Chapter 04 - Consolidation of Wholly Owned Subsidiaries

CHAPTER 4 CONSOLIDATION OF WHOLLY OWNED SUBSIDIARIES ANSWERS TO QUESTIONS Q4-1 An adjusting entry is recorded on the company's books and causes the balances reported by the company to change. Eliminating entries, on the other hand, are not recorded on the books of the companies. Instead, they are entered in the consolidation workpaper so that when the amounts included in the eliminating entries are added to, or deducted from, the balances reported by the individual companies, the appropriate balances for the consolidated entity are reported. Q4-2 The differential represents the difference between the ac uisition!date fair value of the ac uiree and its book value. Q4-3 A company must ac uire a subsidiary at a price e ual to the subsidiary"s fair value, and that subsidiary must have a total ac uisition!date fair value less than its book value. Q4-4 Each of the stockholders' e uity accounts of the subsidiary is eliminated in the consolidation process. Thus, none of the balances is included in the stockholders' e uity accounts of the consolidated entity. That portion of the stockholders' e uity claim assigned to the noncontrolling shareholders is reported indirectly in the balance assigned to the noncontrolling shareholders. Q4-5 #urrent consolidation standards re uire recognition of the fair value of the subsidiary's individual assets and liabilities at the date of ac uisition. At least some portion of the book value would not be included if the fair value of a particular asset or liability was less than book value. Q4-6 $ne hundred percent of the fair value of the subsidiary"s assets and liabilities at the date of ac uisition should be included. The type of asset or liability will determine whether a change in its value will be recogni%ed following the date of ac uisition. Q4-7 &sing a clearing account can reduce the chance of error in preparing consolidated statements. The number of accounts re uiring adjustment for the difference between book value and fair value at the date of ac uisition may be very large. 'ather than including all such adjustments along with other eliminations in a single eliminating entry, it is often easier to place the unamorti%ed balance in a differential clearing account and then use one or more subse uent entries to assign the clearing account balance to the appropriate individual accounts or account groups. Q4-8 The differential account is a clearing account. Each time consolidated statements are prepared, the balance in the investment account is eliminated and the unamorti%ed portion of the differential is entered in the clearing account. It then is assigned to the appropriate asset and liability accounts. This same process is followed each time consolidated statements are prepared. The eliminating entries do not actually remove the balance in the investment account from the parent's books( thus, the differential continues to be a part of the investment account balance until fully amorti%ed.

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

Q4-9 The investment account in the financial statements of the parent company shows its investment in the subsidiary as a single total and therefore does not provide information on the individual assets and liabilities held by the subsidiary, nor their relative values. The e)istence of a large differential indicates the parent paid well over book value to ac uire ownership of the subsidiary. *hen the differential is assigned to identifiable assets or liabilities of the subsidiary, both the consolidated balance sheet and consolidated income statement are likely to provide information not available in the financial statements of the individual companies. The consolidated statements are likely to provide a better picture of the assets actually being used and the resulting income statement charges that should be reported. Q4-10 Additional entries are needed to eliminate all income statement and retained earnings statement effects of intercorporate ownership and any transfers of goods and services between related companies. Q4-11 +eparate parts of the consolidation workpaper are used to develop the consolidated income statement, retained earnings statement, and balance sheet. All eliminating entries needed to complete the entire workpaper normally are entered before any of the three statements are prepared. The income statement portion of the workpaper is completed first so that net income can be carried forward to the retained earnings statement portion of the workpaper. *hen the retained earnings portion is completed, the ending balances are carried forward and entered in the consolidated balance sheet portion of the workpaper. Q4-12 ,one of the dividends declared by the subsidiary are included in the consolidated retained earnings statement. Those which are paid to the parent have not gone outside the consolidated entity and therefore must be eliminated in preparing the consolidated statements. Those paid to noncontrolling shareholders are treated as a reduction in the net assets assigned to noncontrolling interest and also must be eliminated. Q4-13 #onsolidated net income is e ual to the parent"s income from its own operations, e)cluding any investment income from consolidated subsidiaries, plus the income of each of the consolidated subsidiaries, adjusted for any differential write!off. Q4-14 #onsolidated net income includes -.. percent of the revenues and e)penses of the individual consolidating companies arising from transactions with unaffiliated companies. Q4-15 #onsolidated retained earnings is defined in current accounting practice as that portion of the undistributed earnings of the consolidated entity accruing to the parent company shareholders. Q4-16 #onsolidated retained earnings at the end of the period is e ual to the beginning consolidated retained earnings balance plus consolidated net income attributable to the controlling interest, less consolidated dividends. Q4-17 The retained earnings statement shows the increase or decrease in retained earnings during the period. Thus, income for the period is added to the beginning balance and dividends are deducted in deriving the ending balance in retained earnings. /ecause the consolidation workpaper includes the retained earnings statement, the beginning retained earnings balance must be entered in the workpaper.

