ARDIENTE, JULIA OLIVE

PROBLEM 1

1. Journal Entries
Investment in Subsidiary 360,000
Cash 360,000

Retained Earnings 41,400

Cash 41,400

2. Allocation Excess
a. Proportionate Goodwill
FV Consideration Transferred 360,000
Less: BV
Common Stock 240,000
Paid In Capital 24,000
Retained Earnings 96,000
360*80% 288,000
Allocation Excess 72,000
Less: FV adjustments
Inventory 18,000
Land 72,000
Building & Equipment (12,000)
Premium on B. P. (42,000)
36*80% 28,800
Goodwill 43,200

FVCT + NCI = FVNA + GW

360 79.2 396 43.2

b. Full Goodwill
FV Consideration Transferred 360,000
Non controlling interest 90,000
TOTAL 450,000
Less: BV
Common Stock 240,000
Paid In Capital 24,000
Retained Earnings 96,000 360,000
Allocation Excess 90,000
Less: FV adjustments
Inventory 18,000
Land 72,000
Building & Equipment (12,000)
Premium on B. P. (42,000) 36,000
Goodwill 54,000

FVCT(80%) + NCI(20%) = FVNA + GW

360 90 396 54
3. Working Paper Eliminating Entries

a. Proportionate Goodwill
1. Common Stock 240,000
Paid In Capital 24,000
Retained Earnings 96,000
Investment in Subsidiary 288,000
Non controlling Interest 72,000

2. Inventory 18,000
Land 72,000
Accum. Depreciation 360,000
Goodwill 43,200
Building & Equipment 372,000
Premium On BP 42,000
Non controlling Interest 7,200
Investment in Subsidiary 72,000

b. Full Goodwill
1. Common Stock 240,000
Paid In Capital 24,000
Retained Earnings 96,000
Investment in Subsidiary 288,000
Non controlling Interest 72,000

2. Inventory 18,000
Land 72,000
Accum. Depreciation 360,000
Goodwill 54,000
Building & Equipment 372,000
Premium On BP 42,000
Non controlling Interest 18,000
Investment in Subsidiary 72,000

4Consolidated Working Paper

a. Partial Goodwill Approach

Eliminating Entries Consolidated

Assets P Co. S Co. Balances
  Book Value Book Value   Dr   Cr  
Cash 18,600.00 60,000.00         78,600.00
Accounts
90,000.00 60,000.00
receivable         150,000.00
Inventory 120,000.00 72,000.00 (2) 18,000.00     210,000.00
Land 210,000.00 48,000.00 (2) 72,000.00     330,000.00
Buildings and
960,000.00 720,000.00   (2)
equipment   372,000.00 1,308,000.00
Accumulated
-480,000.00 -360,000.00 (2)
Depreciation 360,000.00     -480,000.00
Goodwill     (2) 43,200.00     43,200.00
Investment in
(1)
Subsidiary 360,000.00       288,000.00  
          (2) 72,000.00  
Total Assets 1,278,600.00 600,000.00         1,639,800.00
               
Accounts
120,000.00 120,000.00
payable         240,000.00
Bonds Payable 240,000.00 120,000.00         360,000.00
Premium on
(2)
Bonds Payable         42,000.00 42,000.00
Common
600,000.00 240,000.00 (1) 240,000.00
Stock, P10 par     600,000.00
Paid in Capital 60,000.00 24,000.00 (1) 24,000.00     60,000.00
Retained
258,600.00 96,000.00 (1) 96,000.00
Earnings     258,600.00
NCI         (1) 72,000.00 79,200.00
          (2) 7,200.00  
Liabilities and
SHE 1,278,600.00 600,000.00         1,639,800.00

b. Full Goodwill Approach

Eliminating Entries Consolidated

Assets P Co. S Co. Balances
  Book Value Book Value   Dr   Cr  
Cash 18,600.00 60,000.00         78,600.00
Accounts receivable 90,000.00 60,000.00         150,000.00
Inventory 120,000.00 72,000.00 (2) 18,000.00     210,000.00
Land 210,000.00 48,000.00 (2) 72,000.00     330,000.00
Buildings and
960,000.00 720,000.00   (2)
equipment   372,000.00 1,308,000.00
Accumulated -
-480,000.00 (2)
Depreciation 360,000.00 360,000.00     -480,000.00
Goodwill     (2) 54,000.00     54,000.00
Investment in
(1)
Subsidiary 360,000.00       288,000.00  
          (2) 72,000.00  
Total Assets 1,278,600.00 600,000.00         1,650,600.00
               
