Exercise 7-1

Determination and Distribution of

Excess Schedule
Company Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Common Stock
Paid in Excess
Retained Earnings
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization /year

Total 0

Penstar Company and Subsidiary Sargio Company

Consolidated Balance Sheet
1/2/2014
Assets

Total Assets

Liabilities and Stockholders' Equity

Total Liabilities and Stockholders' Equity

Exercise 7-2

Company
imprlied fair Parent Price NCI value (40%)
Particulars valuealue (60%)
Fair Value of Subsidiary A 250,000 150,000 100,000
Less Book Value of Interest Acquired
Common Stock ($10 par) 100,000
Retained Earnings 20,000
Total Equity 120,000 120,000 120,000
Interest Acquired 60% 40%
Book Value B 120,000 72,000 48,000
Excess of Cost over Book Value A-B 130,000 78,000 52,000
Adjustment of indentifiable accounts Adjustment Life Amortization per year
Equipment 130,000 10 13,000

Analysis of 20% Interest, January 1, 2013

Price paid for additional investment in Hardwood 40,000

Less interest acquired:
Common stock ($10 par) 100,000
Retained earnings 50,000
Total stockholders’ equity 150,000
Interest acquired x20% 30,000
Excess 10,000
Equipment adjustment (8 remaining years × $13,000 × 20%) (20,800)
Parent paid-in capital in excess of par from stock retirement (10,800)
Debit D
Exercise 7-3
Determination and Distribution of
Excess Schedule
Company Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Common Stock
Retained Earnings
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization /year

Total 0

Entries Debit Credit

Exercise 7-4
Determination and Distribution of
Excess Schedule
Company Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization /year

Total 0

Entries and Computations Debit Credit

Exercise 7-6
Determination and Distribution of
Excess Schedule
Company Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Common Stock
Retained Earnings
Prefered Dividends in Arrears
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization /year

Total 0

Determination and Distribution of

Excess Schedule
Company Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Common Stock
Paid in Excess
Retained Earnings
Preferred Dividend Share of RE
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization /year

Total 0

Determination and Distribution of

Excess Schedule
Company Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Common Stock
Retained Earnings
Preferred Dividends Share of RE
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization /year

Total 0
Exercise 7-7
Determination and Distribution of
Excess Schedule
Company Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Common Stock
Retained Earnings
Preferred Dividends in Arrears
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization /year

Total 0

Entries Debit Credit

Problem 7-1
Price Paid
Less Interest Acquired
Common Stock
Retained Ernings
Total
Interest Acquired
Excess
Equipment Adjustment
Debit to RE

Income distribution schedules:

Subsidiary: DR CR
Internally generated net income
Depreciation

Net income
NCI share
Controlling share of sub. Income

Parent
Internally generated net income

Controlling share of subsidiary

Controlling interest

Consolidated net income

Consolidated Worksheet

Trial Balance Eliminations

Parker Share Dr Cr
Current Assets 160,000 80,000
Investment in Share 301,000

Property, Plant, and Equipment 450,000 170,000

Current Liabilities (110,000) (20,000)

Common stock - Parker (500,000)
Retained earnings - Parker (198,000)
Common stock - Share (100,000)
Retained earnings - Share (100,000)

Sales (400,000) (110,000)

Cost of goods sold 200,000 60,000
Other expenses 100,000 15,000

Subsidiary income (28,000)

Dividends declared - Parker 25,000
Dividends declared - Share 5,000
Totals 0 0
Consolidated net income
NCI share
Controlling share
NCI
Controlling retained earnings
Totals

Eliminations and Adjustments

Consol NCI Control. Consol.
Net Inc. R.E. Bal. Sht.
Problem 7-2
Common Information
Market
Number of Price per
Cash Shares Share Total
Price Paid First Purchase 0

Company
Value Analysis First Implied Fair
Purchase Value Parent Price NCI Value
Price Paid
Fair Value of Net Assets
Excluding Goodwill
Goodwill
Gain on Acquisition

Determination and
Distribution of Excess
Schedule
Company
Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest
Acquired
Common Stock
Paid in Excess
Retained Earnings
Total Equity
Interest Acquired
Book Value
Value
Worksheet
Accounts Adjusted Distribution

