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Student Name: Morgan Bertone Class: Problem 04-32

FATHER, INC. AND SAM CORPORATION - Purchase price allocation and annual amortization Acquisition-date subsidiary fair value Book value of subsidiary Fair value in excess of book value $ 850,000 600,000 250,000 Correct!

Allocations to specific accounts based on difference between fair value and book value: Land $ 165,000 Buildings and equipment (25,000) Copyright 100,000 Notes payable 10,000 Total $

250,000 Correct!

Annual excess amortizations: Buildings and equipment Copyright Notes payable Total

$ $ $

(25,000) 100,000 10,000

Life Excess (years) Amortizations 10 $ (2,500) 20 5,000 8 1,250 $ 3,750


Correct!

Student Name: Morgan Bertone Class: Problem 04-32

Totals for the business combination for the year ending December 31, 2006 FATHER, INC. AND SAM CORPORATION Account Name Revenues Balance Explanation $ 1,900,000 Add together Father and Sam

Cost of goods sold

$ 1,085,000 Add together both Father and Sam

Depreciation expense

267,500 Add together both depreciatione expenses and subtrat the 2,500 from above from the building depreciation 10,000 Add the companies together as well as add the copy right amoritization 50,250 Add interest expenses together as well as the additional notes payable from above. - It will be zero because your income entry will get rid of Father equity. 487,250 Revenues minus your expenses from above

Amortization expense

Interest expense

Equity in income of Sam

Net income

Retained earnings, 1/1

$ 1,265,000 Just take Father retained earning from the year prior.

Noncontrolling interest in income of subsidiary Dividends paid

26,250 Take the net income of Sam and subtract the amorization expense of 3,750 and multiply by 20% 260,000 Just take the parents because the other dividends are considered to be inter company

Retained earnings, 12/31

$ 1,466,000 Just take the Father retained earning you do not worry about the subsiary $ 1,493,000 Add together the parent and subsiary

Current assets

Investment in Sam

- The investment will always be zero due to your journal entries

Land

517,000 Add together the land and also add the 165,00 which the land was undervalued by

Buildings and equipment (net)

$ 1,119,500 Add together the parent and subsiary balances. You subtract the the overvalued equipment and add the amortization $ 190,000 Add the balances together and add the undervalue of the copyright and subtract the amoritization

Copyright

Total assets Accounts payable

$ 3,319,500 $ 339,000 Add balances from Father and Sam together

Notes payable

581,250 Add the balances together and subtract add the undervalue and subtract the amortization 183,250 Take 20% of the book fv of the subsiary add the non controlling income and subtract the non controlling dividends 300,000 Just take the parents because the subsiary will be zeroed out from the S entry 450,000 Just take the aprents APIC because the subsiary is going to be zero after you s transaction

Noncontrolling interest in Sam

Common stock

Additional paid-in capital

Retained earnings, 12/31

$ 1,466,000 Use the parents retained earning from above

Total liabilities & equities

$ 3,319,500

Student Name: Morgan Bertone Class: Problem 04-32

FATHER, INC. AND SAM CORPORATION Consolidation Worksheet NonFather, Sam Consolidation Entries controlling Consolidated Inc. Corporation Debit Credit Interest Totals (1,360,000) (540,000) (1,900,000) 700,000 385,000 1,085,000 260,000 10,000 [E] 2,500 267,500 5,000 [E] 5,000 10,000 44,000 5,000 [E] 1,250 50,250 (105,000) - [ I ] 105,000 (461,000) (135,000) (487,250) 26,250 26,250 (461,000) (1,265,000) (461,000) 260,000 (1,466,000) 1,493,000 -

Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sam Separate company net income Consolidated net income Noncontrolling interest in Sam's income Controlling interest in CNI Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31 Current assets Investment in Sam

Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct!

(1,265,000) (461,000) 260,000 (1,466,000) 965,000 733,000

(440,000) [S] (135,000) 65,000 (510,000) 528,000 -

440,000 [D] 52,000 13,000

[D]

52,000

[S] [I] [A] [A] [E]

430,000 105,000 200,000 25,000 5,000

Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable NCI in Sam 1/1 NCI in Sam 12/31 Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and equity Parentheses indicate a credit balance.

292,000 877,000 2,867,000 (191,000) (460,000)

60,000 265,000 95,000 948,000

[A] [E] [A]

165,000 2,500 100,000

517,000 1,119,500 190,000 3,319,500 (339,000) (581,250) 170,000 183,250 (183,250) (300,000) (450,000) (1,466,000) (3,319,500)

Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct!