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

Q4-18 An additional eliminating entry normally must be entered in the workpaper to e)pense an appropriate portion of the amount assigned to buildings and e uipment. ,ormally, depreciation e)pense is debited and accumulated depreciation is credited. Q4-19 The differential is simply a clearing account used in the consolidation process. If the differential arises because the fair value of land held by the subsidiary is greater than book value, the amount assigned to the differential will remain constant so long as the subsidiary continues to hold the land. *hen the differential arises because the fair value of depreciable or amorti%able assets is greater than book value, the amount debited to the differential account each period will decrease as the parent amorti%es an appropriate portion of the differential against investment income. Q4-20 0ush!down accounting occurs when the assets and liabilities of the subsidiary are revalued on the subsidiary's books as a result of the purchase of shares by the parent company. The basis of accountability that the parent company would use in accounting for its investment in the various assets and liabilities is used to revalue the subsidiary's assets and liabilities( thereby pushing down the parent's basis of accountability onto the books of the subsidiary. Q4-21 0ush!down accounting is considered appropriate when a subsidiary is substantially wholly owned by the parent. Q4-22 *hen the assets and liabilities of the subsidiary are revalued at the date of ac uisition there will no longer be a differential. The parent's portion of the revised carrying value of the net assets on the books of the subsidiary will agree with the balance in the investment account reported by the parent.

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

SOLUTIONS TO CASES C4-1 N ! "#$ C#%&#'(!)*(#% P$#+ &&

After the financial statements of each of the individual companies are prepared in accordance with generally accepted accounting principles, consolidated financial statements must be prepared for the economic entity as a whole. The individual companies generally record transactions with other subsidiaries on the same basis as transactions with unrelated enterprises. In preparing consolidated financial statements, the effects of all transactions with related companies must be removed, just as all transactions within a single company must be removed in preparing financial statements for that individual company. It therefore is necessary to prepare a consolidation workpaper and to enter a number of special journal entries in the workpaper to remove the effects of the intercorporate transactions. The parent company also reports an investment in each of the subsidiary companies and investment income or loss in its financial statements. Each of these accounts must be eliminated as well as the stockholders' e uity accounts of the subsidiaries. The latter must be eliminated because only the parent's ownership is held by parties outside the consolidated entity.

4-4

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

C4-2 A++#,%* P$ & %*)*(#% 1E1$ To2 3rom2 'e2 #hief Accountant 0rime #ompany , Accounting +taff #ombining /roadly 4iversified /alance +heet Accounts

1any manufacturing and merchandising enterprises e)cluded finance, insurance, real estate, leasing, and perhaps other types of subsidiaries from consolidation prior to -567 on the basis of 8nonhomogeneous9 operations. #ompanies generally argued that the accounts of these companies were dissimilar in nature and combining them in the consolidated financial statements would mislead investors. FASB 94 specifically eliminated the e)ception for nonhomogeneous operations. :FASB 94, 0ar. 5; FASB 160 affirms the re uirement for consolidating entities in which a controlling financial interest is held. 0rime #ompany controls companies in very different industries and combining the accounts of its subsidiaries may lead to confusion by some investors( however, it may be e ually confusing to provide detailed listings of assets and liabilities by industry or other breakdowns in the consolidated balance sheet. The actual number of assets and liabilities presented in the consolidated balance sheet must be carefully considered, but is the decision of 0rime"s management. It is important to recogni%e that the notes to the consolidated financial statements are regarded as an integral part of the financial statements and 0rime #ompany is re uired to include in its notes to the financial statements certain information on its reportable segments :FASB 131;. /ecause of the diversity of its ownership, 0rime may wish to provide more than the minimum disclosures specified in FASB 131. +egment information appears to be used uite broadly by investors and permits the company to provide sufficient detail to assist the financial statement user in gaining a better understanding of the various operating divisions of the company. <ou have re uested information on those situations in which it may not be appropriate to combine similar appearing accounts of two or more subsidiaries. The following is a partial listing of such situations2 =a> the accounts of a subsidiary should not be included along with other subsidiaries if control of the assets and liabilities does not rest with 0rime #ompany, as when a subsidiary is in receivership( =b> while the assets and liability accounts of the subsidiary should be combined with the parent, the e uity account balances should not( =c> negative account balances in cash or accounts receivable should be reclassified as liabilities rather than being added to the positive