Total 0

Analysis of 20% Interest

Price Paid
Less interest Acquired
Common Stock
Paid in Excess
Retained Earnings
Income
Total
Entries and Computations Debit Credit

Intercompany Inventory Profit Deferral

Parent Parent Parent Sub Sub Sub
Amount % Profit Amount % Profit
Beginning
Ending

Income distribution schedules:

Subsidiary: DR CR
Internally generated net income

Adjusted Net Income

NCI share
Controlling share of sub. Income

Parent
Internally generated net income
Controlling share of subsidiary
Purchased Income
Controlling interest
Consolidated Worksheet
Trial Balance Eliminations
James Craft Dr Cr
Inventory, December 31 100,000 50,000
Other Current Assets 126,000 180,000
Investment in Craft Company 413,000

Land 50,000 50,000

Buildings and Equipment 350,000 320,000
Accumulated Depreciation (100,000) (60,000)
Goodwill
Other Intangibles 20,000
Current Liabilities (120,000) (40,000)
Bonds Payable (100,000)
Other Long-Term Liabilities (200,000)
Common Stock—James (200,000)
Other Paid-In Capital—James (100,000)
Retained Earnings—James (214,000)

Common Stock—Craft (50,000)

Other Paid-In Capital—Craft (100,000)
Retained Earnings—Craft (190,000)

Net Sales (520,000) (450,000)

Cost of Goods Sold 300,000 260,000
Operating Expenses 120,000 100,000
Subsidiary Income (75,000)
Dividends Declared 50,000 30,000
Purchased Income
Total 0 0
Consolidated Net Income
To NCI (see distribution schedule)
To Controlling Interest (see distribution schedule)
Total NCI
Retained Earnings—Controlling Interest, December 31, 20X2
Totals
Eliminations and Adjustments
Consol NCI Control. Consol.
Net Inc. R.E. Bal. Sht.
Problem 7-3 Company
implied fair NCI value
Particulars valuealue Parent Price (70%) (30%)
Fair Value of Subsidiary A 475,500 325,500 15,000
Less Book Value of Interest Acquired
Common Stock ($10 par) 100,000
Retained Earnings 400,000
Total Equity 500,000 500,000 500,000
Interest Acquired 70% 30%
Book Value B 500,000 350,000 150,000
Excess of Cost over Book Value A-B (24,500) (24,500) 0

Amortization
Adjustment of indentifiable accounts Adjustment Life per year
Gain on acquisition (24,500)

Analysis of September 30, 2017, purchase:

Price paid 105,000

Less interest acquired
Common stock 100,000
Retained earnings, January 1 400,000
Income, January–September 25,000
Total stockholders’ equity 525,000
Interest acquired x20%
Excess 105,000
0

Away Company and Subsidiary Stallward Company

Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2017

Particulars
Trail balance
Away Stallward
Cash 99,500 78,000
Notes receivable 100,000

Accounts receivable 200,000 100,000

Interest receivable 3,000
Devidends receivable 4,500
Inventories 924,000 125,000
Investment in Stallward 469,200 D
CY
Propert, plant and equipment 1,250,000 500,000
Accumulated Depreciation... (500,000) (150,000) F
Deferred charges 25,000
Pattents and licenses 50,000
Cash in transit LN
Accounts payable (425,000) (80,000)
Notes payable (75,000) LN
Dividend payable (5,000) CY
Capital stock -Away (300,000)
Retained Earnings—Away (1,605,000)
Capital stock -Stallward (100,000) EL
Retained Earnings—Stallward (400,000) EL
Sales and services (1,800,000) (750,000) S
IS
F
Common stock -Parson (43,200) CY
Paid-in capital in excess of par -Parson (3,000) 525,000 LN
Retained Earnings—Parson 1,350,000
174,000 EL
Administrative and selling expenses 251,000 S
3,000
Interest expenses
Gain on acquisition
Dividends declared 5,000
Purchaes income PI
Totals 0 0
Consolidated Net Income
To NCI
To controlling interest
Total NCI.
Retained Earnings-Controliing Interest 12/31/2017
Totals

