Chapter 3 - ConSta - Subsequent to Acquisition Date

Problem 1 - Pascal and Sax - Cost Method

4.) D & A Of Excess Schedule Full GW Partial GW

Total CI (80%) NCI 20%
FV of Sax Co. 465,000.00 372,000.00 93,000.00 ==> NCI Under Full GW
less: BV of SHE - Sax
CS 240,000.00
RE 120,000.00 360,000.00 288,000.00 72,000.00
Allocated Excess 105,000.00 84,000.00 21,000.00
Less: Allocation
Inc in Inventory 6,000.00
Inc in Land 7,200.00
Inc in Equipment 96,000.00
Dec in Buildings (24,000.00)
Dec in Bonds Payable 4,800.00 90,000.00 72,000.00 18,000.00
Goodwill 15,000.00 12,000.00 3,000.00 90,000.00 ==> NCI Under Partial

Amortization Schedule: Life 20x4 20x5

Inventory 6,000.00 1 6,000.00 - DR
Equipment 96,000.00 8 12,000.00 12,000.00 DR
Buildings (24,000.00) 4 (6,000.00) (6,000.00) CR
Bonds Payable 4,800.00 4 1,200.00 1,200.00 DR
Total 13,200.00 7,200.00

Goodwill Impairment Loss 3,750.00 - DR

1.) Conso Balances - Jan. 1, 20x4: Full GW

a. Retained Earnings - only that of the parent 360,000.00
b. Non Controlling Interest 93,000.00
c. SHE (600K + 360K + 93K) 1,053,000.00 (600K + 360K + 90K)

2.) Conso Balance for Dec 31, 20X4 and Dec 31, 2015 Under Full GW and Partial GW

Dec 31, 20X4 - Partial Goodwill Dec 31, 20X4 - Full G

Parent Subsidiary Eliminations Conso Balances Parent Subsidiary
a. Cash 232,800.00 90,000.00 - 322,800.00 232,800.00 90,000.00
b. AR 90,000.00 60,000.00 - 150,000.00 90,000.00 60,000.00
c. Inventory 120,000.00 90,000.00 - 210,000.00 120,000.00 90,000.00
d. Land 210,000.00 48,000.00 7,200.00 265,200.00 210,000.00 48,000.00
e. Equipment, net 105,000.00 84,000.00 84,000.00 273,000.00 105,000.00 84,000.00
f. Buildings, net 315,000.00 252,000.00 (18,000.00) 549,000.00 315,000.00 252,000.00
g. Investment in Sax - - - - - -
h. Total Assets 1,072,800.00 624,000.00 82,200.00 1,779,000.00 1,072,800.00 624,000.00
i. AP 120,000.00 120,000.00 - 240,000.00 120,000.00 120,000.00
j. BP 240,000.00 120,000.00 (3,600.00) 356,400.00 240,000.00 120,000.00
k. Total Liabilities 360,000.00 240,000.00 (3,600.00) 596,400.00 360,000.00 240,000.00
l. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
m. RE - - - 490,440.00
n. Sales 480,000.00 240,000.00 720,000.00 480,000.00 240,000.00
o. Cost of Goods Sold 204,000.00 138,000.00 6,000.00 348,000.00 204,000.00 138,000.00
p. Gross Profit 276,000.00 102,000.00 (6,000.00) 372,000.00 276,000.00 102,000.00
q. Expenses - GW Impair 108,000.00 42,000.00 10,200.00 160,200.00 108,000.00 42,000.00
r. Div Income - - - - - -
s. CICNI 168,000.00 60,000.00 (25,560.00) 202,440.00 168,000.00 60,000.00
t. NCICNI - - 9,360.00 9,360.00 - -
u. CNI 168,000.00 60,000.00 (16,200.00) 211,800.00 168,000.00 60,000.00
v. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
w. RE - see below 490,440.00
x. Controlling Interest 1,090,440.00
y. NCI - see below 92,160.00
z1. SHE 1,182,600.00
z2 Liabilities and SHE 1,779,000.00
 Supporting Computations : Conso Balances - Dec 31, 20x4
Dec 31, 20x4: Partial Goodwill Full l Goodwill
CNI CICNI NCICNI CNI CICNI
Pascal NI - Own 168,000.00 168,000.00 - 168,000.00 168,000.00
Sax NI 60,000.00 48,000.00 12,000.00 60,000.00 48,000.00
Amortization (13,200.00) (10,560.00) (2,640.00) (13,200.00) (10,560.00)
Goodwill Impairment (3,000.00) (3,000.00) - (3,750.00) (3,000.00)
Conso Balances 211,800.00 202,440.00 9,360.00 211,050.00 202,440.00

RE - Pascal Co - Jan 1, 20x4 360,000.00 360,000.00

CICNI - 20x4 202,440.00 202,440.00
Div Paid (72,000.00) (72,000.00)
Cons RE - Dec 31, 20x4 490,440.00 490,440.00

NCI - Jan 1, 20x4 90,000.00 93,000.00

NCICNI 9,360.00 8,610.00
Div Paid ( 36,000 x 20%) (7,200.00) (7,200.00)
NCI - Dec 31, 20x4 92,160.00 94,410.00

Common Stock - Pascal 600,000.00 600,000.00

Conso RE - Dec 31, 20x4 490,440.00 490,440.00
NCI - Dec 31, 20x4 92,160.00 94,410.00
Conso SHE - Dec 31, 20x4 1,182,600.00 1,184,850.00