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

C4-2 =continued> balances of other affiliates, and =d> assets pledged for a specific purpose and not available for other use by the consolidated entity generally should be separately reported. Primary citations: 3A+/ 5? 3A+/ -@3A+/ -A. Secondary sources: A'/ B3A+/ -?

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

C4-3 C#%&#'(!)*(%- )% U%.$#"(*)/' S,/&(!()$0 1E1$ T$2 3'$12 'e2 #hief Accountant Ama%ing #hemical #orporation , Accounting +taff #onsolidation of &nprofitable /oatyard

This memo is intended to provide recommendations on the presentation of the boatyard in Ama%ing #hemical"s consolidated financial statements. Ama%ing #hemical #orporation currently has full ownership of the boatyard and should fully consolidate the boatyard in its financial statements. #onsolidated statements should be prepared when a company directly or indirectly has a controlling financial interest in one or more other companies. :ARB 511 0ar. -; This re uirement has been reaffirmed by FASB 160. 0rior to the issuance of FASB 94, Ama%ing #hemical may have justified e)cluding the boatyard from consolidation based on the differences in operating characteristics between the subsidiary and the parent company( however, FASB 94 specifically deleted the nonhomogeneity e)clusion :FASB 94, 0ar. 5;. Thus, Ama%ing #hemical appears to be following generally accepted accounting procedures in fully consolidating the boatyard in its financial statements and should continue to do so. The operations of the boatyard appear to be distinct from the other operations of the parent company and its losses appear to be sufficient to establish it as a reportable segment :FASB 131, 0ar. -. and -6;. *hile the operating losses of the boatyard may not be evident in analy%ing the consolidated income statement, a review of the notes to the consolidated statements should provide ade uate disclosure of its operations as a reportable segment. The financial statements for the current period should contain these disclosures and if prior period statements have not included the boatyard as a reportable segment it may be necessary to restate those statements. 3ailure of the president of Ama%ing #hemical to receive approval by the board of directors for the purchase of the boatyard and his subse uent actions to keep information about its operations from the board members appears to be a serious breach of ethics. These actions by the president should immediately be brought to the attention of the board of directors for appropriate action by the board. Primary citations: A'/ B-, 0ar. 3A+/ 5?, 0ar. 5 3A+/ -@-, 0ar. -. and -6 3A+/ -A.

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

C4-4 A&&(-%(%- )% A+2,(&(*(#% D("" $ %*()' It may be difficult to determine the amount of the differential to be assigned to the manufacturing facilities of /all #orporation. The e uipment is relatively old and may be in varying states of repair or operating condition. +ome units may be technologically obsolete or of little value because production needs have changed. The CA..,... estimated fair value of net assets therefore may be difficult to document and even more difficult to assign to specific assets and liabilities. Inventories should be compared to sales to determine if /all has e)cess balances on hand. 3actors such as the degree of salability, physical condition, and e)pected sales prices should be e)amined as well in determining the portion of the differential to be assigned to inventory. The DI3$ inventory balances are likely to be below fair value while the 3I3$ balances may be relatively close to fair value. The amount of differential assigned to inventory will be significantly affected by the rate of change in inventory costs since the DI3$ inventory method was adopted and the relative magnitude of inventory on hand under each method. ,o mention is made of patents or other intangible assets developed by /all #orporation. *hile /all #orporation could not record as assets its e)penditures on research and development, the buyer should recogni%e all tangible and intangible assets at fair value before goodwill is computed. Eoodwill normally is measured as the e)cess of the sum of the consideration given in the ac uisition and the fair value of the noncontrolling interest over the fair value of the identifiable net assets of the ac uired company. Timber must evaluate the fair value of /all as a whole and consider the fair value of the e uity interest in /all that it is not ac uiring.

