CONSOLIDATED FINANCIAL STATEMENT (“At the date of business combination) TOTAL ASSETS TOTAL LIABILITIES: Total Assets of Parent @ BV Total Assets of Subsidiary @ FV Goodwill Purchase Price (Cash/NCA) Direct Cost *If, paid Indirect Cost cTIR Total Assets Total Liabilities of Parent @ BV Total Liabilities of Subsidiary @ FV cpp Purchase Price (Liabilities) Direct Cost *If, unpaid) Indirect Cost cTIR Total Liabilities TOTAL SHAREHOLDER’S EQUITY: "Paid Unpaid { CONTROL PREMIUM PURCHASE PRICE SHE of Parent @ BV NCI _7700 BPO Gait(> on PHI on CCP Purchase Price (Stocks @FV) ‘Direct Cost Indirect Cost CTIR Total Assets Additional investment Part of purchase price Affects goodwill/(gain) Ignored in computing NCI Cash Noncash Liability Stock Px x x Pesggee? ee Bhocsecad BERE®WORKING PAPER ELIMINATING ENTRIES 4. DIVIDEND RECEIVED Dividend Income PxK NCI (partially) xx Dividend Declare — Subsidiary Pxx 2, SUBSIDIARY ~ SHE Ordinary Share — Subsidiary Prox Share Premium — Subsidiary x [Retained Earnings — Subsidiary xx Investment in Subsidiary Prx NCI x 3. OVA, UVA, & GOODWILL Equipment Pxx Inventory xx Goodwill rx Investment in Subsidiary Px Ncl x 4, AMORTIZATION OF IMPAIRMENT LOSS Operating Expense Prxx PPE, net Pox Impairment Loss Px« Goodwill Prx Cost of Sales Pox Inventory Pxx 5. INTERCOMPANY SALES & PURCHASES Sales Pax Cost of Sales Pxx 6. UPE! Cost of Sales Prox Inventory Px 7. RPBI Retained Earnings — Parent Px NCI (up) % Cost of Sales Pax *Ending Inventory NOTE: Multiply: GPR of Seller _% | GONSO GOS NI INVENTORY UPE! — 20x68 Ba UPED + = = RPBI —20x7 Box RPBl = = ~—_Ignored 2‘SUBSEQUENT TO BUSINESS COMBINATION 4-Parent Net income (al year) Z.DwidendReceived (Dividend of Subsidiary x Controlinginterest %) ‘Income frorn Operation of Parent Separate Income from Parent 3. Subsidiary Net Income (ractonal year) 4A. Amortization of UVA (UVA = remaining ite x */,.,) 5. Amortization of OVA (OVA remaining it x 3/4) 6.Gain (@PO & PMI @ year of business combination) 7. ImpaitmentLoss ("Aincated ~ it depends) INTERCOMPANY SALE OF INVENTORY 8. UPEI down 8.UPEI —up. 10.RPBI—down 44, RPBI—up INTERCONPANY SALE OF DEPRECIABLE ASSET 42. Unrealized gain— down (jearof sale) 43. Unrealizedgain— up (year of salo) +14. Unrealizedioss— down (jear of sale) 15. Unroalizedloss ~ up (yaar of sale) 16. Realized gain - down (thes dep. & sale fo 9% pary PUG /RLX x /12) 17. Realized gain —up (tru depin. & sele to party > UG /RL~ x/ 12) 18. Realized loss - down (thru dep'n. & sale to 2 party UL / RL = /12) 49, Realized loss —up (tru dep. sale (0 3" party > UL /RL™ x/ 12) INTERCOMPANY SALE OF LAND. 20. Unrealized gain down (year of sale) 21. Unrealized gain up (year of sale) 22: unrealizedioss— down (ear of sale) 23. Unrealizedioss- up (year of sale) 24. Realized gain ~ down (sale fo rd pary) 25. Realized gain —up (sale tp thi party) 26. Realized loss —down (sale to third party) 27. Realized loss —up (sale fo third patty) NET INCOME -- . EXAMPLE: Intercompany Sale of Inventory Sales ‘P1000 