2.) Conso Balance for Dec 31, 20X4 and Dec 31, 2015 Under Full GW and Partial GW
Dec 31, 20X5 - Partial Goodwill Dec 31, 20X5 - Full G
Parent Subsidiary Eliminations Conso Balances Parent Subsidiary
a. Cash 265,200.00 102,000.00 - 367,200.00 265,200.00 102,000.00
b. AR 180,000.00 96,000.00 - 276,000.00 180,000.00 96,000.00
c. Inventory 216,000.00 108,000.00 - 324,000.00 216,000.00 108,000.00
d. Land 210,000.00 48,000.00 7,200.00 265,200.00 210,000.00 48,000.00
e. Equipment, net 90,000.00 78,000.00 72,000.00 240,000.00 90,000.00 78,000.00
f. Buildings, net 270,000.00 234,000.00 (12,000.00) 492,000.00 270,000.00 234,000.00
g. Investment in Sax - - - - - -
h. Total Assets 1,231,200.00 666,000.00 76,200.00 1,973,400.00 1,231,200.00 666,000.00
i. AP 120,000.00 120,000.00 - 240,000.00 120,000.00 120,000.00
j. BP 240,000.00 120,000.00 (2,400.00) 357,600.00 240,000.00 120,000.00
k. Total Liabilities 360,000.00 240,000.00 (2,400.00) 597,600.00 360,000.00 240,000.00
l. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
m. RE, See Below - - - 676,680.00 - -
n. Sales 540,000.00 360,000.00 900,000.00 540,000.00 360,000.00
o. Cost of Goods Sold 216,000.00 192,000.00 - 408,000.00 216,000.00 192,000.00
p. Gross Profit 324,000.00 168,000.00 - 492,000.00 324,000.00 168,000.00
q. Expenses - GW Impair 132,000.00 78,000.00 7,200.00 217,200.00 132,000.00 78,000.00
r. Div Income - - - - - -
s. CICNI 192,000.00 90,000.00 (23,760.00) 258,240.00 192,000.00 90,000.00
t. NCICNI - - 16,560.00 16,560.00 - -
u. CNI 192,000.00 90,000.00 (7,200.00) 274,800.00 192,000.00 90,000.00
v. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
w. RE - see below 676,680.00
x. Controlling Interest 1,276,680.00
y. NCI - see below 99,120.00
z1. SHE 1,375,800.00
z2 Liabilities and SHE 1,973,400.00

Supporting Computations : Conso Balances - Dec 31, 20x5

Partial Goodwill Full Goodwill
Dec 31, 20x5:
CNI CICNI NCICNI CNI CICNI
Pascal NI - Own 192,000.00 192,000.00 - 192,000.00 192,000.00
Sax NI 90,000.00 72,000.00 18,000.00 90,000.00 72,000.00
Amortization (7,200.00) (5,760.00) (1,440.00) (7,200.00) (5,760.00)
Conso Balances 274,800.00 258,240.00 16,560.00 274,800.00 258,240.00
 RE - Pascal Co - Dec 31, 20x4 490,440.00 490,440.00
CICNI - 20x5 258,240.00 258,240.00
Div Paid (72,000.00) (72,000.00)
Cons RE - Dec 31, 20x5 676,680.00 676,680.00

NCI - Dec 31, 20x4 92,160.00 94,410.00

NCICNI - 20x5 16,560.00 16,560.00
Div Paid ( 48,000 x 20%) (9,600.00) (9,600.00)
NCI - Dec 31, 20x5 99,120.00 101,370.00

Common Stock - Pascal 600,000.00 600,000.00

Conso RE - Dec 31, 20x4 676,680.00 676,680.00
NCI - Dec 31, 20x4 99,120.00 101,370.00
Conso SHE - Dec 31, 20x4 1,375,800.00 1,378,050.00

3.) Journal Entry to record the investment in the Books of the Acquirer

Jan 01, 20X4: Full Goodwill Partial Goodwill

Investment in Sax Co. 372,000.00 372,000.00
Cash 372,000.00
20x4:
Cash ( 36,000 x 80%) 28,800.00 28,800.00
Dividend Income 28,800.00

4.) D & A Of Excess Schedule Full GW Partial GW

Total CI (80%) NCI 20%
FV of Sax Co. 465,000.00 372,000.00 93,000.00
less: BV of SHE - Sax
CS 240,000.00
RE 120,000.00 360,000.00 288,000.00 72,000.00
Allocated Excess 105,000.00 84,000.00 21,000.00
Less: Allocation
Inc in Inventory 6,000.00
Inc in Land 7,200.00
Inc in Equipment 96,000.00
Dec in Buildings (24,000.00)
Dec in Bonds Payable 4,800.00 90,000.00 72,000.00 18,000.00
Goodwill 15,000.00 12,000.00 3,000.00

Amortization Schedule: Life 20x4 20x5

Inventory 6,000.00 1 6,000.00 - DR
Equipment 96,000.00 8 12,000.00 12,000.00 DR
Buildings (24,000.00) 4 (6,000.00) (6,000.00) CR
Bonds Payable 4,800.00 4 1,200.00 1,200.00 DR
Total 13,200.00 7,200.00

Goodwill Impairment Loss 3,750.00 - DR

Full Goodwill Partial Goodwill

5.) ELIMINATING ENTRIES Year 20x4
E1. Common Stock - Sax 240,000.00 240,000.00
Retained Earnings - Sax 120,000.00 120,000.00
Investment in Sax Co. 288,000.00
NCI 72,000.00

E2. Inventory 6,000.00 6,000.00

AD - Equipment 96,000.00 96,000.00
AD - Buildings 192,000.00 192,000.00
Land 7,200.00 7,200.00
Discount on BP 4,800.00 4,800.00
Goodwill 15,000.00 12,000.00
Buildings (192K + 24K) 216,000.00
Investment in Sax Co. 84,000.00
NCI 21,000.00

E3. Cost of Sales 6,000.00 6,000.00

Depreciation Expense (12K-6K) 6,000.00 6,000.00
 AD - Buildings 6,000.00 6,000.00
Interest Expense 1,200.00 1,200.00
Goodwill Impairment Loss 3,750.00 3,000.00
Inventory 6,000.00
AD - Equipment 12,000.00
Discount on BP 1,200.00
Goodwill 3,750.00