Subsidiary Stallward Inc income distribution

Unrealized profit on engineering services 5,500 Internally generated net income 48,000

Adjusted income 42,500

NCI share x10%
NCI 4,250
 Parent Away Company Income Distribution

Unrealized gain on sale of tools 10,000

Unrealized profit in endding inventory 2,500 Internally generated net income 202,000
70% interest in income of Stallward fr full year
(70%x42,500) 29,750
20% interest in income for one-quarter year
[(42,500-25,000)x20%] 3,500
Gain on acquisition 24,500
Depreciation adjustment on tools 1,000

Controlling interest 248,250

 Credit

ary Stallward Company

d Financial Statements
ember 31, 2017

Controllin Consolid
NCI g ated
Consolidated Retained Balance
Eliminatins and adjustments Net income Earnings Shet
Debit Credit
177,500
25,000 LN
75,000 LN
300,000
3,000 LN
4,500 CY
2,500 EL ###
24,500 43,200 CY
4,500 450,000 EL
 5,000 PI
10,000 F ###
1,000 (649,000)
5,500 S 19,500
50,000
28,000 28,000
(505,000)
75,000
4,500 (500)
(300,000)
###
90,000 (10,000)
360,000 (40,000)
40,000
60,000
10,000
43,200 (2,440,000)
3,000

2,500 60,000 IS
5,500 40,000 S 1,817,500
1,000 F
3,000 LN 389,500
24,500 D (24,500)
4,500 CY 500
5,000 5,000
756,700 756,700
(252,500)
4,250 (4,250)
(248,250) (248,250)
(53,750) (53,750)
### ###
Problem 7-4
Determination and Distribution of
Excess Schedule
Company
Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Common Stock
Paid in Excess
Retained Earnings
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization/year

Total 0

Entries Debit Credit

Problem 7-6
Determination and
Distribution of Excess
Schedule
Company
Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest
Acquired
Common Stock
Retained Earnings
Preferred arrearage
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization/year

Total 0

Income distribution schedules:

Subsidiary: DR CR
Internally generated net income

Adjusted Net Income

NCI share
Controlling share of sub. Income

Parent
Internally generated net income

Controlling share of subsidiary

Controlling interest
Marsha Corporation and Subsidiary Transam Corporation
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2016

Trial Balance Eliminations

Marsha Transam Dr

Current Assets 806,400 463,250

Investment in Transam 720,000

Land 400,000 210,000

Building 950,000 500,000
Accumulated Depreciation—Building (200,000) (160,000)
Equipment 1,500,000 740,000
Accumulated Depreciation—
Equipment (400,000) (200,000)
Goodwill
Liabilities (800,000) (550,000)
Common Stock—Marsha (2,000,000)
Retained Earnings—Marsha (860,000)

Preferred Stock—Transam (100,000)

Common Stock—Transam (750,000)
Retained Earnings (common)—
Transam (124,000)

Retained Earnings (preferred)—

Transam
Sales (2,100,000) (1,000,000)
Subsidiary Dividend Income (21,400)
Cost of Goods Sold 1,155,000 600,000
Other Expenses 650,000 320,000
Dividends Declared 200,000 50,750
0 0
Consolidated Net Income
To NCI (see distribution schedule)
To Controlling Interest (see
distribution schedule)
Total NCI
Retained Earnings—Controlling
Interest, December 31, 20X6
Totals
ons Consol NCI Control. Consol.
Cr Net Inc. R.E. Bal. Sht.
Problem 7-7
Adjustment of Investment Account Debit Credit

Determination and
Distribution of Excess
Schedule
Company
Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest
Acquired
Common Stock
Retained Earnings
January 1 to June 20 Income
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization/year

Total 0

January 1, 2018 Motor Corporation Preferred

Determination and
Distribution of Excess
Schedule
Company
Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest
Acquired
Common Stock
Retained Earnings
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization/year

Total 0

Income distribution schedules:

Subsidiary: DR CR
Boat
Internally generated net income

Total
NCI share
Controlling share

Motor
Internally generated net income

Total
NCI share
Controlling share

Parent
Internally generated net income
Controlling share of Boat
Controlling share of Motor

