Problem 1

Shares issued
Par value
Selling price
Fair value of stock issued
Legal fees
Audit fees

Answer
#1 Computation of FV Identifiable Net Assets
Total FMV Assets
Total FMV Current Liabilities
FV of Identifiable Net Assets

#2 Computation of Goodwill (Bargain Purchase Element)

FV of Considerations Given
FV of Identifiable Net Assets
Goodwill

#3 Computation of Additional Paid In Capital

Number of shares issued
Issue price in excess of par value ($30-$10)

Less: Deferred stock issue costs

Increase in add paid in capital

Journal:
1 Merger/Acquisition Expense 30,000
Cash
To record cost related to acquisition of Sentinels

2 Deferred Stock Issue Costs 40,000

Cash
To record costs related to issuance of common stock

3 Cash and Receivables 100,000

Inventory 94,000
Building and Equipment 292,000
Goodwill 75,000
 Account Payables
Notes Payable
Common Stock
Additional Paid In Capital
Deferred Stock Issue Costs
To record purchase of Sentinels

1B PT Paper Acquired 15% of PT Sheet's Outstanding Stock

Date January 10th, 2X21
Number of Stocks Acquired 1500
$325,000

Equity
C/S, Par 250, outstanding 10.000 $2,500,000
RE $2,500,000
Total Equity $5,000,000

Journal:
- 10 Jan 2x21 Investment in PT Sheets

To record the purchase of PT Sheet's Stock

- 15 Jul 2x21 Cash

To record PT Sheet's 15% Dividend Payment of 70000

- 1 Oct 2x21 Cash

To Record PT Sheet's 15% Divide

- 31 Dec 2x21 <NO ENTRY>

To Record PT Paper 15% Shares on

- 31 Dec 2x21 Investment in PT Sheets

To Record The adjustment of the fai

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 15,000 Balance Sheet Historical Cost Fair Value
$10 Cash and Recei 100,000 100,000
$30 Inventory 142,000 94,000
$450,000 Building and E 561,000 292,000
$30,000 Less: Accumula -248,000.00  
$40,000 Total Assets 555,000 486,000
Account Payabl 67,000 67,000
Notes Payable 44,000 44,000
Common Stock ( 225,000  
Retained Earni 219,000  
Total Liabilitie 555,000 111,000

$486,000
111,000
  $375,000

ase Element)
$450,000 >> goodwill
$375,000 kalo fv consideration given << fv net asset jdnya bargain pur
    $75,000 bargain purchase saldo normal kredit

15,000
$20 (30-10)
300,000
$40,000
260,000

30,000

40,000

561,000
 67,000
44,000
150,000
260,000
40,000 561,000

$325,000
Cash $325,000

$10,500
Dividend Income $10,500

$7,500
Dividend Income $7,500

$150,000
Unrealized Gain - P/L $150,000
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
fv net asset jdnya bargain purchas
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
             
PAKE YG SEBELAH
Business Combination Stock Acquisition
Ownership 80% NCI 20%
Acquisition Date January 1, 20X8
Transaction Value 240,000
BV of Equity at Acquisition Date 300,000

Trial Balance for Pikachu Corp & Snorlax Company per 31 December 20X9:
Pikachu Corporation Snorlax Company
Accounts
Debit ($) Credit ($) Debit ($) Credit ($)
Cash 186,000 80,000
Accounts Receivable 165,000 65,000
Inventory 200,000 75,000
Investment in Snorlax Company 284,000 -
Land 200,000 100,000
Building & Equipment 700,000 200,000
COGS 200,000 125,000
Depreciation Expense 50,000 10,000
S&A Expenses 225,000 40,000
Dividends Declared 100,000 20,000
Accumulated Depreciation 450,000 20,000
Accounts Payable 103,000 60,000
Bonds Payable 200,000 85,000
Common Stock 500,000 200,000
Retained Earnings 197,000 100,000
Sales 800,000 250,000
Income from Snorlax 60,000 -
Total 2,310,000 2,310,000 715,000 715,000

PART 1
#1 FV of Consideration Given 240,000
BV at Acquisition Date 240,000 BV = Ownership * BV Equity
Differential -

