Purchase price and implied value

Less : Book value of equity acquired :

Difference beetwen implied and book value
Record new goodwil
Balance
Initial purchase price (30,000 shares at $12.17/shares) $365,000
Changed in retained earnings of Serena Comp since acquisition 10% :
10 x ( 560.000 - 260.000 ) 2,800,000
Cost of investment $ 700,000
Less : Excess cost allocated to the land $ 20,000
Book value acquired ( 90% ) $ 680,000

Total stockholders' equity - Set Company ($680.000/80%) $ 850,000

Less: Retained earnings, 1/1/09 $ 200,000
Common stock, Set Company, 1/1/09 $ 650,000
Computation and Allocation of Difference between Implied and Book Value Acquired
Parent Share NCI Share Total value
80% 20% 100%
Purchase price and implied value $700.000 $175.000 $875.000
Less : Book value of equity acquired : $680.000 $170.000 $850.000
Difference beetwen implied and book value $20.000 $5.000 $25.000
Record new goodwil -$20.000 -$5.000 -$25.000
Balance $0 $0 $0
Dividend Income (80% x 50.000) $40.000
Dividends Declared - Set Company $40.000

Common Stock - Set Company ($850.000 –

$200,000) $650.000
Retained Earnings 1/1/09 - Set Company
$200.000
Difference between $25.000
Investment in Set Company $700.000
Noncontrolling Interest $175.000

Land $25.000
Difference between Implied and Book Value
$25.000

Debit Credit
Dividend Income (80% x 50.000) $40.000
Dividends Declared - Set Company $40.000

Debit Credit
Land $25.000
Difference between Implied and Book Value $25.000
 Debit Credit
Common Stock - Set Company ($850.000 – $200,000) $650.000
Retained Earnings 1/1/09 - Set Company $200.000
Difference between $25.000
Investment in Set Company $700.000
Noncontrolling Interest $175.000
 Debit Credit
Equity Income 80% x $130.000 $104.000
Dividends Declared - Set Company 80% x $50.000 $40.000
Investment in Set Company $64.000

Debit Credit
Land $25.000
Difference between Implied and Book Value $25.000
 Debit Credit
Common Stock - Set Company ($850.000 – $200,000) $650.000
Retained Earnings 1/1/09 - Set Company $200.000
Difference between $25.000
Investment in Salt Company $700.000
Noncontrolling Interest $175.000
 Accumulated Carrying Depreciation
Cost Depreciation Value Life Expense
Original cost 400,000 160,000 240,000 10 yr 24,000
Selling price 360,000 0 360,000 10 yr 36,000
Difference 40,000 160,000 -120,000 -12,000
 Elimination
Income Statement PT Induk PT Anak
Debit Credit
Sales 1,475,000 1,110,000
Dividend income 80,000 80,000
Total revenue 1,555,000 1,110,000
Cost of goods sold 942,000 795,000
Other expenses (including depreciation) 145,000 90,000 12,000
Total cost and expense 1,087,000 885,000
Net income 468,000 225,000
Noncontrolling interest
Net income 468,000 225,000 80,000 12,000

Elimination
Retained Earning Statement 1/1 PT Induk PT Anak
Debit Credit
Induk 1,300,000 96,000 192,000
9,600
Anak 1,040,000 1,040,000
Net income 468,000 225,000 80,000 12,000
Dividend declared -120,000 -100,000 80,000
Retained Earning 12/31 1,648,000 1,165,000 1,216,000 293,600
 Consolidated
NCI
Balance
2,585,000
-
2,585,000
1,737,000
223,000
1,972,000
613,000
48,000 -63,000
48,000 550,000

Consolidated
NCI
Balance
1,204,000

63,000 722,000
-12,000 -128,000
51,000 1,798,000
 Elimination
Balance Sheets PT Induk PT Anak NCI
Debit Credit
Investment in Anak 1,600,000 192,000 1,792,000
Fixed assets 1,972,000 830,000 40,000
Current assets 568,000 271,000
Other assets 1,000,800 1,600,000
Accumulated depreciation -375,000 -290,000 24,000 160,000
Total Assets 4,765,800 2,411,000
Liabilities 305,000 136,000
Common stock 3,000,000 1,200,000 1,200,000
Retained earnings 1,648,000 1,165,000 1,216,000 293,600 51,000
NCI in net assets 24,000 448,000 424,000
24,000
475,000
Total Liab & Equity 4,765,800 2,411,000 2,696,000 2,717,600
Consolidated
Balance
0
2,762,000
839,000
2,600,800
-481,000
5,720,800
441,000
3,000,000
1,303,400

4,744,400

5,720,800
January 1, 2013 30.000 shares (10% of 300.000 shares ) 365,000
January 1,2014 75.000 shares( 25% of 300.000 shares ) 960,000
January 1,2015 135.000 shares ( 45% of 300.000 shares ) 1,890,000
Total 240.000 shares ( 80% of 300.000 shares ) 3,215,000