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BADVACIX_sample problems_5.17.2025_solution (1)

The document outlines financial data related to a parent company and its subsidiary, including consideration transferred, fair value adjustments, and consolidated net income for the years ending 2030 and 2031. It details the calculation of goodwill, retained earnings, and non-controlling interest (NCI), along with various adjustments for fair value and amortization. The final figures indicate consolidated total assets and shareholders' equity at the end of the reporting periods.

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7 views4 pages

BADVACIX_sample problems_5.17.2025_solution (1)

The document outlines financial data related to a parent company and its subsidiary, including consideration transferred, fair value adjustments, and consolidated net income for the years ending 2030 and 2031. It details the calculation of goodwill, retained earnings, and non-controlling interest (NCI), along with various adjustments for fair value and amortization. The final figures indicate consolidated total assets and shareholders' equity at the end of the reporting periods.

Uploaded by

rosadinojessa2
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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1.1 Consideration transferred 960,000.

00
NCI 230,400.00
Previously held interest
Total 1,190,400.00
Fair value net identifiable assets (1,152,000.00)
Goodwill 38,400.00

Assets - FV 1,228,800.00
Liabilities - FV (76,800.00)
Fair value net identifiable assets 1,152,000.00

Parent - book value 3,328,000.00


Subsidiary - FV 1,228,800.00
Goodwill 38,400.00
Consolidated Assets - 1/1/2030 4,595,200.00

1.2 Ordinary Share - parent


Beg 1,536,000.00
Newly issued shares 640,000.00 2,176,000.00

Share premium - parent


Beg 512,000.00
Newly issued shares 320,000.00 832,000.00

Retained earnings - parent 640,000.00


NCI 230,400.00
Consolidated Shareholders' Equity - 1/1/2030 3,878,400.00

80% 20%
1.3 Parent NCI Total
Net income - parent 768,000.00 768,000.00
Net income - subsidiary 204,800.00 51,200.00 256,000.00
Fair value adjustment - amortization
Inventory (sold at year end) (81,920.00) (20,480.00) (102,400.00)
Equipment (20,480.00) (5,120.00) (25,600.00)
Consolidated Net Income - 12/31/2030 870,400.00 25,600.00 896,000.00
Fair value adjustment Fair value Book value Undervalued/ (Overvalued)
Inventory 396,800.00 294,400.00 102,400.00
Equipment, net 614,400.00 512,000.00 102,400.00

Yearly amortization
Equipment 25,600.00

1.4 Parent, 12/31 5,350,400.00


Subsidiary, 12/31 1,587,200.00
Investment in X (960,000.00)
Goodwill 38,400.00
Fair value adjustment
Equipment, net 76,800.00
Consolidated Total Assets - 12/31/2030 6,092,800.00

1.5 Ordinary share - parent 2,176,000.00


Share premium - parent 832,000.00
Retained earnings - parent 1,510,400.00
NCI 256,000.00
Consolidated Shareholders' Equity - 12/31/2030 4,774,400.00

Retained earnings, beg - 1/1/ 2030 640,000.00


Consolidated net income attributable to parent 870,400.00
Retained earnings, end - 12/31/2030 1,510,400.00

Unadjusted Retained earnings, end - 12/31/2030 1,408,000.00


Net income subsidiary 204,800.00 256000*0.8
Fair value adjustment - amortization
Inventory (sold at year end) (81,920.00)
Equipment (20,480.00)
Adjusted Retained earnings, end - 12/31/2030 1,510,400.00
NCI, beg
Consolidated net income attributable to parent (960,000.00)
Retained earnings, end - 12/31/2030 (960,000.00)

NCI, beg - 1/1/ 2030 230,400.00


Consolidated net income attributable to NCI 25,600.00
NCI, end - 12/31/2030 256,000.00

NCI, beg - 1/1/ 2030 230,400.00


Net income subsidiary 51,200.00
Fair value adjustment - amortization
Inventory (sold at year end) (20,480.00)
Equipment (5,120.00)
NCI, end - 12/31/2030 256,000.00

2.1 Retained earnings beg - mama 780,000.00


Net Income 170,000.00
Divident (60,000.00)
Retained earnings, end - Mama 890,000.00

Ordinary share - mama 1,000,000.00


share premium - mama 450,000.00
Retained earnings beg - mama 780,000.00
Net assets, book value - mama 2,230,000.00
fair value adjustment
Inventory (44,000.00)
Equipment 60,000.00
Net assets, fair value value - mama 2,246,000.00

80% 20%
Parent NCI Total
Consideration transferred 2,345,000.00 2,345,000.00
NCI 470,000.00 470,000.00
Net assets, fair value value - mama (1,796,800.00) (449,200.00) (2,246,000.00)
Goodwill, 1/1 548,200.00 20,800.00 569,000.00
Impairment (54,820.00) (2,080.00) (56,900.00)
Goodwill, 12/31 493,380.00 18,720.00 512,100.00
80% 20%
Parent NCI Total
Net income - parent 300,000.00 300,000.00
Net income - subsidiary 136,000.00 34,000.00 170,000.00
Dividends - subsidiary (48,000.00) (12,000.00) (60,000.00)
Fair value adjustment - amortization -
Inventory (sold at year end) - overstated cost of sales;
understated net income 35,200.00 8,800.00 44,000.00
Equipment - understated depreciation expense;
overstated net income (60000/4)*(7/12) (7,000.00) (1,750.00) (8,750.00)
Impairment - proportionate on the goodwill amount (54,820.00) (2,080.00) (56,900.00)
Consolidated Net Income 361,380.00 26,970.00 388,350.00

NCI, beg - 1/1 470,000.00


Consolidated net income attributable to NCI 26,970.00
NCI, end - 12/31 496,970.00

NCI, beg - 1/1 470,000.00


Net income subsidiary 34,000.00
Dividends (12,000.00)
Impairment (2,080.00)
Fair value adjustment - amortization
Inventory (sold at year end) 8,800.00
Equipment (1,750.00)
NCI, end - 12/31 496,970.00

Ordinary share - parent 3,000,000.00


Share premium parent 700,000.00
Retained earnings parent 2,381,380.00
NCI 496,970.00
Consolidated Shareholders' Equity - 12/31 6,578,350.00

Retained earnings, beg - 1/1 2,100,000.00


Dividend (80,000.00)
Consolidated net income attributable to parent 361,380.00
Retained earnings, end - 12/31 2,381,380.00

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