Chapter 4 Accounting For Business Combinations Solman

Chapter 4
Consolidated Financial Statements (Part 1)
PROBLEM 1: TRUE OR FALSE

1. FALSE - control
2. FALSE – The 20x1 consolidated profit includes only the profit
of Entity B from November 1 to December 31, 20x1.
3. FALSE – At each reporting date, goodwill is measured at
acquisition-date fair value less accumulated impairment losses.
4. TRUE – 200 x 10% = 20
5. TRUE (1,000 + 90* share of Entity A in the net change in Entity
B’s net assets) = 1,090
* (200 – 100) = 100 net change x 90% = 90
6. FALSE
7. TRUE
8. TRUE
9. TRUE (200 + 100) = 300
10. TRUE [200 + (80% of 100)] = 280
PROBLEM 2: FOR CLASSROOM DISCUSSION
1. Solution:
Health Group
Consolidated statement of financial position
As of January 1, 20x1
Cash (100K + 20K) 120,000

Accounts receivable (120K + 20K fair value) 140,000
Inventory (400K + 100K) 500,000
Investment in subsidiary (eliminated) -
Prepaid assets (30K + 10K) 40,000
Building, net (1.2M + 540K fair value) 1,740,000
Goodwill (see computations below) 140,000
Total assets 2,680,000
Accounts payable (70K + 90K) 160,000

Share capital (Parent only) 1,000,000
Share premium (Parent only) 350,000
Retained earnings (Parent only) 990,000
NCI (see computations below) 180,000
Total liabilities and equity 2,680,000
Consideration transferred (equal to Investment in

subsidiary) 560,000
NCI (600K (a) x 30%) 180,000
Previously held equity interest -
Total 740,000
Fair value of net identifiable assets acquired (a) (600,000)
Goodwill 140,000
(a)
Share capital 200,000
Share premium 50,000
Retained earnings 230,000
Net assets at carrying amount
480,000
Fair value adjustment (20K + 540K - 40K - 400K)
120,000
Fair value of net identifiable assets acquired 600,000
2. Solution:
Step 1: Analysis of subsidiary’s net assets

Net
Jan. 1,
Floyd Co. Dec. 31, 20x1 chang
20x1 e
Net assets at carrying amount 480,000 568,000*
Fair value adjustments (FVA) 120,000(a) 88,000(b)
Net assets at fair value 600,000 656,000 56,000
* (200K share capital + 50K share premium + 318K retained earnings) = 568K total
equity on 12/31/x1
(a)
FVA at acquisition date
Carrying Fair Fair value
amount value adjustment (FVA)
Inventory 100,000 110,000 10,000
Building, net 400,000 510,000 110,000
Totals 500,000 620,000 120,000
(b)
FVA at acquisition date less subsequent depreciation.
Depreciatio
FVA, 1/1/x1 Useful life FVA, 12/31/x1
n
Inventory 10,000 N/A * 10,000 -
Equipment 110,000 5 yrs. 22,000 88,000
Totals 120,000 32,000 88,000
* The entire inventory is assumed to have been sold during the year.
Step 2: Goodwill computation

subsidiary) 560,000
NCI (600K x 10%) 60,000
Total 620,000
Fair value of net identifiable assets acquired (600,000)
Goodwill 20,000
Step 3: Non-controlling interest in net assets
Subsidiary's net assets at fair value – Dec. 31, 20x1 (see Step 656,00
1) 0
Multiply by: NCI percentage 10%
Non-controlling interest in net assets – Dec. 31, 20x1 65,600
Step 4: Consolidated retained earnings

1,260,00
Parent's retained earnings – Dec. 31, 20x1 0
Parent's share in the net change in subsidiary's net
assets (d) 50,400
1,310,40
Consolidated retained earnings – Dec. 31, 20x1 0
(d)
Net change in Floyd’s net assets (See Step 1)
56,000
Multiply by: Pink’s interest in Floyd 90%
Pink’s share in the net change in Floyd’s net assets 50,400
Step 5: Consolidated profit or loss