Accounts payable 120,000.00 120,000.00         240,000.00
Bonds Payable 240,000.00 120,000.00         360,000.00
Premium on Bonds
(2)
Payable         42,000.00 42,000.00
Share Capital, P10 600,000.00 240,000.00 (1) 240,000.00     600,000.00
 par
Share Premium 60,000.00 24,000.00 (1) 24,000.00     60,000.00
Retained Earnings 258,600.00 96,000.00 (1) 96,000.00     258,600.00
NCI         (1) 72,000.00 90,000.00
          (2) 18,000.00  
Liabilities and SHE 1,278,600.00 600,000.00         1,650,600.00

5. Compute the Non-controlling interest on acquisition

a. Partial Goodwill Approach

BV
Common Stock 240,000
Paid In Capital 24,000
Retained Earnings 96,000

Add: FV adjustments

Inventory 18,000
Land 72,000
Building & Equipment (12,000)
Premium on B. P. (42,000)
FV Net Assets 396,000
Multiply: % of NCI 20%
Non-controlling Interest 79,200

b. Full Goodwill Approach

FVCT 360,000
Divide: % .80
Total 450,000
Multiply: % of NCI 20%
Non-controlling Interest 90,000

6. Prepare the consolidated balance sheet immediately after acquisition.

a. Partial Goodwill Approach

P Co. & Subsidiaries

Consolidated Financial Statement

As of January 1, 2021

Assets
Cash 78,600.00

Accounts receivable 150,000.00

Inventory 210,000.00
 Land 330,000.00

Buildings and equipment (net) 828,000.00

Goodwill 43,200.00

Total Assets 1,639,800.00

Liabilities and SHE

Liabilities
Accounts payable 240,000.00

Bonds Payable 360,000.00

Premium on Bonds Payable 42,000.00 402,000.00

Total Liabilities 642,000.00

SHE
Common Stock, P10 par 600,000.00

Paid in Capital 60,000.00

Retained Earnings 258,600.00

Parent's SHE (80%) 918,600.00

NCI (20%) 79,200.00

Total SHE 997,800.00

Liabilities and SHE 1,639,800.00

b. Full Goodwill Approach

P Co. & Subsidiaries

Consolidated Financial Statement

As of January 1, 2021

Assets
Cash 78,600.00

Accounts receivable 150,000.00

Inventory 210,000.00

Land 330,000.00

Buildings and equipment (net) 828,000.00

Goodwill 54,000.00

Total Assets 1,650,600.00

 Liabilities and SHE

Liabilities
Accounts payable 240,000.00

Bonds Payable 360,000.00

Premium on Bonds Payable 42,000.00 402,000.00

Total Liabilities 642,000.00

SHE
Common Stock, P10 par 600,000.00

Paid in Capital 60,000.00

Retained Earnings 258,600.00

Parent's SHE (80%) 918,600.00

NCI (20%) 90,000.00

Total SHE 1,008,600.00

Liabilities and SHE 1,650,600.00

7. In relation to No. 6 requirement and using Partial Goodwill (Proportionate Basis): determine the following
consolidated amounts: 
a) total assets; 1,639,800.00
(b) total liabilities; 642,000.00
(c) Ordinary share/Common stock; 600,000.00
(d) Share premium/additional paid-in capital; 60,000.00
(e) Accumulated profit/Common stock (Retained earnings). 258,600.00

