 10,000
Investment in Agee 494,400 - 494,400 -
Dividends receivab - - 8,000 8,000 -
Goodwill - - 30,000 30,000
Unamortized exces - - 160,000 160,000 -
### 608,000 1,444,000
LIAB. & EQUITY
Accounts payable 41,000 130,000 171,000
Dividends payable 10,000 8,000 2,000
Capital stock, $10 770,000 270,000 270,000 770,000
Additional paid-in c 160,000 - 160,000
Retained earnings 218,400 198,000 218,400
### 608,000
Noncontrolling interest, Jan 1 120,000
Noncontrolling interest, Dec 31 - 2,600 122,600
894,000 894,000 1,444,000
ontrolling interest 7,600
Noncontrolling interest share 7,600
ontrolling interest share 3,000
Noncontrolling interest 3,000

o its beginning balance

 Agee reports €78.000 net income for 2019 and declares dividends of €30.000 which
remains unpaid at Dec 31 2019 while Omma has paid all €10.000 dividends for the year.
During 2019, Omma also sold merch that cost €80.000 to Agee for €100.000. Agee sold
all but €30.000 of this merch to its customer for €150.000.

ANSWERS: markup 25%

Computations
Cost of 80% Agee 480,000
Implied value 600,000
Book value 440,000
Excess of BFV over BV 160,000
Identifiable assets
Land 50,000
Equipment 30,000
Buildings 50,000 130,000
Remainder to goodwill 30,000

Excess 2018 Amortization Excess 2019

Land 50,000 - 50,000
Equipment 20,000 10,000 10,000
Buildings 45,000 5,000 40,000
Goodwill 30,000 - 30,000
145,000 15,000 130,000

Omma 80% NCI 20% Total

Agee's net income 62,400 15,600 78,000
Amortization 12,000 3,000 15,000
Adjusted income 50,400 12,600 63,000
Dividends 24,000 6,000 30,000

Deferred profits - 6,000 - 6,000

Recognized profits 4,000 4,000
Income recognized - 2,000 - 2,000

2018 2019
Sales 80,000 100,000
Cost of sales 64,000 80,000
Gross profit 16,000 20,000
Mark up 25% 25%
Remainder 20,000 30,000
Journal Entries
0 to record Agee's amortization, net income, and intercompany profits for 2019
Investment in Agee 62,400 Noncontrolling interest
Income from Agee 62,400
Income from Agee 12,000 Noncontrolling interest share
Investment in Agee 12,000
Income from Agee 2,000
Investment in Agee 2,000
1 to adjust for errors & record the unpaid dividends
Dividend receivable 24,000
Investment in Agee 24,000
2 to eliminate intercompany sales and cost of sales
Sales 100,000
Cost of sales 100,000
to eliminate intercompany profit from cost of sales and inventory
Cost of sales 6,000
Inventory 6,000
to adjust unrealized proft in the beginning inventory
Investment in Agee 4,000
Cost of sales 4,000
3 to eliminate income & dividends from Agee and bring investment account to its beginning balance
Income from Agee 48,400
Dividends 24,000
Investment in Agee 24,400
4 to record NCI in Agee's earnings & dividends
Noncontrolling interest share 12,600
Dividends 6,000
Noncontrolling interest 6,600
5 to eliminate reciprocal investment & Agee's equity balances
Capital stock 270,000
Retained earnings 198,000
Unamortized excess 145,000
Investment in Agee 490,400
Noncontrolling interest 122,600
to allocate unamortized excess according to beginning-of-year balances
Land 50,000
Equipment 20,000
Buildings 45,000
Goodwill 30,000
Unamortized excess 145,000
6 to amortize FV over BV differentials
Expenses 15,000
Equipment 10,000
Buildings 5,000
7 to eliminate other reciprocal balances
 7
Dividends payable 24,000
Dividends receivable 24,000

CONSOLIDATION WORKPAPERS TWO YEARS AFTER ACQUISITION

Income statement Omma Agee Adjust. & Eliminat. Consolidated
Sales 100,000 150,000 100,000 150,000
Income from Agee 50,400 48,400 2,000
Cost of sales - 80,000 - 70,000 6,000 104,000 - 52,000
Expenses - 10,000 - 2,000 15,000 - 27,000
Noncontrolling interest share 12,600 - 12,600
Controlling share 60,400 78,000 60,400

Retained earnings statement

Retained earnings 218,400 218,400
Retained earnings - Agee 198,000 198,000 -
Controlling share 60,400 78,000 60,400
Dividends - 10,000 - 30,000 30,000 - 10,000
Retained earnings 268,800 246,000 268,800

Balance sheet
ASSETS
Cash 118,000 118,000 236,000
Net receivable 210,000 158,000 368,000
Inventory 34,000 30,000 6,000 58,000
Land 110,000 150,000 50,000 310,000
Equipment 100,000 100,000 20,000 10,000 210,000
Buildings 115,000 120,000 45,000 5,000 275,000
Patents 10,000 - 10,000
Investment in Age 542,800 - 4,000 538,800 8,000
Dividends receivab - - 24,000 24,000 -
Goodwill - - 30,000 30,000
Unamortized exces - - 145,000 145,000 -
1,239,800 ### 1,505,000
LIAB. & EQUITY
Accounts payable 41,000 ### 171,000
Dividends payable - 30,000 24,000 6,000
Capital stock, $10 770,000 ### 270,000 770,000
Additional paid-in 160,000 - 160,000
Retained earnings 268,800 ### 268,800
1,239,800 ###
Noncontrolling interest, Jan 1 122,600
Noncontrolling interest, Dec 31 6,600 129,200
992,000 992,000 1,505,000
oncontrolling interest 15,600
Noncontrolling interest share 15,600
oncontrolling interest share 3,000
Noncontrolling interest 3,000

beginning balance
onsolidated