Profits of Pink & Floyd (270K +
88K) 358,000
Depreciation of FVA (see Step 1) (32,000)
Consolidated profit 326,000
Owners of parent NCI Consolidated

Parent's profit before FVA 270,000 N/A 270,000
Share in Floyd's profit before FVA (e) 79,200 8,800 88,000
(28,800 (3,200
Depreciation of FVA (f) ) ) (32,000)
320,40
Totals 0 5,600 326,000
(e)
(88K x 90% = 79,200); (88K x 10% = 8,800).
(f)
(32K x 90% = 28,000); (32K x 10% = 3,200).
Pink Group
As of December 31, 20x1
ASSETS
Cash (620,000 + 120,000) 740,000
Accounts receivable (170,000 + 100,000) 270,000
Inventory (200,000 + 80,000 + 0 FVA net, Step 1) 280,000
Prepaid assets (10,000 + 8,000) 18,000
Investment in subsidiary (Eliminated)
Building, net (1,100,000 + 350,000 + 88,000 FVA net, Step 1,538,000
1)
Goodwill (Step 2) 20,000
TOTAL ASSETS 2,866,000
LIABILITIES AND EQUITY
Accounts payable (50,000 + 90,000) 140,000
Total liabilities 140,000
Retained earnings (Parent only – Step 4) 1,310,400
Owners of parent 2,660,400
Non-controlling interest (Step 3) 65,600
Total equity 2,726,000
TOTAL LIABILITIES AND EQUITY 2,866,000
Pink Group
Statement of profit or loss
For the year ended December 31, 20x1
Sales (600,000 + 200,000) 800,000
Cost of goods sold (200K + 60K + 10K dep’n. of FVA on
inventory) (270,000)
Gross profit 530,000
Depreciation expense (100K + 50K + 22K dep’n. of FVA on
bldg.) (172,000)
Distribution costs (30,000 + 2,000) (32,000)
Profit for the year 326,000
Profit attributable to:
Owners of the parent (Step 5) 320,400
Non-controlling interests (Step 5) 5,600
326,000
3. Solution:
Step 1: Analysis of subsidiary’s net assets (Same as #2)
Net
Jan. 1,
Floyd Co. Dec. 31, 20x1 chang
20x1 e
equity on 12/31/x1
(a)
Inventory 100,000 110,000 10,000
Building, net 400,000 510,000 110,000
Totals 500,000 620,000 120,000
(b)
Depreciatio
n
Inventory 10,000 N/A * 10,000 -
Equipment 110,000 5 yrs. 22,000 88,000
Totals 120,000 32,000 88,000

subsidiary) 560,000
Previously held equity interest in the acquiree -
Total 560,000
Less: Parent’s proportionate share in the net assets
of subsidiary (600,000 x 90%) – Step 1 (540,000)
Goodwill attributable to owners of the parent 20,000
Fair value of NCI 65,000
Less: NCI’s proportionate share in the net assets
Goodwill attributable to NCI 5,000
Goodwill – Dec. 31, 20x1 25,000
Reconciliation using regular formula:

subsidiary) 560,000
NCI 65,000
Total 625,000
Goodwill 25,000

656,00
Subsidiary's net assets at fair value – Dec. 31, 20x1 (Step 1) 0
Total 65,600
Add: Goodwill attributable to NCI (Step 2) 5,000
Step 4: Consolidated retained earnings (Same as #2)

1,260,00
assets (d) 50,400
1,310,40
(d)
Net change in Floyd’s net assets (See Step 1)
56,000
Multiply by: Pink’s interest in Floyd 90%
Pink’s share in the net change in Floyd’s net assets 50,400
Step 5: Consolidated profit or loss (Same as #2)

