CHAPTER 2 - ConSta - Acquisition Date

Problem 2 - Per Co. And Sia Co.

Requirement 1 - D & A of Excess Schedule

Case 1 - Wholly Owned

Consideration Given 408,000.00
Less: BV of Equity Acquired:
Common Stock 240,000.00
PIC in Excess of Par 24,000.00
Retained Earnings 96,000.00 360,000.00
Allocated Excess 48,000.00
Less: Allocation:
Increase in Inventory 18,000.00
Increase in Land 72,000.00
Decrease in B&E (12,000.00)
Increase in Bonds Payable (42,000.00) 36,000.00
Goodwill 12,000.00

Case 2 - Wholly Owned

Consideration Given:
Cash 288,000.00
Common Stock (12,000 x P12) 144,000.00 432,000.00
Less: BV of Equity Acquired:
Common Stock 240,000.00
PIC in Excess of Par 24,000.00
Retained Earnings 96,000.00 360,000.00
Allocated Excess 72,000.00
Less: Allocation:
Increase in Inventory 18,000.00
Increase in Land 72,000.00
Decrease in B&E (12,000.00)
Increase in Bonds Payable (42,000.00) 36,000.00
Goodwill 36,000.00

Case 3 - Partially Owned (B) (A)

Total Parent (80%) NCI (20%)
FV of Subsidiary (360,000 / 80%) 450,000.00 360,000.00 90,000.00 NCI under Full GW
Less: BV of Interest Acquired 360,000.00 288,000.00 72,000.00
Allocated Excess 90,000.00 72,000.00 18,000.00
Allocation: 678,000.00
Increase in Inventory 18,000.00 282,000.00
Increase in Land 72,000.00 396,000.00 79,200.00
Decrease in B&E (12,000.00)
Increase in BP (42,000.00) 36,000.00 28,800.00 7,200.00
Goodwill 54,000.00 43,200.00 10,800.00 79,200.00 NCI under Partial GW
Full GW Partial GW

Case 4 - Wholly Owned

Consideration Given:
Cash 288,000.00
Common Stock (12,000 x P12) 144,000.00 432,000.00
Less: BV of Equity Acquired:
Common Stock 240,000.00
PIC in Excess of Par 24,000.00
Retained Earnings 96,000.00 360,000.00
Allocated Excess 72,000.00
Add: Existing Goodwill of Subsidiary 6,000.00
Total Allocated Excess 78,000.00
 Less: Allocation:
Increase in Inventory 18,000.00
Increase in Land 72,000.00
Decrease in B&E (12,000.00)
Increase in Bonds Payable (42,000.00) 36,000.00 6,000.00 Existing GW
Goodwill 42,000.00 36,000.00 Newly Acquired

Case 5 - Wholly Owned

Consideration Given:
Cash 408,000.00
Dividends-on (6,000.00) 402,000.00
Less: BV of Equity Acquired:
Common Stock 240,000.00
PIC in Excess of Par 24,000.00
Retained Earnings 96,000.00 360,000.00
Allocated Excess 42,000.00
Less: Allocation:
Increase in Inventory 18,000.00
Increase in Land 72,000.00
Decrease in B&E (12,000.00)
Increase in Bonds Payable (42,000.00) 36,000.00
Goodwill 6,000.00

Requirement 2 - Consolidated Balances

Case 1 Case 2 Case 3 - FGW Case 3 - PGW Case 4 Case 5
a. Total Assets - Per Co @ BV 912,000.00 1,011,600.00 945,600.00 945,600.00 1,011,600.00 912,000.00
Total Assets - Sia Co @ FV 678,000.00 678,000.00 678,000.00 678,000.00 672,000.00 678,000.00
Goodwill 12,000.00 36,000.00 54,000.00 43,200.00 42,000.00 6,000.00
Conso Total Assets 1,602,000.00 1,725,600.00 1,677,600.00 1,666,800.00 1,725,600.00 1,596,000.00

b. Total Liabilities - Per Co. @ BV 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00
Total Liabilities - Sia Co. @ FV 282,000.00 282,000.00 282,000.00 282,000.00 282,000.00 276,000.00
Conso Total Liabilities 642,000.00 642,000.00 642,000.00 642,000.00 642,000.00 636,000.00

c. Common Stock - Per Co. 600,000.00 600,000.00 600,000.00 600,000.00 600,000.00 600,000.00
New Shares Issued - Per - 120,000.00 - - 120,000.00 -
Common Stock - Sia - - - - - -
Conso Common Stock 600,000.00 720,000.00 600,000.00 600,000.00 720,000.00 600,000.00