Ending Inventory (1000*50%) Cost of Sales (700) GPR Gross Profit 300 UPEI (12/31/16) Ending Inventory % x 50% UPEI Piso REBUT) Working Paper Eliminating Entries DOWN UP UPEI: COS Pax cos Pox Inventory Px Inventory RPBI: RE, beg. Pax RE, beg Pax cos Prox | NCI w cos 2 2 0 REGunxnE QRxwanGP anBP Fun geler g «af xg g x Bs Rex x 2 500 x 30% 2150 haEXAMPLE: intercompany Sale of Equipment Sales P70 CV [P90-(F 90/10) x3)] {63) Gain BI SELLER BUYER WP.E.E. Cash P70 Equipment 70 Gain P7 Acc. Dep. aT Cash P10 | Equipment 20 Equipment P00 Acc. Dep. P27 Gain 7 Dep. Exp. Pg Dep.Exp. P10 Acc. Dep. Pt Acc. Dep. PO ‘Acc. Dep. P10 Dep. Exp. P41 “(P707=P10) “(RG thru emortization P7/T=P1) UNREALIZED GAIN Gain e7 Equipment P7 “fit depends upon the Selling Price) YEAR 2 YEAR 3 Unrealized | RE 7 Gain Equipment °7 NO ENTRY Realized —_| Acc. Dep. 2 RE 5 Gain Dep. Exp. P1 | Dep. Exp P14 RE 1 Gain EXAMPLE: intercompany Sale of Land Land (selling price) - #100 cL - 80 Sale to third party -_150 YEAR 1 | YEAR 2 | YEAR 3 Recorded — Subsidiary P50 UG “P(20) | -0- -0- Not yet recorded RG 0- -0- P20FORMULAS: Non-controlling Interest, beginning Non-controlling Interest — Net Income Dividend Share Non-controlling Interest, end Retained Earnings — Parent Consolidated Net Income — Parent Dividend - Parent Consolidated Retained Earnings Ordinary Share — Parent Share Premium — Parent Consolidated Retained Earnings Non-controlling Interest Consolidated Shareholder's Equity Shareholder’s Equity, end Net Income of Subsidiary Dividend of Subsidiary Shareholder’s Equity at book value Overvalued Assets (OVA) Undervalued Assets (UVA) Net Assets at fair value ‘Sales — Parent Sales — Subsidiary Intercompany Sales & Purchases at Selling Price Consolidated Sales Cost of Sales — Parent Cost of Sales — Subsidiary Intercompany Sales & Purchases at Selling Price Unrealized Profit in Ending Inventory (UPE!) Realized Profit in Beginning Inventory (RPB!) Amortization of Undervalued Assets Amortization of Overvalued Assets Consolidated Cost of Sales Consolidated Sales Consolidated Cost of Sales Consolidated Gross ProfitGross Profit— Parent Gross Profit— Subsidiary Unrealized Proft in Ending Inventory (UPE!) Realzed Profit in Beginning Inventory (RPB)) Amortization of Undervalued Assets Amortization of Overvalued Assets Consolidated Gross Profit Operating Expense - Parent Operating Expense — Subsidiary Realized Loss (thru depreciation/amortization) Realized Gain (thru depreciation/amortization) Impairment Loss Amortization of Undervalued Assets Amortization of Overvalued Assets: Consolidated Operating Expense Inventory — Parent @ BV Inventory — Subsidiary @ BV Undervalued Inventory Overvalued Inventory Amortization of Undervalued Assets — Inventory Amortization of Overvalued Assets — Inventory Unrealized Profit in Ending Inventory (UPEI) Consolidated Inventory Consolidated Net Income attributable to Parent Non-controlling Interest in Net Income Consolidated Net Income seen? Exkee EEeeP Rem xzane Be Be? Pex