#2 Sales 250,000 Sekop

COGS (125,000)
Gross Profit 125,000
Depreciation Expense (10,000)
S&A Expense (40,000)
Net Income 75,000
NI from Snorlax 60,000
Record Stock Acquisition on Jan 1, 2X28
Investment in Snorlax's Company 240,000
Cash 240,000

Record portion of Snorlax's Income

Investment in Snorlax's Stock 60,000
Income from Snorlax 60,000

Record portion of Dividend Declared by Snorlax

Cash 16,000
Investment in Snorlax's Stock 16,000 20.000 * 80%

Statement of Equity 20X9

Pikachu NCI =
80% 20%
BV of Equity, Jan 1 20X9 240,000 60,000
(+) Net Income, 20X9 60,000 15,000
(-) Dividend Declared, 20X9 (16,000) (4,000)
End. Investment, Dec 31 20X9 284,000 71,000 =

Eliminating Entries on December 31, 2X28

Record Elimination of investment on Pikachu BV with Equity on Snorlax BV
C/S 200,000
R/E 100,000
Income from Snorlax 60,000
NCI in Net Income of Snorlax 15,000
Dividend Declared 20,000
Investment in Snorlax Company 284,000 284,000
NCI in Net Assets of Snorlax 71,000

PART 2
Consolidation Worksheet Jan 1, 20X8
ELIMINATION ENTRIES
PIKACHU SNORLAX
dr
INCOME STATEMENT
Sales 800,000 250,000
COGS (200,000) (125,000)
Depreciation & Amortization Expense (50,000) (10,000)
S&A Expense (225,000) (40,000)
Income from Sekop 60,000 - 60,000
Consolidated Net Income 385,000 75,000 60,000
NCI in Net Income - - 15,000
Controlling Interest Net Income 385,000 75,000 75,000

RETAINED EARNINGS STATEMENT

R/E, Beg. 197,000 100,000 100,000
(+) Net Income 385,000 75,000 75,000
(-) Dividends (100,000) (20,000) -
R/E, End. 482,000 155,000 175,000

BALANCE SHEET
Cash 186,000 80,000
A/R 165,000 65,000
Inventory 200,000 75,000
Investment in Sekop's Stock 284,000 -
Land 200,000 100,000
Buildings & Equipment 700,000 200,000
(-) Acc. Depreciation (450,000) (20,000) -
Total Assets 1,285,000 500,000 -

A/P 103,000 60,000

B/P 200,000 85,000
C/S 500,000 200,000 200,000
R/E 482,000 155,000 175,000
NCI in Net Assets of Sekop Company - - -
Total Liabilities & Equity 1,285,000 500,000 375,000
 PAKE YG INI YA GUYS

V = Ownership * BV Equity
0.000 * 80%

Snorlax BV EQUITY
C/S R/E APIC
200,000 100,000 -
- 75,000 -
- (20,000) -
200,000 155,000 -

ELIMINATION ENTRIES
CONSILIDATED
cr

1,050,000
(325,000)
(60,000)
(265,000)
- -
- 400,000
 - -
- 400,000

197,000
385,000
20,000 (100,000)
20,000 482,000

266,000
230,000
275,000
284,000 -
300,000
- 900,000
- (470,000)
284,000 1,501,000

163,000
285,000
500,000
20,000 482,000
71,000 71,000
20,000 1,430,000
Business Combination
Ownership
Acquisition Date
Transaction Value
BV of Equity at Acquisition Date
FV of NCI

Trial Balance forPancake & Sushi Comp

Accounts
Cash
Accounts Receivable
Inventory
Land
Building & Equipment
Investment in Yuji's Stock
COGS
Depreciation Expense
S&A Expenses
Dividends Declared
Accumulated Depreciation
Accounts Payable
Bonds Payable
Common Stock
Retained Earnings
Sales
Income from Yuji
Total

PART 1
Considered Transferred
Considered Transferred
FV of NCI
FV of Considered Transferred
BV of Equity of Yuji Co.
Differential