d. APIC - Per Co. 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00

APIC on New Issuance - 15,600.00 - - 15,600.00 -
APIC - Sia - - - - - -
Conso APIC 60,000.00 75,600.00 60,000.00 60,000.00 75,600.00 60,000.00

e. RE - Per Co. 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00

RE on Acquisition - (12,000.00) (14,400.00) (14,400.00) (12,000.00) -
RE - Sia - - - - - -
Conso RE 300,000.00 288,000.00 285,600.00 285,600.00 288,000.00 300,000.00

f. Conso Common Stock 600,000.00 720,000.00 600,000.00 600,000.00 720,000.00 600,000.00

Conso APIC 60,000.00 75,600.00 60,000.00 60,000.00 75,600.00 60,000.00
Conso RE 300,000.00 288,000.00 285,600.00 285,600.00 288,000.00 300,000.00
NCI - - 90,000.00 79,200.00 - -
Conso SHE 960,000.00 1,083,600.00 1,035,600.00 1,024,800.00 1,083,600.00 960,000.00

g. NCI - - 90,000.00 79,200.00 - -

Conso Liabilities and SHE 1,602,000.00 1,725,600.00 1,677,600.00 1,666,800.00 1,725,600.00 1,596,000.00
CHAPTER 2 - ConSta - Acquisition Date

Problem 2 - Per Co. And Sia Co.

Requirement 3 to 6 are applicable to Case 1 and 2 Only:
CASE 1
3.) Investment in Sia Co. 408,000.00
Cash 408,000.00

4.) Elimination Entries - Working Papers

Case 1 - Wholly Owned
Consideration Given 408,000.00
Less: BV of Equity Acquired:
Common Stock 240,000.00
PIC in Excess of Par 24,000.00
Retained Earnings 96,000.00 360,000.00
Allocated Excess 48,000.00
Less: Allocation:
Increase in Inventory 18,000.00
Increase in Land 72,000.00
Decrease in B&E (12,000.00)
Increase in Bonds Payable (42,000.00) 36,000.00
Goodwill 12,000.00

E1 - Common Stock - Sia 240,000.00

PIC in Excess of Par - Sia 24,000.00
Retained Earnings - Sia 96,000.00
Investment in Sia Co. 360,000.00

E2 - Inventory 18,000.00
Land 72,000.00
Goodwill 12,000.00
Buildings & Equipment, net 12,000.00
Premiums on Bonds Payable 42,000.00
Investment in Sia Co. 48,000.00

5.) Conso Working Paper - for discussion

6.) Informal Conso Balance Sheet

 Assets
Cash 72,000.00
Accounts Receivale 150,000.00
Inventory 210,000.00
Land 330,000.00
Building & Equipment, net 828,000.00
Goodwill 12,000.00
Total Assets 1,602,000.00

Liabilities and Equity

Liabilities:
Accounts Payable 240,000.00
Bonds Payable 360,000.00
Premiums on BP 42,000.00 402,000.00 642,000.00
Stockholder's Equity:
Common Stock, P10 par 600,000.00
PIC in Excess of Par 60,000.00
Retained Earnings 300,000.00 960,000.00
Total Liabilities and SHE 1,602,000.00

CASE 2
3.) Investment in Sia Co. 432,000.00
Cash 288,000.00
Common Stock (12,000 x P10) 120,000.00
PIC in Excess of Par (12,000 x P2) 24,000.00

Retained Earnings/ARE 12,000.00

Cash 12,000.00

PIC in Excess of Par 8,400.00

Cash 8,400.00

4.) Elimination Entries

Case 2 - Wholly Owned
Consideration Given:
Cash 288,000.00
Common Stock (12,000 x P12) 144,000.00 432,000.00
Less: BV of Equity Acquired:
 Common Stock 240,000.00
PIC in Excess of Par 24,000.00
Retained Earnings 96,000.00 360,000.00
Allocated Excess 72,000.00
Less: Allocation:
Increase in Inventory 18,000.00
Increase in Land 72,000.00
Decrease in B&E (12,000.00)
Increase in Bonds Payable (42,000.00) 36,000.00
Goodwill 36,000.00

E1- Common Stock - Sia 240,000.00

PIC in Excess of Par - Sia 24,000.00
Retained Earnings - Sia 96,000.00
Investment in Sia Co. 360,000.00