Profits of Pink & Floyd (270K +
88K) 358,000

Share in Floyd's profit before FVA (e) 79,200 8,800 88,000
(28,800 (3,200
320,40
Totals 0 5,600 326,000
(e)
(88K x 90% = 79,200); (88K x 10% = 8,800).
(f)
(32K x 90% = 28,000); (32K x 10% = 3,200).
Pink Group
ASSETS
Cash (620,000 + 120,000) 740,000
Prepaid assets (10,000 + 8,000) 18,000
Building, net (1,100,000 + 350,000 + 88,000 FVA net, Step 1,538,000
1)

Pink Group
Sales (600,000 + 200,000) 800,000
bldg.) (172,000)
326,000
PROBLEM 3: EXERCISES
1. Solution:
Sunny Group
ASSETS
Cash (80,000 + 50,000) 130,000
Inventory (400,000 + 80,000 fair value) 480,000
Land (600,000 + 250,000 fair value) 850,000

Non-controlling interest (see computations below) 120,000

subsidiary) 300,000
NCI (300K x 40%) 120,000
Total 420,000
Fair value of net identifiable assets (250K + 50K) (300,000)
Goodwill 120,000
2. Solution:
Hammer Group
ASSETS
Cash (160,000 + 10,000) 170,000
Inventory (400,000 + 100,000 fair value) 500,000
Building (1,000,000 + 400,000 fair value) 1,400,000

Non-controlling interest (see computations below) 120,000

subsidiary) 520,000
NCI (600K x 20%) 120,000
Total 640,000
Fair value of net identifiable assets (a) (600,000)
Goodwill 40,000
(a)
(200K share cap. + 100K share prem. + 180K ret. earnings + 20K FVA on inventory +
100K FVA on building) = 600K
3. Solution:
Net
Jan. 1,
Walk Co. Dec. 31, 20x1 chang
20x1 e
equity on 12/31/x1
(a)
Inventory 80,000 100,000 20,000
Building, net 300,000 400,000 100,000
Totals 380,000 500,000 120,000
(b)
Depreciatio
n
Inventory 20,000 N/A * 20,000 -
Equipment 100,000 10 yrs. 10,000 90,000
Totals 120,000 30,000 90,000

subsidiary) 520,000
NCI (600K x 20%) 120,000
Total 640,000
Goodwill 40,000

1) 0
131,60
Non-controlling interest in net assets – Dec. 31, 20x1 0

1,300,00
assets (d) 46,400
Consolidated retained earnings – Dec. 31, 20x1 1,346,40
0
(d)
Net change in Walk’s net assets (See Step 1)
58,000
Multiply by: Run’s interest in Walk 80%
Run’s share in the net change in Walk’s net assets 46,400

Profits of Run & Walk (420K +
88K) 508,000

Share in Walk's profit before FVA (e) 70,400 17,600 88,000
(24,000 (6,000
466,40 11,60
Totals 0 0 478,000
(e)
(88K x 80% = 70,400); (88K x 20% = 17,600).
(f)
(30K x 80% = 24,000); (30K x 20% = 6,000).
Run Group
ASSETS
Cash (750,000 + 258,000) 1,008,000
Building, net (950,000 + 250,000 + 90,000 FVA net, Step 1) 1,290,000

Run Group
Sales (800,000 + 200,000) 1,000,000
bldg.) (110,000)
478,000
4. Solution:
Net
Jan. 1,
Walk Co. Dec. 31, 20x1 chang
20x1 e
equity on 12/31/x1
(a)
Inventory 80,000 100,000 20,000
Building, net 300,000 400,000 100,000
Totals 380,000 500,000 120,000
(b)
Depreciatio
n
Inventory 20,000 N/A * 20,000 -
Equipment 100,000 10 yrs. 10,000 90,000
Totals 120,000 30,000 90,000

subsidiary) 520,000
Total 520,000
Goodwill – Dec. 31, 20x1 50,000

subsidiary) 520,000
NCI 130,000
Total 650,000
Goodwill 50,000

658,00
131,60
Total 0
0

1,300,00
assets (d) 46,400
1,346,40
(d)
Net change in Walk’s net assets (See Step 1)
58,000
Multiply by: Run’s interest in Walk 80%
Run’s share in the net change in Walk’s net assets 46,400