PART 1
Record Stock Acquisition on Jan 1, 2028
Investment in Yuji's Company
Record portion of Sushi's Income
Investment in Yuji's Stock

Record portion of Dividend Declared by

Cash

PART 3
Investment, Jan 1 2X29
(+) Income from Sushi
(-) Dividend
Investment, Dec 31 2X29

PART 4
Yuji's Net Income
% NCI
Income for NCI

PART 5
Sales
COGS
Gross Profit
Depreciation Expense
S&A Expense
Net Income
Add : 100% NI of Yuji
Less : Portion of NCI
Income Controlling Interest

PART 2
Statement of Equity 20X1

BV of Equity, Jan 1 20X1

(+) Net Income, 20X1
(-) Dividend Declared, 20X1
End. Investment, Dec 31 20X1

Eliminating Entries on December 31, 20

Record Elimination of investment on Pa
C/S
R/E
Income from Yuji
NCI in Net Income of Yuji

Consolidation Worksheet Jan 1, 20X8

INCOME STATEMENT
Sales
COGS
Depreciation & Amortization Expense
S&A Expense
Income from Sushi
Consolidated Net Income
NCI in Net Income
Controlling Interest Net Income

RETAINED EARNINGS STATEMENT

R/E, Beg.
(+) Net Income
(-) Dividends
R/E, End.

BALANCE SHEET
Cash
A/R
Inventory
Investment in Sushi's Stock
Land
Buildings & Equipment
(-) Acc. Depreciation
Total Assets

A/P
B/P
C/S
R/E
NCI in Net Assets of Sushi Company
Total Liabilities & Equity
 Stock Acquisition
80% NCI 20%
January 1, 20X1
851,200
quisition Date 1,064,000
212,800

ancake & Sushi Company per 31 December 20X8:

Run Corporation Yuji Company
Accounts
Debit ($) Credit ($) Debit ($) Credit ($)
426,800 404,000
495,000 195,000
600,000 225,000
600,000 300,000
ent 2,100,000 600,000
s Stock 1,778,200 -
600,000 375,000
150,000 30,000
675,000 120,000
d 300,000 60,000
eciation 1,350,000 60,000
225,000 180,000
600,000 255,000
1,500,000 764,000
675,000 300,000
2,400,000 750,000
975,000 -
7,725,000 7,725,000 2,309,000 2,309,000

Sales 750,000
851,200 COGS (375,000)
212,800 Gross Profit 375,000
Transferred 1,064,000 Depreciation Expense (30,000)
(1,064,000) S&A Expense (120,000)
- Net Income 225,000

isition on Jan 1, 2028

's Company 851,200
 Cash 851,200

Sushi's Income
180,000
Income from Yuji 180,000 225.00 * 80%

Dividend Declared by Sushi

48,000
Investment in Yuji's Stock 48,000 60.000 * 80%

851,200
975,000
(48,000)
1,778,200

225,000
20%
45,000

2,400,000
(600,000)
1,800,000
(150,000)
(675,000)
975,000
225,000
(45,000)
g Interest 1,155,000

RUN NCI = YUJI BV EQUITY

80% 20% C/S
851,200 212,800 764,000
180,000 45,000 -
(48,000) (12,000) -
Dec 31 20X1 983,200 245,800 = 764,000

s on December 31, 20X8

n of investment on Pancake BV with Equity on Sushi BV
764,000
300,000
180,000
45,000
Dividend Declared 60,000
Investment in Yuji Company 983,200 983,200
NCI in Net Assets of Yuji 245,800
1,289,000 1,289,000
rksheet Jan 1, 20X8

PANCAKE SUSHI ELIMINATION ENTRIES

dr cr

2,400,000 750,000
(600,000) (375,000)
mortization Expense (150,000) (30,000)
(675,000) (120,000)
975,000 - 180,000 -
1,950,000 225,000 180,000 -
- - 45,000 -
st Net Income 1,950,000 225,000 225,000 -

NGS STATEMENT
675,000 300,000 300,000
1,950,000 225,000 225,000
(300,000) (60,000) - 60,000
2,325,000 465,000 525,000 60,000