E2 - Inventory 18,000.00
Land 72,000.00
Goodwill 36,000.00
Building & Equipment, net 12,000.00
Premiums on Bonds Payable 42,000.00
Investment in Sia Co. 72,000.00

5.) Conso Working Paper - for discussion

6.) Informal Conso Balance Sheet

Assets
Cash 171,600.00
Accounts Receivale 150,000.00
Inventory 210,000.00
Land 330,000.00
Building & Equipment, net 828,000.00
Goodwill 36,000.00
Total Assets 1,725,600.00

Liabilities and Equity

Liabilities:
Accounts Payable 240,000.00
Bonds Payable 360,000.00
 Premiums on BP 42,000.00 402,000.00 642,000.00
Stockholder's Equity:
Common Stock, P10 par 720,000.00
PIC in Excess of Par 75,600.00
Retained Earnings 288,000.00 1,083,600.00
Total Liabilities and SHE 1,725,600.00
CHAPTER 2 - ConSta - Acquisition Date

Problem 2 - Per Co. And Sia Co.

Requirement 7 to 11 are applicable to Case 3 Only:

7.) Investment in Sia Co. 360,000.00

Cash 360,000.00

Retained Earnings/ARE 14,400.00

Cash 14,400.00

8.) D& A of Excess Schedule

Case 3 - Partially Owned (B) (A)
Total Parent (80%) NCI (20%)
FV of Subsidiary (360,000 / 80%) 450,000.00 360,000.00 90,000.00
Less: BV of Interest Acquired 360,000.00 288,000.00 72,000.00
Allocated Excess 90,000.00 72,000.00 18,000.00
Allocation:
Increase in Inventory 18,000.00
Increase in Land 72,000.00
Decrease in B&E (12,000.00)
Increase in BP (42,000.00) 36,000.00 28,800.00 7,200.00
Goodwill 54,000.00 43,200.00 10,800.00
Full GW Partial GW

9.) Working Papers Elimination Entries

a.) Partial Goodwill Approach b.) Full Goodwill Approach
E1 -Common Stock - Sia 240,000.00 E1 - Common Stock - Sia 240,000.00
PIC in Excess of Par - Sia 24,000.00 PIC in Excess of Par - Sia 24,000.00
Retained Earnings - Sia 96,000.00 Retained Earnings - Sia 96,000.00
Investment in Sia Co. 288,000.00 Investment in Sia Co. 288,000.00
Non-controlling Interest 72,000.00 Non-controlling Interest 72,000.00

E2 -Inventory 18,000.00 E2 - Inventory 18,000.00

Land 72,000.00 Land 72,000.00
Goodwill 43,200.00 Goodwill 54,000.00
Building & Equipment, net 12,000.00 Building & Equipment, net 12,000.00
Premiums on Bonds Payable 42,000.00 Premiums on Bonds Payable 42,000.00
Investment in Sia Co. 72,000.00 Investment in Sia Co. 72,000.00
Non-controlling Interest 7,200.00 Non-controlling Interest 18,000.00

10.)Conso Working Paper - for discussion

11.)Informal Conso Balance Sheet - Partial GW Informal Conso Balance Sheet - Full GW
Assets Assets
Cash 105,600.00 Cash 105,600.00
Accounts Receivale 150,000.00 Accounts Receivale 150,000.00
Inventory 210,000.00 Inventory 210,000.00
Land 330,000.00 Land 330,000.00
Building & Equipment, net 828,000.00 Building & Equipment, net 828,000.00
Goodwill 43,200.00 Goodwill 54,000.00
Total Assets 1,666,800.00 Total Assets 1,677,600.00

Liabilities and Equity Liabilities and Equity

Liabilities: Liabilities:
Accounts Payable 240,000.00 Accounts Payable 240,000.00
Bonds Payable 360,000.00 Bonds Payable 360,000.00
Premiums on BP 42,000.00 402,000.00 642,000.00 Premiums on BP 42,000.00 402,000.00 642,000.00
Stockholder's Equity: Stockholder's Equity:
Common Stock, P10 par 600,000.00 Common Stock, P10 par 600,000.00
PIC in Excess of Par 60,000.00 PIC in Excess of Par 60,000.00
Retained Earnings 285,600.00 945,600.00 Retained Earnings 285,600.00 945,600.00
NCI 79,200.00 NCI 90,000.00
Total Liabilities and SHE 1,666,800.00 Total Liabilities and SHE 1,677,600.00