8. In relation to No. 6 requirement and using Full-Goodwill (Fair Value Basis) Approach: determine the
following consolidated amounts:
(a) total assets; 1,650,600.00
(b) total liabilities; 642,000.00
(c) Ordinary share/Common stock; 600,000.00
(d) Share premium/additional paid-in capital; 60,000.00
(e) Accumulated profit/Common stock (Retained earnings). 258,600.00
Problem 2
1. Journal Entries
Investment in Subsidiary 372,000
Cash 372,000

Cash 28,800
Dividend Income 28,800

2. Allocation Excess - Proportionate Goodwill

FV Consideration Transferred (80%) 372,000

Less: BV
Common Stock 240,000
Retained Earnings 120,000
360*80% 288,000
Allocation Excess 84,000
Less: FV adjustments
Inventory 6,000
Land 7,200
Equipment 96,000
Accum. Depre. Building (24,000)
Discount on B. P. 4,800
90*80% 72,000
Goodwill 12,000

FVCT + NCI = FVNA + GW

372 90 450 12

3. Working paper eliminating entries for 2021 for the purpose of preparing consolidated balance sheet.

1. Common Stock 240,000

Retained Earnings 120,000
Investment in Subsidiary 288,000
Non-controlling Interest 72,000

2. Inventory 6,000
Land 7,200
Accumulated Depre- Equipment 96,000
Accumulated Depre- Building 192,000
Discount on Bonds Payable 4,800
Goodwill 12,000
Building 216,000
Investment in Subsidiary 84,000
Non-controlling Interest 18,000

3. Cost of Goods Sold 6,000

Depreciation Expense- Equip (12k – 6k) 6,000
Accum. Depreciation- Building 6,000
 Interest Expense (4,800/4) 1,200
Impairment Loss – Goodwill (3,750*.8) 3,000
Inventory 6,000
Accumulated Depreciation – Equip . 12,000
Discount on Bonds Payable 1.200
Goodwill 3,000

GW-P 3,000 3K/.8

GW-NCI 750
FULL GW 3,750

4. Dividend Income 28,800

Non-controlling Interest 7,200
Dividend Paid 36,000

5. Non-controlling Interest in Net Income of Subsidiary 9,360

Non-controlling Interest 9,360

4. Consolidated workpaper on December 31, 2021

5. Determine the following items for January 1, 2021:

a. Consolidated Retained Earnings

P CO 168,000

S. CO 60,000

TOTAL CONSO NI 228,000

Less: FVA

NCI – NI 8610

ADJ. 13,200

IL-GW 3750 25,560

CI -NI(CONSO) 202,440

Add: NCI – NI 9,360

CONSO. NI 211,800

OR

S. CO NI 60,000

ADJ. (13,200)
 IL (3,750)

S. CO TOTAL 43,050

% .80

CI – NI 34,440

P. CO NI 168,000

FNI – P. CO 202,440

NCI – NI 9360

CONSO NI 211,800

RE, b – P.CO 360,000

Add: Conso CI – NI 202,400
Total 562,400
Less: Div Paid 72,000
Conso. RE 490,400

b. NCI
Partial Goodwill Approach
BV
Common Stock 240,000
Retained Earnings 120,000

Add: FV adjustments

Inventory 6,000
Land 7,200
Equipment 96,000
Accum. Depre. Building (24,000)
Discount on B. P. 4,800
FV Net Assets 450,000
Multiply: % of NCI 20%
Non-controlling Interest 90,000

c. Consolidated SHE

6. Determine the following items for December 31, 2021:

a. Controlling Interest in Consolidated Net Income

b. Non-controlling Interest in Consolidated Net Income

NI – S. Co

Sales 240,000
 Less: COGS 138,000

GP 102,000

Less: OPEX:

Dep.Exp 24,000

Other Exp 18,000

Net Income from Separate Operation 60,000

Adjustments (13,200) = COGS 6,000 + DE 6,000 + Int. Exp 1,200

Total 46,800

NCI (20%) x.20

Non-controlling Interest – Net Income 9,360

Consolidated Net Income

d. Consolidated Retained Earnings

e. Non-Controlling Interests

f. Consolidated Stockholders’ Equity