E4. Dividend Income 28,800.00 28,800.00

NCI 7,200.00 7,200.00
Dividends Declared 36,000.00

E5. NCI in Sax Co Net Income 8,610.00 9,360.00

NCI 8,610.00

Year 20x5
E1. Investment in Sax Co. 19,200.00 19,200.00
Ret. Earnings - Pascal (24,000 x 80%) 19,200.00
RE - Sax, 12/31/x4 144,000.00
RE - Sax, 01/01/x4 120,000.00
Increase in RE - Sax 20x4 24,000.00

E2. Common Stock - Sax 240,000.00 240,000.00

Retained Earnings - Sax 144,000.00 144,000.00
Investment in Sax Co. (240k + 144k) X 80% 307,200.00
NCI (240K+144k) X 20% 76,800.00

E3. Inventory 6,000.00 6,000.00

AD - Equipment 96,000.00 96,000.00
AD - Buildings 192,000.00 192,000.00
Land 7,200.00 7,200.00
Discount on BP 4,800.00 4,800.00
Goodwill 15,000.00 12,000.00
Buildings (192K + 24K) 216,000.00
Investment in Sax Co. 84,000.00
NCI 21,000.00

E4. Ret. Earnings - Pascal, Beg. (16,950 x 80%) 13,560.00 13,560.00

NCI (16,950 x 20%) 3,390.00 (13,200 x 20%) 2,640.00
Deprn. Expense 6,000.00 6,000.00
AD - Buildings (6,000 x 2) 12,000.00 12,000.00
Interest Exp. 1,200.00 1,200.00
Inventory 6,000.00
AD - Equipment (12,000 x 2) 24,000.00
Discount on BP (1,200 x 2) 2,400.00
Goodwill 3,750.00

E5. Dividend Income 38,400.00 38,400.00

NCI 9,600.00 9,600.00
Dividends Declared 48,000.00

E6. NCI in Sax Co Net Income 16,560.00 16,560.00

NCI 16,560.00
Under Partial GW

Partial GW
360,000.00
90,000.00
1,050,000.00

20X4 - Full Goodwill

Eliminations Conso Balances
- 322,800.00
- 150,000.00
- 210,000.00
7,200.00 265,200.00
84,000.00 273,000.00 105,000.00
(18,000.00) 549,000.00 84,000.00
- - 96,000.00
84,450.00 1,781,250.00 (12,000.00)
- 240,000.00 273,000.00
(3,600.00) 356,400.00
(3,600.00) 596,400.00
(240,000.00) 600,000.00 240,000.00
490,440.00 120,000.00
720,000.00 (4,800.00)
6,000.00 348,000.00 1,200.00
(6,000.00) 372,000.00 356,400.00
10,950.00 160,950.00
- -
(25,560.00) 202,440.00
8,610.00 8,610.00
(16,200.00) 211,050.00
(240,000.00) 600,000.00
490,440.00
1,090,440.00
94,410.00
1,184,850.00
1,781,250.00
dwill
NCICNI
-
12,000.00
(2,640.00)
(750.00)
8,610.00

20X5 - Full Goodwill

Eliminations Conso Balances
- 367,200.00
- 276,000.00
- 324,000.00
7,200.00 265,200.00
72,000.00 240,000.00 90,000.00
(12,000.00) 492,000.00 78,000.00
- - 96,000.00
78,450.00 1,975,650.00 (24,000.00)
- 240,000.00 240,000.00
(2,400.00) 357,600.00
(2,400.00) 597,600.00 240,000.00
(240,000.00) 600,000.00 120,000.00
- 676,680.00 (4,800.00)
900,000.00 2,400.00
- 408,000.00 357,600.00
- 492,000.00
7,200.00 217,200.00
- -
(23,760.00) 258,240.00
16,560.00 16,560.00
(7,200.00) 274,800.00
(240,000.00) 600,000.00
676,680.00
1,276,680.00
101,370.00
1,378,050.00
1,975,650.00

will 78,000.00
96,000.00
NCICNI (24,000.00)
- 150,000.00
18,000.00
(1,440.00)
16,560.00
dwill

372,000.00

28,800.00

dwill

288,000.00
72,000.00

216,000.00
84,000.00
18,000.00
 6,000.00
12,000.00
1,200.00
3,000.00

36,000.00

9,360.00

19,200.00

307,200.00
76,800.00

216,000.00
84,000.00
18,000.00

6,000.00
24,000.00
2,400.00
3,000.00

48,000.00

16,560.00
6.) Worksheet for Consolidated FS - Dec 31, 20x4
Cost Model - 80% Ownership (Partial Goodwill)
Adjustments & Eliminations
Income Statement Pascal Co. Sax Co. Dr Cr
Sales 480,000 240,000
Dividend Income 28,800 - 4 28,800
Total Revenue 508,800 240,000
Cost of Goods Sold 204,000 138,000 3 6,000
Depreciation Expense 60,000 24,000 3 6,000
Interest Expesne - - 3 1,200
Other Expenses 48,000 18,000
Goodwill Impairment Loss - - 3 3,000
Total Costs & Expenses 312,000 180,000
NET INCOME 196,800 60,000
NCICNI 5 9,360
CICNI

Statement of Retained Earnings

Retained Earnings, Jan 1
Pascal Co. 360,000
Sax Co. 120,000 1 120,000
Net Income From Above 196,800 60,000
Total 556,800 180,000
Dividends Paid
Pascal Co. 72,000
Sax Co. 36,000 4
Retained Earnings, Dec 31 484,800 144,000

Balance Sheet
Cash 232,800 90,000
Accounts Receivable 90,000 60,000
Inventory 120,000 90,000 2 6,000 3
Land 210,000 48,000 2 7,200
Equipment 240,000 180,000
Building 720,000 540,000 2
Discount on BP - - 2 4,800 3
Goodwill - - 2 12,000 3
Investment in Sax Co. 372,000 1
2
Total 1,984,800 1,008,000