Profits of Run & Walk (420K +
88K) 508,000

Share in Walk's profit before FVA (e) 70,400 17,600 88,000
(24,000 (6,000
466,40 11,60
Totals 0 0 478,000
(e)
(88K x 80% = 70,400); (88K x 20% = 17,600).
(f)
(30K x 80% = 24,000); (30K x 20% = 6,000).
Run Group
ASSETS
Cash (750,000 + 258,000) 1,008,000
Building, net (950,000 + 250,000 + 90,000 FVA net, Step 1) 1,290,000

Run Group
Sales (800,000 + 200,000) 1,000,000
bldg.) (110,000)
478,000
5. Solution:
Net
Jan. 1,
Axion Co. Dec. 31, 20x1 chang
20x1 e
Net assets at carrying amount 290,000* 310,000
* (250K share capital + 40K retained earnings)
(a)
Inventory 120,000 80,000 (40,000)
Building, net 200,000 250,000 50,000
Totals 320,000 330,000 10,000
(b)
Depreciatio
n
Inventory (40,000) N/A (40,000) -
Equipment 50,000 5 yrs. 10,000 40,000
Totals 10,000 (30,000) 40,000

Consideration transferred 300,000
NCI (300K x 40%) 120,000
Total 420,000
Fair value of net identifiable assets acquired (Step 1) (300,000)
Goodwill 120,000

1) 0
140,00

Parent's retained earnings – Dec. 31, 20x1 243,000
Parent's share in the net change in subsidiary's net assets 30,00
(d)
0
Consolidated retained earnings – Dec. 31, 20x1 273,000
(d)
Net change in Axion’s net assets (See Step 1)
50,000
Multiply by: 60%
Joy’s share in the net change in Axion’s net assets 30,000

Profits of Joy & Axion (63K + 20K) 83,000
Depreciation of FVA (see Step 1) 30,000

Share in Axion's profit before FVA (e) 12,000 8,000 20,000
Depreciation of FVA (f) 18,000 12,000 30,000
93,00 20,00
Totals 0 0 113,000
(e)
(20K x 60% = 12,000); (20K x 40% = 8,000).
(f)
(-30K x 60% = 18,000); (-30K x 40% = 12,000).
Joy Group
ASSETS
Cash (143,000 + 60,000) 203,000
Building, net (560,000 + 160,000 + 40,000 FVA net, Step 1) 760,000

Retained earnings (Parent only – Step 4) 273,000
Joy Group
Sales (300,000 + 120,000) 420,000
Cost of goods sold (165K + 72K - 40K dep’n. of FVA on
bldg.) (60,000)
113,000
6. Solution:
Net
Jan. 1,
Axion Co. Dec. 31, 20x1 chang
20x1 e
* (250K share capital + 40K retained earnings)
(a)
Inventory 120,000 80,000 (40,000)
Building, net 200,000 250,000 50,000
Totals 320,000 330,000 10,000
(b)
Depreciatio
n
Inventory (40,000) N/A (40,000) -
Equipment 50,000 5 yrs. 10,000 40,000
Totals 10,000 (30,000) 40,000

Total 300,000
Goodwill – Dec. 31, 20x1 132,000

NCI 132,000
Total 432,000
Goodwill 132,000
350,00
140,00
Total 0
152,00

(d)
0
(d)
Net change in Axion’s net assets (See Step 1)
50,000
Multiply by: 60%
Joy’s share in the net change in Axion’s net assets 30,000

Profits of Joy & Axion (63K + 20K) 83,000
Depreciation of FVA (see Step 1) 30,000

Share in Axion's profit before FVA (e) 12,000 8,000 20,000
Depreciation of FVA (f) 18,000 12,000 30,000
93,00 20,00
Totals 0 0 113,000
(e)
(20K x 60% = 12,000); (20K x 40% = 8,000).
(f)
(-30K x 60% = 18,000); (-30K x 40% = 12,000).
Joy Group
ASSETS
Cash (143,000 + 60,000) 203,000
Building, net (560,000 + 160,000 + 40,000 FVA net, Step 1) 760,000