426,800 404,000
495,000 195,000
600,000 225,000
1,778,200 - 983,200
600,000 300,000
2,100,000 600,000 -
(1,350,000) (60,000) - -
4,650,000 1,664,000 - 983,200

225,000 180,000
600,000 255,000
1,500,000 764,000 764,000
2,325,000 465,000 525,000 60,000
of Sushi Company - - - 245,800
4,650,000 1,664,000 1,289,000 60,000
5,946,800
YUJI BV EQUITY
R/E APIC
300,000 -
225,000 -
(60,000) -
465,000 -
CONSILIDATED

3,150,000
(975,000)
(180,000)
(795,000)
795,000
1,995,000
(45,000)
1,950,000

675,000
1,950,000
(300,000)
2,325,000

830,800
690,000
825,000
795,000
900,000
2,700,000
(1,410,000)
5,330,800

405,000
855,000
1,500,000
2,325,000
 245,800
5,330,800
Question
1. Equity method entries recorded by Blue Bird Co. related
2. Consolidation entries needed to prepare a full set of con
3. Three-part consolidation worksheet for December 31, 2
 Acquisition Date January 1, 20X8
Ownership 75%
FV Net Assets at Acquisition 266,500
BV Net Assets at Acquisition 227,500
Intercompany Payable 12,500

Fair value consideration of Blue Bird 210,250

FV of NCI 72,750
Book value of net assets 227,500
Total differential 55,500
Fair value differential (B&E) 39,000
Goodwill 16,500

*B&E depreciation (in years) 10

Depreciation per year 3,900

Trial Balance as of Dec 31, 20X9:

Blue Bird Co. Silver Bird
Item
Debit Credit Debit
Cash 100,000 59,200
Accounts Receivable 140,000 98,000
Inventory 72,500 100,000
Land 90,000 135,000
Buildings & Equipment 525,800 148,000
Investment in silver Co. 293,550
Cost of Goods Sold 415,000 280,000
Depreciation Expense 85,000 15,000
Other Expenses 122,000 84,000
Dividends Declared 45,000 30,000
Acc. Depreciation 152,000
Accounts Payable 198,000
Bonds Payable 138,500
Common Stock 300,000
Retained Earnings 389,950
Sales 650,550
Income from SIlver bird Co. 59,850
1,888,850 1,888,850 949,200

Equity method entries recorded by Blue Bird Co. related to its investment in Silver Bird during 20X9

Investment in Silver Bird 67,650 Net Income:

Income from Silver Bird 67,650
Record share of 20X9 NI from Silver Bird
 Cash 22,500
Investment in Silver Bird 22,500
Record share of 20X9 Dividend from Silver Bird

Income from Silver Bird 7,800 Goodwill impaired

Investment in Silver Bird 7,800 to:
Record amortization of excess differential

Consolidation entries needed to prepare a full set of consolidated financial statements for 20X9

Book Value Reconciliation

Blue bird Co. NCI =
Beginning BV (1/1/20X9) 217,500 72,500
(+) Net Income 67,650 22,550
(-) Dividends (22,500) (7,500)
Ending BV (31/12/20X9) 262,650 87,550

Excess Value (Differential) Calculation

blue Bird Co. NCI =
Beginning Balance (1/1/20X9) 38,700 12,900
(+/-) Changes (7,800) (2,600)
Ending Balance (31/12/20X9) 30,900 10,300

Basic Consolidation Entry

Common Stock 50,000
Retained Earning 240,000
Income from Silver Bird 67,650
NCI in NI of Silver Bird 22,550
Dividend Declared 30,000
Investment in Silver Bird 262,650
NCI in NA of Silver Bird 87,550
380,200 380,200
Amortized Excess Value Reclassification Entry
Depreciation Expense 3,900
Goodwill Impairment Loss 6,500
Income from Silver Bird 7,800
NCI in NI of Silver Bird 2,600

Excess Value (Differential) Reclassification Entry

Buildings & Equipment 39,000
Goodwill 10,000
Acc. Depreciation 7,800
 Investment in Silver Bird 30,900
NCI in NA of Silver Bird 10,300

Eliminate Intercompany Account:

Accounts Payable 12,500
Accounts Receivable 12,500

Three-part consolidation worksheet for December 31, 20X9

Elimination Entries
Blue Bird Co. Silver
dr.
INCOME STATEMENT
Sales 650,550 469,200
Cost of Goods Sold (415,000) (280,000)
Depreciation Expense (85,000) (15,000) 3,900
Other Expenses (122,000) (84,000)
Goodwill Impairment Loss 6,500
Income from Silver Bird 59,850 67,650
Consolidated NI 88,400 90,200 78,050
NCI in NI 22,550
Controlling Interest in NI 88,400 90,200 100,600

RETAINED EARNINGS STATEMENT

Retained Earnings, Beg 389,950 240,000 240,000
Add: Net Income 88,400 90,200 100,600
Less: Dividends (45,000) (30,000)
Retained Earnings, End 433,350 300,200 340,600

BALANCE SHEET
Cash 100,000 59,200
Accounts Receivable 140,000 98,000
Inventory 72,500 100,000
Land 90,000 135,000
Buildings & Equipment 525,800 148,000 39,000
Investment in Silver Bird Stock 293,550 -
Less: Accumulated Depretiation (152,000) (90,000)
Goodwill 10,000
Total Assets 1,069,850 450,200 49,000

Accounts Payable 198,000 30,000 12,500

Bonds Payable 138,500 70,000
Common Stock 300,000 50,000 50,000
Retained Earnings 433,350 300,200 340,600
NCI in NA of Silver Bird Stock
Total Liabilities & Equity 1,069,850 450,200 403,100
Silver Bird
Credit

90,000
30,000
70,000
50,000 -
240,000
469,200

949,200

90,200
 10,000

C/S R/E
50,000 240,000
90,200
(30,000)
50,000 300,200

Building & Eq. Acc. Depre Goodwill

39,000 (3,900) 16,500
(3,900) (6,500)
39,000 (7,800) 10,000
Elimination Entries
Consolidated
cr.

1,119,750
(695,000)
(103,900)
(206,000)
(6,500)
7,800 -
7,800 108,350
2,600 (19,950)
10,400 88,400

389,950
10,400 88,400
30,000 (45,000)
40,400 433,350

159,200
12,500 225,500
172,500
225,000
712,800
293,550 -
7,800 (249,800)
10,000
313,850 1,255,200

215,500
208,500
300,000
40,400 433,350
97,850 97,850
138,250 1,255,200
 Acquisition Date January 1, 20X8
Ownership 75%
FV Net Assets at Acquisition 252,500
BV Net Assets at Acquisition 227,500
Intercompany Payable 12,500

Fair value consideration of Biko 206,250

FV of NCI 68,750
Book value of net assets 227,500
Total differential 47,500
Fair value differential (B&E) 25,000
Goodwill 22,500

*B&E depreciation (in years) 10

Depreciation per year 2,500

Trial Balance as of Dec 31, 20X9:

Biko Group Co.
Item
Debit Credit
Cash 100,000
Accounts Receivable 140,000
Inventory 72,500
Land 90,000
Buildings & Equipment 525,800
Investment in Ismaya Co. 293,550
Cost of Goods Sold 415,000
Depreciation Expense 85,000
Other Expenses 122,000
Dividends Declared 45,000
Acc. Depreciation 152,000
Accounts Payable 198,000
Bonds Payable 138,500
Common Stock 300,000
Retained Earnings 389,950
Sales 650,550
Income from Ismaya Co. 59,850
1,888,850 1,888,850

1. Equity method entries recorded by Biko Group Co. related to its investment in Ismaya Co. during 20X9

Investment in Ismaya Co. 67,650

Income from Ismaya Co. 67,650
Record share of 20X9 NI from Ismaya Co.
 Cash 22,500
Investment in Ismaya Co. 22,500
Record share of 20X9 Dividend from Ismaya Co.