AD - Equipment 135,000 96,000 2 96,000 3

AD - Building 405,000 288,000 2 192,000
3 6,000
Accounts Payable 120,000 120,000
Bonds Payable 240,000 120,000
Common Stock, P10 par - Pascal 600,000
Common Stock, P10 par - Sax 240,000 1 240,000
Retained Earnings
Pascal Co. 484,800
Sax Co. 144,000
Non-Controlling Interest - 3 7,200 1
2
5
Total 1,984,800 1,008,000 745,560

Worksheet for Consolidated FS - Dec 31, 20x5

Cost Model - 80% Ownership (Partial Goodwill)
Adjustments & Eliminations
Income Statement Pascal Co. Sax Co. Dr Cr
Sales 540,000 360,000
Dividend Income 38,400 - 5 38,400
Total Revenue 578,400 360,000
Cost of Goods Sold 216,000 192,000
Depreciation Expense 60,000 24,000 4 6,000
Interest Expesne - - 4 1,200
Other Expenses 72,000 54,000
Goodwill Impairment Loss - -
Total Costs & Expenses 348,000 270,000
NET INCOME 230,400 90,000
NCICNI 6 16,560
CICNI

Statement of Retained Earnings

Retained Earnings, Jan 1
Pascal Co. 484,800 2 13,560 1
Sax Co. 144,000 2 144,000
Net Income From Above 230,400 90,000
Total 715,200 234,000
Dividends Paid
Pascal Co. 72,000
Sax Co. 48,000 5
Retained Earnings, Dec 31 643,200 186,000

Balance Sheet
Cash 265,200 102,000
Accounts Receivable 180,000 96,000
Inventory 216,000 108,000 3 6,000 4
Land 210,000 48,000 3 7,200
Equipment 240,000 180,000
Building 720,000 540,000 3
Discount on BP - - 3 4,800 4
Goodwill - - 3 12,000 4
Investment in Sax Co. 372,000 1 19,200 2
3
Total 2,203,200 1,074,000

AD - Equipment 150,000 102,000 3 96,000 4

AD - Building 450,000 306,000 3 192,000
4 12,000
Accounts Payable 120,000 120,000
Bonds Payable 240,000 120,000
Common Stock, P10 par - Pascal 600,000
Common Stock, P10 par - Sax 240,000 2 240,000
Retained Earnings
Pascal Co. 643,200
Sax Co. 186,000
Non-Controlling Interest - 4 2,640 2
5 9,600 3
6
Total 2,203,200 1,074,000 821,160
ments & Eliminations Consolidated
Cr Balances
720,000
-
720,000
348,000
90,000
1,200
66,000
3,000
508,200
211,800
(9,360)
202,440

360,000
-
202,440
562,440

72,000
36,000 -
490,440

322,800
150,000
6,000 210,000
265,200
420,000
216,000 1,044,000
1,200 3,600
3,000 9,000
288,000 -
84,000
2,424,600 1,779,000

12,000 147,000
495,000

240,000
 360,000
600,000
-

490,440

72,000 92,160
18,000
9,360
745,560 2,424,600

ments & Eliminations Consolidated

Cr Balances
900,000
-
900,000
408,000
90,000
1,200
126,000
-
625,200
274,800
(16,560)
258,240

19,200 490,440
-
258,240
748,680

72,000
48,000 -
676,680

367,200
276,000
6,000 324,000
 265,200
420,000
216,000 1,044,000
2,400 2,400
3,000 9,000
307,200 -
84,000
2,707,800

24,000 180,000
552,000

240,000
360,000
600,000
-

676,680

76,800 99,120
18,000
16,560
821,160 2,707,800
Chapter 3 - ConSta - Subsequent to Acquisition Date

Problem 2 - Pascal and Sax - Equity Method

4.) D & A Of Excess Schedule Full GW Partial GW

Total CI (80%) NCI 20%
FV of Sax Co. 465,000.00 372,000.00 93,000.00 ==> NCI Under Full GW
less: BV of SHE - Sax
CS 240,000.00
RE 120,000.00 360,000.00 288,000.00 72,000.00
Allocated Excess 105,000.00 84,000.00 21,000.00
Less: Allocation
Inc in Inventory 6,000.00
Inc in Land 7,200.00
Inc in Equipment 96,000.00
Dec in Buildings (24,000.00)
Dec in Bonds Payable 4,800.00 90,000.00 72,000.00 18,000.00
Goodwill 15,000.00 12,000.00 3,000.00 90,000.00 ==> NCI Under Partial

Amortization Schedule: Life 20x4 20x5

Inventory 6,000.00 1 6,000.00 - DR
Equipment 96,000.00 8 12,000.00 12,000.00 DR
Buildings (24,000.00) 4 (6,000.00) (6,000.00) CR
Bonds Payable 4,800.00 4 1,200.00 1,200.00 DR
Total 13,200.00 7,200.00

Goodwill Impairment Loss 3,750.00 - DR

1.) Conso Balances - Jan. 1, 20x4: Full GW

a. Retained Earnings - only that of the parent 360,000.00
b. Non Controlling Interest 93,000.00
c. SHE (600K + 360K + 93K) 1,053,000.00 (600K + 360K + 90K)