Joy Group
Sales (300,000 + 120,000) 420,000
Cost of goods sold (165K + 72K - 40K dep’n. of FVA on
bldg.) (60,000)
113,000
PROBLEM 4: MICROSOFT EXCEL

NOTE: This activity is OPTIONAL as the learner will need to
have access to a COMPUTER with a Microsoft Excel ®
application installed in it.
1. Open a Microsoft Excel® Worksheet and copy the following:
 To place commas on the amounts or increase/decrease

decimal places, use these buttons.
2. Make your table look like this:

*The shortcut for bold is CTRL+B, while the shortcut for italic is CTRL+I.
③ To insert rows, place your cursor on a row (like this)…..

…right click, a dropdown list appears, select ‘Insert’ from that list.
④ To get the total of Parent’s assets, you can do any of the

following:
a. Select cell B8 then left click “AutoSum” (located on the
“Home” tab, “Editing” menu bar) - this one; or
b. Select cell B8 then type the following formula =sum(B2:B7)

 To check a formula, select the cell with the formula (e.g., cell
B8) then press the ‘F2’ key on the keyboard.
 To get the total of Subsidiary’s assets, you can copy the
formula in cell B8 and paste it on cell C8, for example, select
cell B8 then press CTRL+C (shortcut for copy), select cell C8
then press CTRL+V (shortcut for paste).
 Get the totals of Parent’s and Subsidiary’s liabilities and
equity.
CONSOLIDATION PROCEDURES
Step 1: Eliminate the investment in subsidiary account by:
a. Measuring the subsidiary’s assets and liabilities at their
acquisition-date fair values;
b. Recognizing the goodwill; and
c. Replacing the subsidiary’s equity accounts with the NCI in
net assets.
Additional information:
 Subsidiary’s assets and liabilities approximate their
acquisition-date fair values, except for the following:
- Inventory, ₱5,000
- Land, ₱300,000
 The goodwill is ₱30,000.
 The NCI is ₱50,000.
Step 1: Type zero for investment in subsidiary in the ‘Consolidated’

column.
Step 1(a):
 Select cell D4 then type =B4+5000. Press enter.
 Select cell D6 then type =B6+300000. Press enter.
Step 1(b): Type 30000 for goodwill in the ‘Consolidated’ column.
Step 1(c): Type 50000 for NCI in the ‘Consolidated’ column.
At this point, your table should look like this:
Step 2: Add, line by line, similar items of assets and liabilities of

the combining entities.
 Select cell D2 then type =B2+C2. Press enter.
 Copy the formula in cell D2 (select cell D2 then press CTRL+C
on your keyboard).
 Go to cell D3 and paste the formula (CTRL+V).
 Go to cell D10 and press CTRL+V.
 Select cell D11 then type =B11. Press enter.
 Copy the formula in cell D11 and paste it on cell D12 and cell
D13.
 Get the totals of assets and liabilities and equity in the
‘Consolidated’ columns. These should be equal.
Your table should look like this:
Print the file and submit it to your teacher for grading.

PROBLEM 5: MULTIPLE CHOICE - THEORY
1. A
2. C
3. B
4. D
Explanation: Only in choice (d) that Entity A has all the elements of
control:
1. Power – “Entity A is the ultimate boss of Entity B.”
2. Variable return – Entity A “earns profit the most if Entity B
earns profit, but suffers the most if Entity B incurs.”
3. Ability to affect return – “Entity A makes all the major
decisions.”
5. D
6. A
Explanation: Consolidation is applied prospectively. Therefore,
Entity B’s profit will be consolidated starting January 1, 20x2.
However, Entity B’s statement of financial position will be
included in the December 31, 20x1 consolidated financial
statements.
7. B
8. D
9. B
10. A
PROBLEM 6: MULTIPLE CHOICE – COMPUTATIONAL
1. B
Solution:
Total assets of parent (1,296,000 + 360,000) 1,656,000
Total assets of subsidiary 444,000
Investment in subsidiary (360,000)
Fair value adjustments – net (310,000 – 348,000) (38,000)
Goodwill – net (see computation below) 290,000
Consolidated total assets 1,992,000