Amortizations
Total

Intercompany Inventory Profit Deferral

Parent Parent Parent Sub Sub
Amount % Profit Amount %
Beginning
Ending

Trial Balance Eliminations

Titan Boat Engine Dr

Cash 100,000 87,000 95,000

Accounts Receivable 158,200 210,000 105,000
Inventories 290,000 90,000 115,000
Advance to Boat Corporation 17,000
Dividends Receivable 24,000
Property, Plant, and Equipment 777,600 325,000 470,000
Accumulated Depreciation (180,000) (55,000) (160,000)
Investment in Boat Corporation:
6% Bonds 23,800
Common Stock 293,600

Investment in Engine Corporation:

Preferred Stock 7,400

Common Stock 207,200

Notes Payable (45,000) (14,000) (44,000)

Accounts Payable (170,000) (96,000) (86,000)

Bonds Payable (285,000) (150,000) (125,000)

Discount on Bonds Payable 8,000
Dividends Payable (22,000) (30,000)
Preferred Stock—Titan (400,000)
Common Stock—Titan (600,000)
Retained Earnings—Titan (154,600)
Common Stock—Boat (250,000)
Retained Earnings—Boat (107,000)
Preferred Stock—Engine (50,000)
Common Stock—Engine (200,000)
Retained Earnings (common)—
Engine (100,000)

Retained Earnings (preferred)—

Engine

Sales (1,050,000) (500,000) (650,000)

Other Revenue (2,100)
Gain on Bond Retirement
Unrealized gain on investment (1,000)
Subsidiary Income:
Common Stock—Boat (16,000)
Preferred Stock—Engine (400)
Common Stock—Engine (11,200)
Cost of Goods Sold 650,000 300,000 400,000
Other Expenses 358,500 160,000 230,000
Dividends Declared 22,000 30,000
Purchased Income
0 0 0
Consolidated Net Income
To NCI—Boat (see distribution
schedule)
To NCI—Motor (see distribution
schedule)
To Controlling Interest (see
distribution schedule)
NCI—Boat
NCI—Engine
Retained Earnings—Controlling
Interest, December 31, 20X8
Totals
Sub
Profit
Eliminations Consol NCI Control. Consol.
Cr Net Inc. R.E. Bal. Sht.
Problem 7-8

Determination and Distribution of Excess

Schedule
Company
Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Common Stock
Retained Earnings
Preferred Arrearage
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization/year

Total 0

Income distribution schedules:

Subsidiary: DR CR
Internally generated net income

Total
Less Preferred Share

NCI share

Controlling share

Parent
Internally generated net income
Total

Intercompany Inventory Profit Deferral

Parent Parent Parent Sub
Amount % Profit Amount
Beginning
Ending

Consolidated Balance Sheet

Trial Balance Eliminations
Black Jack Zeppo Dr

Cash 30,400 10,000

Accounts Receivable (net) 80,000 76,000
Inventories 230,000 44,000
Other Current Assets 20,000 8,000
Property, Plant, and Equipment 1,450,000 122,000

Accumulated Depreciation (420,000) (25,000)

Investment in Zeppo—Preferred Stock 56,000

Investment in Zeppo—Common Stock 121,200

Liabilities (350,000) (18,000)

Common Stock—Black Jack (1,000,000)
Retained Earnings—Black Jack (195,000)

Preferred Stock—Zeppo ($100 par) (50,000)

Common Stock—Zeppo (100,000)
Paid-In Capital in Excess of Par—Zeppo (20,000)
Retained Earnings (preferred)—Zeppo
Retained Earnings—Zeppo (41,000)

Sales (420,000) (96,000)

Cost of Goods Sold 300,000 60,000

Other Expenses 80,000 26,000

Dividends Declared 25,000 4,000

Subsidiary Income—Preferred (4,000)

Subsidiary Income—Common (3,600)
Paid-In Capital in Excess of Par—Black Jack
 0 0
Consolidated Net Income
To NCI—Boat (see distribution schedule)
To NCI—Motor (see distribution schedule)
To Controlling Interest (see distribution schedule)
NCI—Boat
NCI—Engine
Retained Earnings—Controlling Interest,
December 31, 20X8
Totals
 Sub Sub
% Profit

Eliminations Consol NCI Control. Consol. Consol.