2.) Conso Balance for Dec 31, 20X4 and Dec 31, 2015 Under Full GW and Partial GW

Dec 31, 20X4 - Partial Goodwill Dec 31, 20X4 - Full G

Parent Subsidiary Eliminations Conso Balances Parent Subsidiary
a. Cash 232,800.00 90,000.00 - 322,800.00 232,800.00 90,000.00
b. AR 90,000.00 60,000.00 - 150,000.00 90,000.00 60,000.00
c. Inventory 120,000.00 90,000.00 - 210,000.00 120,000.00 90,000.00
d. Land 210,000.00 48,000.00 7,200.00 265,200.00 210,000.00 48,000.00
e. Equipment, net 105,000.00 84,000.00 84,000.00 273,000.00 105,000.00 84,000.00
f. Buildings, net 315,000.00 252,000.00 (18,000.00) 549,000.00 315,000.00 252,000.00
g. Investment in Sax - - - - - -
h. Total Assets 1,072,800.00 624,000.00 82,200.00 1,779,000.00 1,072,800.00 624,000.00
i. AP 120,000.00 120,000.00 - 240,000.00 120,000.00 120,000.00
j. BP 240,000.00 120,000.00 (3,600.00) 356,400.00 240,000.00 120,000.00
k. Total Liabilities 360,000.00 240,000.00 (3,600.00) 596,400.00 360,000.00 240,000.00
l. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
m. RE - - - 490,440.00
n. Sales 480,000.00 240,000.00 720,000.00 480,000.00 240,000.00
o. Cost of Goods Sold 204,000.00 138,000.00 6,000.00 348,000.00 204,000.00 138,000.00
p. Gross Profit 276,000.00 102,000.00 (6,000.00) 372,000.00 276,000.00 102,000.00
q. Expenses - GW Impair 108,000.00 42,000.00 10,200.00 160,200.00 108,000.00 42,000.00
r. Div Income - - - - - -
s. CICNI 168,000.00 60,000.00 (25,560.00) 202,440.00 168,000.00 60,000.00
t. NCICNI - - 9,360.00 9,360.00 - -
u. CNI 168,000.00 60,000.00 (16,200.00) 211,800.00 168,000.00 60,000.00
v. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
w. RE - see below 490,440.00
x. Controlling Interest 1,090,440.00
y. NCI - see below 92,160.00
z1. SHE 1,182,600.00
z2 Liabilities and SHE 1,779,000.00
 Supporting Computations : Conso Balances - Dec 31, 20x4
Dec 31, 20x4: Partial Goodwill Full l Goodwill
CNI CICNI NCICNI CNI CICNI
Pascal NI - Own 168,000.00 168,000.00 - 168,000.00 168,000.00
Sax NI 60,000.00 48,000.00 12,000.00 60,000.00 48,000.00
Amortization (13,200.00) (10,560.00) (2,640.00) (13,200.00) (10,560.00)
Goodwill Impairment (3,000.00) (3,000.00) - (3,750.00) (3,000.00)
Conso Balances 211,800.00 202,440.00 9,360.00 211,050.00 202,440.00

RE - Pascal Co - Jan 1, 20x4 360,000.00 360,000.00

CICNI - 20x4 202,440.00 202,440.00
Div Paid (72,000.00) (72,000.00)
Cons RE - Dec 31, 20x4 490,440.00 490,440.00

NCI - Jan 1, 20x4 90,000.00 93,000.00

NCICNI 9,360.00 8,610.00
Div Paid ( 36,000 x 20%) (7,200.00) (7,200.00)
NCI - Dec 31, 20x4 92,160.00 94,410.00

Common Stock - Pascal 600,000.00 600,000.00

Conso RE - Dec 31, 20x4 490,440.00 490,440.00
NCI - Dec 31, 20x4 92,160.00 94,410.00
Conso SHE - Dec 31, 20x4 1,182,600.00 1,184,850.00

2.) Conso Balance for Dec 31, 20X4 and Dec 31, 2015 Under Full GW and Partial GW
Dec 31, 20X5 - Partial Goodwill Dec 31, 20X5 - Full G
Parent Subsidiary Eliminations Conso Balances Parent Subsidiary
a. Cash 265,200.00 102,000.00 - 367,200.00 265,200.00 102,000.00
b. AR 180,000.00 96,000.00 - 276,000.00 180,000.00 96,000.00
c. Inventory 216,000.00 108,000.00 - 324,000.00 216,000.00 108,000.00
d. Land 210,000.00 48,000.00 7,200.00 265,200.00 210,000.00 48,000.00
e. Equipment, net 90,000.00 78,000.00 72,000.00 240,000.00 90,000.00 78,000.00
f. Buildings, net 270,000.00 234,000.00 (12,000.00) 492,000.00 270,000.00 234,000.00
g. Investment in Sax - - - - - -
h. Total Assets 1,231,200.00 666,000.00 76,200.00 1,973,400.00 1,231,200.00 666,000.00
i. AP 120,000.00 120,000.00 - 240,000.00 120,000.00 120,000.00
j. BP 240,000.00 120,000.00 (2,400.00) 357,600.00 240,000.00 120,000.00
k. Total Liabilities 360,000.00 240,000.00 (2,400.00) 597,600.00 360,000.00 240,000.00
l. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
m. RE - - - 676,680.00 - -
n. Sales 540,000.00 360,000.00 900,000.00 540,000.00 360,000.00
o. Cost of Goods Sold 216,000.00 192,000.00 - 408,000.00 216,000.00 192,000.00
p. Gross Profit 324,000.00 168,000.00 - 492,000.00 324,000.00 168,000.00
q. Expenses - GW Impair 132,000.00 78,000.00 7,200.00 217,200.00 132,000.00 78,000.00
r. Div Income - - - - - -
s. CICNI 192,000.00 90,000.00 (23,760.00) 258,240.00 192,000.00 90,000.00
t. NCICNI - - 16,560.00 16,560.00 - -
u. CNI 192,000.00 90,000.00 (7,200.00) 274,800.00 192,000.00 90,000.00
v. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
w. RE - see below 676,680.00
x. Controlling Interest 1,276,680.00
y. NCI - see below 99,120.00
z1. SHE 1,375,800.00
z2 Liabilities and SHE 1,973,400.00

Supporting Computations : Conso Balances - Dec 31, 20x5

Partial Goodwill Full Goodwill
Dec 31, 20x5:
CNI CICNI NCICNI CNI CICNI
Pascal NI - Own 192,000.00 192,000.00 - 192,000.00 192,000.00
Sax NI 90,000.00 72,000.00 18,000.00 90,000.00 72,000.00
Amortization (7,200.00) (5,760.00) (1,440.00) (7,200.00) (5,760.00)
Conso Balances 274,800.00 258,240.00 16,560.00 274,800.00 258,240.00
 RE - Pascal Co - Dec 31, 20x4 490,440.00 490,440.00
CICNI - 20x5 258,240.00 258,240.00
Div Paid (72,000.00) (72,000.00)
Cons RE - Dec 31, 20x5 676,680.00 676,680.00