subsidiary) 360,000
NCI 240,000
Total 600,000
Goodwill 290,000
2. B
Solution:
Total assets of parent 2,000,000
Fair value adjustments – net 50,000
Goodwill – net (see computation below) 110,000

subsidiary) 430,000
NCI (400K x 20%) 80,000
Total 510,000
Fair value of net identifiable assets acquired
(310K + 40K + 50K FVA) (400,000)
Goodwill 110,000
3. B
Solution:
Owners of parent: (1M share cap. + 250K ret. earnings) = 1.25M
NCI: (see solution in preceding question)
4. D
Solution:
Net
Jan. 1,
Dec. 31, 20x1 chang
20x1 e
Net assets at carrying amount 296,000 376,000
(a)
Inventory 92,000 124,000 32,000
Equipment, net 160,000 192,000 32,000
Totals 252,000 316,000 64,000
(b)
Depreciatio
n
Inventory 32,000 N/A 32,000 -
Equipment 32,000 4 yrs. 8,000 24,000
Totals 64,000 40,000 24,000
5. A
Solution:
Consideration transferred (equal to invest. in subs.) 300,000
NCI (360K x 20%) 72,000
Total 372,000
Goodwill 12,000
6. D - None because NCI is measured at ‘proportionate share’.

7. C
Solution:
Total assets of subsidiary+ 496,000
Fair value adjustments – net (See Step 1 above) 24,000
Goodwill – net (See Step 2 above) 12,000
8. B
Solution:
1) 0
9. C
Solution:
(d)
0
(d)
Net change in subsidiary’s net assets (See Step 1)
40,000
Multiply by: 80%
Parent’s share in the net change in Subsidiary’s net
32,000
assets
10. C
Solution:
Share capital (Parent only) 940,000
11. C
Solution:
Profits of parent & subsidiary (600K + 680,00
80K) 0
(40,000
Depreciation of FVA (see Step 1) )
640,00
Consolidated profit 0

Share in sub.'s profit before FVA (e) 64,000 16,000 80,000
(32,000 (8,000
632,00
Totals 0 8,000 640,000
(e)
(80,000 x 80% = 64,000); (80K x 20% = 16,000)
(f)
(40,000 x 80% = 32,000); (40K x 20% = 8,000)
12. B See Step 5
13. B
Solution:
Net
Jan. 1,
Dec. 31, 20x1 chang
20x1 e
Fair value adjustments (FVA) (38,000)(a) 8,750 (a)
*300,000 share capital + 48,000 retained earnings on 1/1/x1 = 348,000 carrying amount
(a)
FVA – Useful FVA –
Dep’n
1/1/x1 life 12/31/x1
Inventory (96K – 144K) (48,000) N/A (48,000) -
Building – net (250K – 240K) 10,000 8 1,250 8,750
(46,750 8,750
Totals (38,000) )

subsidiary) 360,000
Total 360,000
Goodwill – Dec. 31, 20x1 290,000

NCI 240,000
Total 600,000
Goodwill 290,000
14. C
Solution:
Investment in subsidiary (equal to the consideration
transferred) (360,000)
Fair value adjustments – net (Step 1) 8,750
Goodwill – net (Step 2) 290,000
15. A
Solution:
426,75
170,70
Total 0
116,00
Add: Goodwill attributable to NCI (Step 2) 0
286,70
16. A
Solution:
(d)
0
(d)
Net change in subsidiary’s net assets (See Step 1)
116,750
Multiply by: 60%
Parent’s share in the net change in Sub.’s net assets 70,050