Income from Ismaya Co. 9,750

Investment in Ismaya Co. 9,750
Record amortization of excess differential

2. Consolidation entries needed to prepare a full set of consolidated financial statements for 20X9

Book Value Reconciliation

Biko NCI
Beginning BV (1/1/20X9) 217,500 72,500
(+) Net Income 67,650 22,550
(-) Dividends (22,500) (7,500)
Ending BV (31/12/20X9) 262,650 87,550

Excess Value (Differential) Calculation

Biko NCI
Beginning Balance (1/1/20X9) 33,750 11,250
(+/-) Changes (9,750) (3,250)
Ending Balance (31/12/20X9) 24,000 8,000

Basic Consolidation Entry

Common Stock 50,000
Retained Earning 240,000
Income from Ismaya Co. 67,650
NCI in NI of Ismaya Co. 22,550
Dividend Declared 30,000
Investment in Ismaya Co. 262,650
NCI in NA of Ismaya Co. 87,550

Amortized Excess Value Reclassification Entry

Depreciation Expense 2,500
Goodwill Impairment Loss 10,500
Income from Ismaya Co. 9,750
NCI in NI of Ismaya Co. 3,250

Excess Value (Differential) Reclassification Entry

Buildings & Equipment 25,000
Goodwill 12,000
Acc. Depreciation 5,000
 Investment in Ismaya Co. 24,000
NCI in NA of Ismaya Co. 8,000

Eliminate Intercompany Account:

Accounts Payable 12,500
Accounts Receivable 12,500

3. Three-part consolidation worksheet for December 31, 20X9

Biko Group Co. Ismaya Co.

INCOME STATEMENT
Sales 650,550 469,200
Cost of Goods Sold (415,000) (280,000)
Depreciation Expense (85,000) (15,000)
Other Expenses (122,000) (84,000)
Goodwill Impairment Loss
Income from Ismaya 59,850
Consolidated NI 88,400 90,200
NCI in NI
Controlling Interest in NI 88,400 90,200

RETAINED EARNINGS STATEMENT

Retained Earnings, Beg 389,950 240,000
Add: Net Income 88,400 90,200
Less: Dividends (45,000) (30,000)
Retained Earnings, End 433,350 300,200

BALANCE SHEET
Cash 100,000 59,200
Accounts Receivable 140,000 98,000
Inventory 72,500 100,000
Land 90,000 135,000
Buildings & Equipment 525,800 148,000
Investment in Ismaya Stock 293,550 -
Less: Accumulated Depretiation (152,000) (90,000)
Goodwill
Total Assets 1,069,850 450,200

Accounts Payable 198,000 30,000

Bonds Payable 138,500 70,000
Common Stock 300,000 50,000
Retained Earnings 433,350 300,200
NCI in NA of Ismaya Company
Total Liabilities & Equity 1,069,850 450,200
 Ismaya Co.
Debit Credit
59,200
98,000
100,000
135,000
148,000

280,000
15,000
84,000
30,000
90,000
30,000
70,000
50,000 -
240,000
469,200

949,200 949,200

ya Co. during 20X9

Net Income: 90,200 Investment in Sun Co.

Cash
Record the initial investment in Sun Co.
 Goodwill 12,000
impaired to:

nts for 20X9

= C/S R/E
50,000 240,000
90,200
(30,000)
50,000 300,200

= Building & Eq. Acc. Depre Goodwill

25,000 (2,500) 22,500 langsung dimasukin acc deprenya kare
(2,500) (10,500)
25,000 (5,000) 12,000
 Elimination Entries
Consolidated
dr. cr.

1,119,750
(695,000)
2,500 (102,500)
(206,000)
10,500 (10,500)
67,650 9,750 1,950
80,650 9,750 107,700
22,550 3,250 (19,300)
103,200 13,000 88,400

240,000 389,950
103,200 13,000 88,400
30,000 (45,000)
343,200 43,000 433,350

159,200
12,500 225,500
172,500
225,000
25,000 698,800
286,650 6,900
5,000 (247,000)
12,000 12,000
37,000 304,150 1,252,900

12,500 215,500
208,500
50,000 300,000
343,200 43,000 433,350
 95,550 95,550
405,700 138,550 1,252,900
 206,250
206,250
nt in Sun Co.
sung dimasukin acc deprenya karena buat 20x9