NCI - Dec 31, 20x4 92,160.00 94,410.00

NCICNI - 20x5 16,560.00 16,560.00
Div Paid ( 48,000 x 20%) (9,600.00) (9,600.00)
NCI - Dec 31, 20x5 99,120.00 101,370.00

Common Stock - Pascal 600,000.00 600,000.00

Conso RE - Dec 31, 20x4 676,680.00 676,680.00
NCI - Dec 31, 20x4 99,120.00 101,370.00
Conso SHE - Dec 31, 20x4 1,375,800.00 1,378,050.00

3.) Journal Entry to record the investment in the Books of the Acquirer

Jan 01, 20X4: Full Goodwill Partial Goodwill

Investment in Sax Co. 372,000.00 372,000.00
Cash 372,000.00
20x4:
Cash ( 36,000 x 80%) 28,800.00 28,800.00
Investment in Sax Co. 28,800.00

Dec. 31, 20X4:

Investment in Sax Co. 48,000.00 48,000.00
Investment Income (P60,000 x 80%) 48,000.00

Investment Income (P16,950 x 80%) 13,560.00 13,560.00

Investment in Sax Co. 13,560.00

4.) D & A Of Excess Schedule Full GW Partial GW

Total CI (80%) NCI 20%
FV of Sax Co. 465,000.00 372,000.00 93,000.00
less: BV of SHE - Sax
CS 240,000.00
RE 120,000.00 360,000.00 288,000.00 72,000.00
Allocated Excess 105,000.00 84,000.00 21,000.00
Less: Allocation
Inc in Inventory 6,000.00
Inc in Land 7,200.00
Inc in Equipment 96,000.00
Dec in Buildings (24,000.00)
Dec in Bonds Payable 4,800.00 90,000.00 72,000.00 18,000.00
Goodwill 15,000.00 12,000.00 3,000.00

Amortization Schedule: Life 20x4 20x5

Inventory 6,000.00 1 6,000.00 - DR
Equipment 96,000.00 8 12,000.00 12,000.00 DR
Buildings (24,000.00) 4 (6,000.00) (6,000.00) CR
Bonds Payable 4,800.00 4 1,200.00 1,200.00 DR
Total 13,200.00 7,200.00

Goodwill Impairment Loss 3,750.00 - DR

Full Goodwill Partial Goodwill

5.) ELIMINATING ENTRIES Year 20x4
E1. Common Stock - Sax 240,000.00 240,000.00
Retained Earnings - Sax 120,000.00 120,000.00
Investment in Sax Co. 288,000.00
NCI 72,000.00

E2. Inventory 6,000.00 6,000.00

AD - Equipment 96,000.00 96,000.00
AD - Buildings 192,000.00 192,000.00
Land 7,200.00 7,200.00
Discount on BP 4,800.00 4,800.00
 Goodwill 15,000.00 12,000.00
Buildings (192K + 24K) 216,000.00
Investment in Sax Co. 84,000.00
NCI 21,000.00

E3. Cost of Sales 6,000.00 6,000.00

Depreciation Expense (12K-6K) 6,000.00 6,000.00
AD - Buildings 6,000.00 6,000.00
Interest Expense 1,200.00 1,200.00
Goodwill Impairment Loss 3,750.00 3,000.00
Inventory 6,000.00
AD - Equipment 12,000.00
Discount on BP 1,200.00
Goodwill 3,750.00

E4. Investment Income 34,440.00 34,440.00

NCI (36,000 x 20%) 7,200.00 7,200.00
Dividends Declared - Sax 36,000.00
Investment in Sax Co. 5,640.00

E5. NCI in Sax Co Net Income 8,610.00 9,360.00

NCI 8,610.00
=====0=====0=====0=====0====0=====0=====0=====0=====0=====0=====0=====0====0=====0====0=====0====0=====0====0====0=====0=====0==
20X5 Entries in the Books of Parent relative to its Investment in Sax - (Not required but necessary)
Full Goodwill Partial Goodwill
Year 20x5
Jan 1 to Dec 31, 20X5:
Cash (P48,000 x 80%) 38,400.00 38,400.00
Investment in Sax Co. 38,400.00

Dec 31, 20X4:

Investment in Sax Co. 72,000.00 72,000.00
Investment Income (P90,000 x 80%) 72,000.00

Investment Income 5,760.00 5,760.00

Investment in Sax Co. (P7,200 x 80%) 5,760.00

=====0=====0=====0=====0====0=====0=====0=====0=====0=====0=====0=====0====0=====0====0=====0====0=====0====0====0=====0=====0==
Full Goodwill Partial Goodwill
Year 20x5
E1. Common Stock - Sax 240,000.00 240,000.00
Retained Earnings - Sax 144,000.00 144,000.00
Investment in Sax Co. (240k + 144k) X 80% 307,200.00
NCI (240K+144k) X 20% 76,800.00

E2. AD - Equipment (P96,000 - 12,000) 84,000.00 84,000.00

AD - Buildings (P192,000 + 6,000) 198,000.00 198,000.00
Land 7,200.00 7,200.00
Discount on BP (P4,800 - 1,200) 3,600.00 3,600.00
Goodwill (P15,000 - 3,750) 11,250.00 (P12,000 - 3,000) 9,000.00
Buildings (192K + 24K) 216,000.00
Investment in Sax Co. (80%) 70,440.00
NCI (20%) 17,610.00 (17,610 - 3000+750)

E3. Deprn. Expense 6,000.00 6,000.00

AD - Buildings 6,000.00 6,000.00
Interest Exp. 1,200.00 1,200.00
AD - Equipment 12,000.00
Discount on BP 1,200.00