17. B
Solution:
COS of parent & subsidiary (200K +
80K) 280,000
Depreciation of FVA on inventory (see (48,00
Step 1) 0)
Consolidated cost of sales 232,000
The depreciation of FVA is deducted because the carrying amount
exceeded the fair value. This is the opposite of the illustration in
the text where the fair value exceeded the carrying amount.
18. A
Solution:
Other operating expenses of parent & 600,
subsidiary (400K + 200K) 000
Depreciation of FVA on building (see Step 1,
1) 250
601,
Consolidated other operating expenses 250
19. A
Solution:
Profits of parent & subsidiary (100K + 170,00
70K) 0
46,75
Depreciation of FVA (see Step 1) 0
216,75
Consolidated profit 0

100,00
Parent's profit before FVA 0 N/A 100,000
28,00
Share in sub.'s profit before FVA (e) 42,000 0 70,000
18,70
Depreciation of FVA (f) 28,050 0 46,750
170,05 46,70
Totals 0 0 216,750
(e)
(70K x 60% = 42,000); (70K x 40% = 28,000)
(f)
(46,750 x 60% = 28,050); (46,750 x 40% = 18,700)
20. D See Step 5

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Chapter 4

Consolidated Financial Statements (Part 1)

PROBLEM 1: TRUE OR FALSE

Cash (100K + 20K) 120,000

Accounts payable (70K + 90K) 160,000

Consideration transferred (equal to Investment in

Step 1: Analysis of subsidiary’s net assets

Step 2: Goodwill computation

Step 4: Consolidated retained earnings

Step 5: Consolidated profit or loss

Owners of parent NCI Consolidated

Step 2: Goodwill computation

Reconciliation using regular formula:

Step 3: Non-controlling interest in net assets

Step 4: Consolidated retained earnings (Same as #2)

Step 5: Consolidated profit or loss (Same as #2)

Owners of parent NCI Consolidated

LIABILITIES AND EQUITY

LIABILITIES AND EQUITY

Consideration transferred (equal to Investment in

LIABILITIES AND EQUITY

Consideration transferred (equal to Investment in

Step 2: Goodwill computation

Step 3: Non-controlling interest in net assets

Step 4: Consolidated retained earnings

Step 5: Consolidated profit or loss

Owners of parent NCI Consolidated

LIABILITIES AND EQUITY

Step 2: Goodwill computation

Consideration transferred (equal to Investment in

Reconciliation using regular formula:

Step 3: Non-controlling interest in net assets

Step 4: Consolidated retained earnings (Same as #3)

Step 5: Consolidated profit or loss (Same as #3)

Owners of parent NCI Consolidated

LIABILITIES AND EQUITY

Step 2: Goodwill computation

Step 3: Non-controlling interest in net assets

Step 4: Consolidated retained earnings

Step 5: Consolidated profit or loss

Owners of parent NCI Consolidated

LIABILITIES AND EQUITY

Step 2: Goodwill computation

Reconciliation using regular formula:

Consideration transferred 300,000

Step 4: Consolidated retained earnings (Same as #5)

Step 5: Consolidated profit or loss (Same as #5)

Owners of parent NCI Consolidated

LIABILITIES AND EQUITY

PROBLEM 4: MICROSOFT EXCEL

1. Open a Microsoft Excel® Worksheet and copy the following:

 To place commas on the amounts or increase/decrease

2. Make your table look like this:

③ To insert rows, place your cursor on a row (like this)…..

④ To get the total of Parent’s assets, you can do any of the

b. Select cell B8 then type the following formula =sum(B2:B7)

Step 1: Type zero for investment in subsidiary in the ‘Consolidated’

Step 1(b): Type 30000 for goodwill in the ‘Consolidated’ column.

Step 1(c): Type 50000 for NCI in the ‘Consolidated’ column.

At this point, your table should look like this:

Step 2: Add, line by line, similar items of assets and liabilities of

Your table should look like this:

Print the file and submit it to your teacher for grading.