Cr Net Inc. R.E. Bal. Sht. Bal. Sht.
Problem 7-A1
Analysis of 20% Purchase

Consolidated Balance Sheet

Balance Sheet Eliminations and Adjustments

Marley Foster Debit Credit
Cash 167,250 101,000
Accounts Receivable 170,450 72,000
Notes Receivable 87,500 28,000
Dividends Receivable 36,000
Inventories 122,000 68,000
Property, Plant, and
Equipment
487,000 252,000
Accumulated Depreciation (117,000) (64,000)
Investment in Foster 248,800

Accounts Payable (222,000) (76,000)

Notes Payable (79,000) (89,000)
Dividends Payable (40,000)
Common Stock ($10 par)—
Marley
(400,000)
Common Stock ($10 par)—
Foster
(100,000)
Retained Earnings—Marley (501,000)

Retained Earnings—Foster (152,000)

Totals 0 0
NCI
Totals
 Consolidated
NCI Balance Sheet
Problem 7A-2

Determination and
Distribution of Excess
Schedule
Company
Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest
Acquired
Common Stock
Retained Earnings
Preferred arrearage
Total Equity
Interest Acquired
Book Value
Value
Worksheet
Accounts Adjusted Distribution Amortization/year

Total 0

Consolidated Balance Sheet

Balance Sheet Eliminations and Adjustments

Book Cray Debit
Cash
Accounts and Other Current 825,000 330,000
Receivables 2,140,000 835,000
Inventories 2,310,000 1,045,000
Land 650,000 300,000
Depreciable Assets (net) 4,575,000 1,980,000
Goodwill
Investment in Cray Inc. 2,860,000
Long Term Investments and
Other Assets 865,000 385,000
Accounts Payable and Other
Current Liabilities (2,465,000) (1,145,000)
Long-Term Debt (1,900,000) (1,300,000)
Common Stock ($25 par) (3,200,000) (1,000,000)
Additional Paid-In Capital (3,260,000) (190,000)
Retained Earnings (3,400,000) (1,240,000)
Totals 0 0
NCI
Totals
Adjustments and Eliminations
Book Inc. and Subsidiary Cray Inc.
Consolidated Statement of Retained Earnings
 Consolidated
djustments NCI Balance Sheet
Credit
Problem 7-A3
Determination and Distribution of
Excess Schedule
Company
Value Parent Price NCI
Fair Value of Subsidiary
Less Book Value of Interest Acquired
Total Equity
Interest Acquired
Book Value
Excess of Cost over Book Value
Worksheet
Accounts Adjusted Distribution Amortization/year

Total 0

Consolidated Balance Sheet

Balance Sheet Eliminations and Adjustments

Press Soap Debit
Assets:
Accounts Receivable 65,000 50,000
Bond Interest Receivable 1,500
Minimum Lease Payments Receivable 80,000
Unearned Interest Income (2,961)
Inventory 86,000 80,000
Other Current Assets 60,236 183,668
Investment in Soap Company 351,000

Investment in Soap Bonds 59,225

Land 60,000 30,000
Buildings and Equipment 300,000 230,000

Accumulated Depreciation—Buildings and

Equipment (100,000) (50,000)

Equipment Under Capital Lease 111,332

Accumulated Depreciation—Equipment
Under Lease (35,000)
Goodwill
Total 960,000 600,000

Liabilities and Equity:

Accounts Payable 78,000 70,000
Bond Interest Payable 2,500
Lease Interest Payable 5,707
Other Current Liabilities 57,000 48,911
Lease Obligation Payable 71,332
Bonds Payable 150,000 100,000
Premium on Bonds 1,550
Common Stock—Press 200,000
Other Paid-In Capital—Press 150,000
Retained Earnings—Press 325,000

Common Stock—Soap 100,000

Other Paid-In Capital—Soap 70,000
Retained Earnings—Soap 130,000
960,000 600,000

NCI
Totals
 Consolidated
ations and Adjustments NCI Balance Sheet
Credit