E4. Investment Income (P72,000 - (7,200 x 80%) 66,240.00 66,240.00

NCI (P48,000 x 20%) 9,600.00 9,600.00
Dividends Declared 48,000.00
Investment in Sax Co. 27,840.00

E5. NCI in Sax Co Net Income 16,560.00 16,560.00

NCI 16,560.00
Under Partial GW

Partial GW
360,000.00
90,000.00
1,050,000.00

20X4 - Full Goodwill

Eliminations Conso Balances
- 322,800.00
- 150,000.00
- 210,000.00
7,200.00 265,200.00
84,000.00 273,000.00 105,000.00
(18,000.00) 549,000.00 84,000.00
- - 96,000.00
84,450.00 1,781,250.00 (12,000.00)
- 240,000.00 273,000.00
(3,600.00) 356,400.00
(3,600.00) 596,400.00
(240,000.00) 600,000.00 240,000.00
490,440.00 120,000.00
720,000.00 (4,800.00)
6,000.00 348,000.00 1,200.00
(6,000.00) 372,000.00 356,400.00
10,950.00 160,950.00
- -
(25,560.00) 202,440.00
8,610.00 8,610.00
(16,200.00) 211,050.00
(240,000.00) 600,000.00
490,440.00
1,090,440.00
94,410.00
1,184,850.00
1,781,250.00
dwill
NCICNI
-
12,000.00
(2,640.00)
(750.00)
8,610.00

20X5 - Full Goodwill

Eliminations Conso Balances
- 367,200.00
- 276,000.00
- 324,000.00
7,200.00 265,200.00
72,000.00 240,000.00 90,000.00
(12,000.00) 492,000.00 78,000.00
- - 96,000.00
78,450.00 1,975,650.00 (24,000.00)
- 240,000.00 240,000.00
(2,400.00) 357,600.00
(2,400.00) 597,600.00 240,000.00
(240,000.00) 600,000.00 120,000.00
- 676,680.00 (4,800.00)
900,000.00 2,400.00
- 408,000.00 357,600.00
- 492,000.00
7,200.00 217,200.00
- -
(23,760.00) 258,240.00
16,560.00 16,560.00
(7,200.00) 274,800.00
(240,000.00) 600,000.00
676,680.00
1,276,680.00
101,370.00
1,378,050.00
1,975,650.00

will 78,000.00
96,000.00
NCICNI (24,000.00)
- 150,000.00
18,000.00
(1,440.00)
16,560.00
dwill
Investment in Sax Co. (Partial)
372,000.00 372,000.00 28,800.00
48,000.00 13,560.00
420,000.00 42,360.00
28,800.00 Bal. 377,640.00
288,000.00 E1
84,000.00 E2
5,640.00 E4
48,000.00 377,640.00 377,640.00

13,560.00 Investment Income (Partial)

13,560.00 48,000.00
34,440.00 Bal
E4 34,440.00
34,440.00 34,440.00

dwill

288,000.00
72,000.00
 216,000.00
84,000.00
18,000.00

6,000.00
12,000.00
1,200.00
3,000.00

(48,000 - 13,560)

36,000.00
5,640.00

9,360.00
==0=====0======0=====0

dwill

Investment in Sax Co. (Partial)

377,640.00 38,400.00
38,400.00 72,000.00 5,760.00
449,640.00 44,160.00
Bal. 405,480.00
307,200.00 E1
72,000.00 70,440.00 E2
27,840.00 E4
405,480.00 405,480.00
5,760.00

==0=====0======0=====0 Investment Income (Partial)

dwill 5,760.00 72,000.00
66,240.00 Bal
E4 66,240.00
66,240.00 66,240.00
307,200.00
76,800.00

216,000.00
70,440.00
15,360.00

12,000.00
1,200.00

48,000.00
27,840.00

16,560.00
6.) Worksheet for Consolidated FS - Dec 31, 20x4
Equity Model - 80% Ownership (Partial Goodwill)
Adjustments & Eliminations
Income Statement Pascal Co. Sax Co. Dr Cr
Sales 480,000 240,000
Investment Income 34,440 - 4 34,440
Total Revenue 514,440 240,000
Cost of Goods Sold 204,000 138,000 3 6,000
Depreciation Expense 60,000 24,000 3 6,000
Interest Expesne - - 3 1,200
Other Expenses 48,000 18,000
Goodwill Impairment Loss - - 3 3,000
Total Costs & Expenses 312,000 180,000
NET INCOME 202,440 60,000
NCICNI 5 9,360
CICNI

Statement of Retained Earnings

Retained Earnings, Jan 1
Pascal Co. 360,000
Sax Co. 120,000 1 120,000
Net Income From Above 202,440 60,000
Total 562,440 180,000
Dividends Paid
Pascal Co. 72,000
Sax Co. 36,000 4
Retained Earnings, Dec 31 490,440 144,000

Balance Sheet
Cash 232,800 90,000
Accounts Receivable 90,000 60,000
Inventory 120,000 90,000 2 6,000 3
Land 210,000 48,000 2 7,200
Equipment 240,000 180,000
Building 720,000 540,000 2
Discount on BP - - 2 4,800 3
Goodwill - - 2 12,000 3
Investment in Sax Co. 377,640 2
2
4
Total 1,990,440 1,008,000

AD - Equipment 135,000 96,000 2 96,000 3

AD - Building 405,000 288,000 2 192,000
3 6,000
Accounts Payable 120,000 120,000
Bonds Payable 240,000 120,000
Common Stock, P10 par - Pascal 600,000
Common Stock, P10 par - Sax 240,000 1 240,000
Retained Earnings
Pascal Co. 490,440
Sax Co. 144,000
Non-Controlling Interest - 4 7,200 1
2
5
Total 1,990,440 1,008,000 751,200

