E8-2

1 Income Irom Superstore Ior 2009:

40 interest L $240,000 L 2/3 year $ 64,000
60 interest L $240,000 L 1/3 year 48,000
$112,000

2 Preacquisition income:
$240,000 L 20 L 2/3 year $ 32,000

Noncontrolling interest share Ior 2009:
$240,000 L 40 $ 96,000

E8-4

1 Gain on sale oI 20 interest
Beginning of the period sale assumption
Selling price $130
Book value oI interest ($436 investment
account balance L 20/80) 109
Gain on sale $ 21

.tual sale date assumption
Selling price $130
Book value oI interest sold:
Beginning oI the period balance $436
Add: Income ($150 L 1/3 year L 80) 40
476
Interest sold (L 20/80) 119
Gain on sale $ 11

2 Income Irom Savage
Beginning of the period sale assumption
Income Irom Savage($150 L 60) $ 90
.tual sale date assumption
January 1 to May 1:
Share oI Savage`s income ($150 L 80 L 1/3 year) $ 40
May 1 to December 31:
Share oI Savage`s income ($150 L 60 L 2/3 year) 60
Income Irom Savage $100

Investment in Savage December 31, 2009

Beginning oI Actual
Period Sale Sale Date
Assumption Assumption
Investment balance January 1 $436 $436
Book value oI interest sold (109) (119)
Income Irom Savage 90 100
Dividends (48) (48)
Investment balance December 31, 2009 $369 $369

E8-6

1 Investment in Sower

Investment balance December 31, 2009 ($9,000 L 80) $ 7,200
Cost oI new shares ($25 L 60,000 shares) 1,500
Investment in Sower aIter new investment $ 8,700

2 Goodwill Irom new investment

Sower`s stockholders` equity aIter issuance
($9,000 $1,500) $10,500
Petal`s ownership percentage
(480,000 60,000 shares)/660,000 shares .8182
Petal`s book value aIter issuance 8,591.1
Less: Petal`s book value beIore issuance (7,200)
Increase in book value Irom purchase
(book value acquired) $ 1,391.1

Cost oI 60,000 shares $ 1,500
Book value acquired (1,391.1)
Goodwill Irom acquisition oI new shares $ 108.9




E8-10

Preliminary.4mputati4ns

Investment cost July 1, 2010 $675,000

Implied total Iair value oI Sandridge ($675,000 / 90) $750,000
Less: Book value oI Sandridge:
Equity oI Sandridge Mines December 31, 2009 $700,000
Add: Income Ior 1/2 year 50,000
Equity oI Sandridge Mines July 1, 2010 750,000
Excess (book value underlying equity) 0

1 Investment income Irom Sandridge Mines

Income Irom Sandridge 2010 ($100,000 L 1/2 year L 90) $ 45,000

Income Irom Sandridge 2011:
January 1 to July 1 ($80,000 L 1/2 year L 90) $ 36,000
July 1 to December 31 ($80,000 L 1/2 year L 80) 32,000
$ 68,000

Investment in Sandridge Mines
Cost July 1, 2010 $675,000
Add: Income Irom Sandridge 2010 45,000
Less: Dividends paid in December ($50,000 L 90) (45,000)

Investment balance December 31, 2010 675,000

Less: Book value oI 1/9 interest sold on July 1, 2011 (79,000)
Add: Income Irom Sandridge 2011 68,000
Less: Dividends paid in December ($30,000 L 80) (24,000)

Investment balance December 31, 2011 $640,000

a Sale oI 10 interest July 1, 2011:
Equity oI Sandridge Mines December 31, 2009 $700,000
Add: Income less dividends 2010 50,000
Add: Income Ior 1/2 year 2011 40,000
Equity oI Sandridge Mines July 1, 2011 790,000
Interest sold 10

Underlying equity oI interest sold $ 79,000

Gain on sale oI 1/9 interest ($85,000 proceeds - $79,000) $ 6,000


2 Noncontrolling interest share

Noncontrolling interest share 2010:
($100,000 income L 10 interest)

$ 10,000

Noncontrolling interest share 2011:
($80,000 L 1/2 year L 10) ($80,000 L 1/2 year L 20) $ 12,000

on.ontrolling interest De.ember 31, 2010
Equity oI Sandridge Mines January 1 $700,000
Add: Income less dividends Ior 2010 50,000
Equity oI Sandridge Mines December 31 750,000
Noncontrolling interest percentage 10

Noncontrolling interest December 31 $ 75,000

on.ontrolling interest De.ember 31, 2011
Equity oI Sandridge Mines January 1 $750,000
Add: Income less dividends Ior 2011 50,000
Equity oI Sandridge Mines December 31 800,000
Noncontrolling interest percentage 20

Noncontrolling interest December 31 $160,000

E8-11

Preliminary computations:
Investment cost January 1, 2010 $ 690,000

Implied total Iair value oI Sanyo ($690,000 / 75) $ 920,000
Book value oI Sanyo (800,000)
Excess cost over book value Goodwill $ 120,000

1 Underlying book value December 31, 2010

$1,000,000 equity L 75 $ 750,000

2 Percentage ownership beIore purchase oI additional shares

30,000 shares owned/40,000 shares outstanding 75 interest

Percentage ownership aIter purchase oI additional shares

40,000 shares owned/50,000 shares outstanding 80 interest

Investment in Sanyo balance January 3, 2011

Investment cost January 1, 2009 $ 690,000
Add: Share oI Sanyo`s income less dividends
Ior 2009 ($200,000 L 75) 150,000
Investment in Sanyo December 31, 2009 840,000
Add: Additional investment January 3, 2011
(10,000 shares L $30) 300,000
Investment in Sanyo balance January 3, 2011 $1,140,000

4 Percentage ownership iI shares sold to outside entities

30,000 shares owned/50,000 shares outstanding 60 interest

5 Investment in Sanyo balance January 3, 2011

Investment in Sanyo December 31, 2009
$ 840,000
Add: Increase in book value Irom change in
ownership interest:

Book value aIter additional 10,000 shares
were issued ($1,300,000 equity L 60) $780,000
Book value beIore additional 10,000 shares
were issued ($1,000,000 equity L 75) (750,000) 30,000
Investment in Sanyo balance - January 3, 2011 $ 870,000