(148,000) (130,000) [A]

10,000

[E] [S] [A]

1,250 120,000 50,000

(300,000) (450,000) (1,466,000) (2,867,000)

(100,000) [S] (60,000) [S] (510,000) (948,000)

100,000 60,000

Given Data P04-32 Sam Corporation outstanding common stock acquired by Father, Inc. Cash paid by Father, Inc. for Sam Corporation shares Sam's assessed fair value Book value of Sam Corporation Sam accounts values on 1/1/11 Book Value $ 60,000 275,000 100,000 (130,000) Father, Inc. 12/31/2011 $ (1,360,000) 700,000 260,000 44,000 (105,000) $ (461,000) Fair Value $ 225,000 250,000 200,000 (120,000) Sam Corporation 12/31/2011 $ (540,000) 385,000 10,000 5,000 5,000 $ (135,000) 80% $ $ $ 680,000 850,000 600,000

Land Buildings and equipment (10-year remaining life) Copyright (20-year life) Notes payable (due in 8 years)

Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sam Net income Retained earnings, 1/1/11 Net income Dividends paid Retained earnings, 12/31/11 Current assets Investment in Sam Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equity

$ (1,265,000) $ (440,000) (461,000) (135,000) 260,000 65,000 $ (1,466,000) $ (510,000) $ 965,000 733,000 292,000 877,000 $ 2,867,000 $ $ 528,000 60,000 265,000 95,000 948,000

(191,000) $ (148,000) (460,000) (130,000) (300,000) (100,000) (450,000) (60,000) (1,466,000) (510,000) $ (2,867,000) $ (948,000)

Note: Credits are indicated by parentheses.

Student Name: Class: Problem 04-33 ADAMS CORPORATION AND BARSTOW, INC. - Purchase price allocation and excess amortizations Consideration transferred by Adams Noncontrolling interest fair value Acquisition-date total fair value Book value of Barstow Excess fair value over book value Annual Excess Amortizations

Life (years) Land Buildings Equipment Patents Notes payable Goodwill Total

indefinite

Student Name: Class: Problem 04-33 ADAMS CORPORATION AND BARSTOW, INC. Consolidation Worksheet For Year Ending December 31, 2011 Noncontrolling Consolidated Interest Totals

Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Investment income Separate company net income Consolidated net income Income to noncontrolling interest Income to controlling interest Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31 Current assets Investment in Barstow

Adams Corp. (940,000) 480,000 100,000 40,000 (108,000) (428,000)

Barstow Inc. (280,000) 90,000 55,000 15,000 (120,000)

Debit

Credit

(1,367,000) (428,000) (110,000) (1,685,000) 610,000 702,000

(340,000) (120,000) 70,000 (390,000) 250,000

Land Buildings Equipment Patents Goodwill Total assets Notes payable Common stock Retained earnings, 12/31 Noncontrolling interest

380,000 490,000 873,000

150,000 250,000 150,000

3,055,000 (860,000) (510,000) (1,685,000)

800,000 (230,000) (180,000) (390,000)

Total liabilities and equity Parentheses indicate a credit balance.

(3,055,000)

(800,000)

Given Data P04-33 Barstow, Inc. outstanding voting shares acquired by Adams Corporation Cash paid by Adams Corporation for Barstow, Inc. shares Barstow account values on 12/31/09 Book Fair Market Value Value $ 160,000 $ 160,000 120,000 150,000 220,000 200,000 160,000 200,000 50,000 (200,000) (180,000) (180,000) (280,000) Adams Barstow, Inc. Corporation Corporation 12/31/2011 12/31/2011 Debits Current assets Land Buildings Equipment Investment in Barstow, Inc. Cost of goods sold Depreciation expense Interest expense Dividends paid Total debits Credits Notes Payable Common stock Retained earnings, 1/1/11 Revenues Investment income Total credits $ 610,000 380,000 490,000 873,000 702,000 480,000 100,000 40,000 110,000 $ 3,785,000 $ 250,000 150,000 250,000 150,000 90,000 55,000 15,000 70,000 $ 1,030,000 90% $ 603,000

Current assets Land Buildings (10-year life) Equipment (5-year life) Patents (10-year life) Liabilities (5-year life) Common stock Retained earnings, 12/31/09

860,000 510,000 1,367,000 940,000 108,000 $ 3,785,000

230,000 180,000 340,000 280,000 $ 1,030,000