Worksheet for Consolidated FS - Dec 31, 20x5

Cost Model - 80% Ownership (Partial Goodwill)
Adjustments & Eliminations
Income Statement Pascal Co. Sax Co. Dr Cr
Sales 540,000 360,000
Investment Income 66,240 - 4 66,240
Total Revenue 606,240 360,000
Cost of Goods Sold 216,000 192,000
Depreciation Expense 60,000 24,000 3 6,000
Interest Expesne - - 3 1,200
Other Expenses 72,000 54,000
Goodwill Impairment Loss - -
Total Costs & Expenses 348,000 270,000
NET INCOME 258,240 90,000
NCICNI 5 16,560
CICNI

Statement of Retained Earnings

Retained Earnings, Jan 1
Pascal Co. 490,440
Sax Co. 144,000 1 144,000
Net Income From Above 258,240 90,000
Total 748,680 234,000
Dividends Paid
Pascal Co. 72,000
Sax Co. 48,000 4
Retained Earnings, Dec 31 676,680 186,000

Balance Sheet
Cash 265,200 102,000
Accounts Receivable 180,000 96,000
Inventory 216,000 108,000
Land 210,000 48,000 2 7,200
Equipment 240,000 180,000
Building 720,000 540,000 3
Discount on BP - - 3 3,600 3
Goodwill - - 3 9,000
Investment in Sax Co. 405,480 2
2
4
Total 2,236,680 1,074,000

AD - Equipment 150,000 102,000 2 84,000 3

AD - Building 450,000 306,000 2 198,000
3 6,000
Accounts Payable 120,000 120,000
Bonds Payable 240,000 120,000
Common Stock, P10 par - Pascal 600,000
Common Stock, P10 par - Sax 240,000 1 240,000
Retained Earnings
Pascal Co. 676,680
Sax Co. 186,000
Non-Controlling Interest - 5 9,600 2
2
5
Total 2,236,680 1,074,000 791,400
ments & Eliminations Consolidated
Cr Balances
720,000
-
720,000
348,000
90,000
1,200
66,000
3,000
508,200
211,800
(9,360)
202,440

360,000
-
202,440
562,440

72,000
36,000 -
490,440

322,800
150,000
6,000 210,000
265,200
420,000
216,000 1,044,000
1,200 3,600
3,000 9,000
288,000 -
84,000
5,640
2,424,600 1,779,000

12,000 147,000
495,000
 240,000
360,000
600,000
-

490,440

72,000 92,160
18,000
9,360
751,200 2,424,600

ments & Eliminations Consolidated

Cr Balances
900,000
-
900,000
408,000
90,000
1,200
126,000
-
625,200
274,800
(16,560)
258,240

490,440
-
258,240
748,680

72,000
48,000 -
676,680

367,200
276,000
 324,000
265,200
420,000
216,000 1,044,000
1,200 2,400
9,000
307,200 -
70,440
27,840
2,707,800

12,000 180,000
552,000

240,000
360,000
600,000
-

676,680

76,800 99,120
15,360
16,560
791,400 2,707,800
Problem 5 - Cost Method

D & A of Excess Schedule; Full Partial (CI) NCI

Consideration/FV of Subsidiary 760,000.00 646,000.00 114,000.00
BV of SHE Acquired (500K + 100k) 600,000.00 510,000.00 90,000.00
Excess 160,000.00 136,000.00 24,000.00
Allocation:
Increase in Inventory 70,000.00
Increase in Patent 90,000.00 160,000.00 136,000.00 24,000.00

Amortization Of Allocated Excess:

20x5 20x6
Inventory - P70,000 / 1yr 70,000.00 -
Patent - P90,000 / 10 yrs 9,000.00 9,000.00
Total 79,000.00 9,000.00

1-2.) 20x5 CNI CICNI NCICNI

Parent's Net Income from own operations 28,000.00 28,000.00 -
Subsidiary's net Income 30,000.00 25,500.00 4,500.00
Amortization (79,000.00) (67,150.00) (11,850.00)
Net Income/(Loss) (21,000.00) (13,650.00) (7,350.00)
(2) (1)
20x6 CNI CICNI NCICNI
Parent's Net Income from own operations
(P45,000) - (15,000 x 85%) (57,750.00) (57,750.00) -
Subsidiary's net Income 52,000.00 44,200.00 7,800.00
Amortization (9,000.00) (7,650.00) (1,350.00)
Net Income/(Loss) (14,750.00) (21,200.00) 6,450.00
(2) (1)

3.) Pen's Retained Earnings, 12/31/x6 91,000.00

Parent's share on undistributed Earnings of Silk:
RE - Silk, 12/31/x6 (100K+30K+52K-15K) 167,000.00
RE - Silk, 12/31/x4 100,000.00
Undistributed Earnings 67,000.00
Amortization: 20x5 (79,000.00)
20x6 (9,000.00) (88,000.00)
Adjusted Earnings/(Deficit) (21,000.00)
X CI %age 85% (17,850.00)
Consolidated Retained Earnings - 12/31/X6 73,150.00
OR
Pen's Retained Earnings, 12/31/x6 91,000.00
Parent's share in Subs adjsuted NI:
20X5 = (7,350) /15% x 85%) (41,650.00)
20X6 = 6,450 / 15% X 85% 36,550.00
20X6 Dividends Income from Subs (15,000 x 85%) (12,750.00)
Consolidated Retained Earnings - 12/31/X6 73,150.00

4.) FV of NCI, 12/31/x4 114,000.00 114,000.00

Share on Undistributed Earnings: NCICNI -x5 (7,350.00)
(21,000) x 15% (3,150.00) NCICNI -x6 6,450.00
NCI Value, 12/31/x6 110,850.00 Div (15K x 15%) (2,250.00)
NCI, 12/31/x6 110,850.00

5.) Patent, 12/31/x4 90,000.00

Less: Amortization, 20x5 to 20x6:
(9,000 x 2years) 18,000.00
Patent, 12/31/x6 72,000.00
 760,000.00
114,000.00

Loss (57,750.00)
Div Inc. 12,750.00
(45,000.00)