4-

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

C4-5 N -)*(3 R *)(% ! E)$%(%-& ,et assets of the subsidiary increase when positive earnings results occur and decrease when negative results occur. A negative retained earnings balance indicates that the other stockholders' e uity balances of the subsidiary e)ceed the reported net assets of the subsidiary. a. The negative retained earnings balance of the subsidiary is eliminated in the consolidation process and does not affect the dollar amounts reported in the consolidated stockholders' e uity accounts. b. The consolidation process does not change in any substantive manner. 'ather than debiting retained earnings in the entry to eliminate the stockholders' e uity balances of the subsidiary in the consolidation workpaper, the account must be credited. c. Eoodwill is recorded whenever the fair value of the ac uired company as a whole, as evidenced by the fair value of the consideration given in the ac uisition and the fair value of the noncontrolling interest, e)ceeds the fair value of the net identifiable assets ac uired. In this case it is not known whether the fair value is above or below book value. +loan #ompany recorded losses in prior periods and may have written down all assets that had decreased in value. $n the other hand, management may have been reluctant to recogni%e such losses in order to avoid reducing earnings even further. In the e)treme, it may even have sold all assets that had appreciated in value. 1any factors, including the future earning power of the company, will affect the purchase price and it is therefore difficult to determine whether goodwill will be recorded in a situation such as this.

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

C4-6 B)')%+ S4

* R .#$*(%- I&&, &

a. &nder the first two alternatives, the cars and associated debt would appear on #rumple's consolidated balance sheet. In the first case the debt is recorded directly by #rumple. In the second case, the leasing subsidiary should be fully consolidated. Although in economic substance there may be little difference between creating a leasing subsidiary and creating a trust to accomplish the same goals, consolidation of a trust generally has not been re uired under generally accepted accounting procedures. Fowever, the recent issuance of FASB 160 changes the definition of a subsidiary to include trusts. Although the 3A+/ is still grappling with specifically what entities to include in consolidation, it now seems unlikely that a trust in which another company has a controlling financial interest can escape being included in the consolidated financial statements. If #rumple has the capability to name the directors of the trust and to administer its activities, the activities of the trust may be carried out to benefit #rumple in virtually the same manner as an operating corporate affiliate. The situation presented provides an opportunity to think about the concept of control and the use of nontraditional organi%ation structures in carrying out the business activities of a company. b. #rumple apparently has not considered selling additional common or preferred shares. The sale of additional shares or use of convertible securities would be one set of options to consider. If #rumple is willing to lease the automobiles, other leasing companies or automobile manufacturers may be interested in participating. If the availability of rental cars is considered important in the economic development of the states into which #rumple intends to e)pand, the company may be able to negotiate low cost loans or partially forgivable loans in ac uiring the facilities and automobiles needed for e)pansion. c. +ome individuals may focus on the fact that #rumple will not get any residual amounts if the trust is dissolved. Fowever, through management charges and selection of lease rates, #rumple is likely to be able to leave as large or small a balance in the trust as it wishes. +tudents may wish to look at the financial statements of one or more leasing companies in arriving at their recommendation=s>. 3rom a financial reporting perspective, all three alternatives now should be reported in essentially the same manner in the consolidated financial statements. Thus, the financial reporting aspects of the three alternatives have become irrelevant. Fowever, even when different alternatives lead to different reporting treatments, the choice of an alternative should be based on economic considerations rather than on the financial reporting effects. Even though the three financing alternatives #rumple is considering are reported in the same manner, they each may have different legal, ta), and economic aspects that should be considered by #rumple"s management.

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

-C4-7 S,/&(!()$0 O5% $&4(.6 A7R C#$.#$)*(#% )%! I%* $%)*(#%)' L )& a. =-> Airline service =G> American Airlines, Inc. =@> 3ort *orth, Te)as =?> 4elaware =B> 4elaware =A> The ,ew <ork +tock E)change =7> G. =6> All of A1'"s subsidiaries are wholly owned e)cept several subsidiaries of American Airlines. =-> International Dease 3inance #orporation leases aircraft to airlines. =G> AIE #apital #orporation and ,ational &nion 3ire Insurance #ompany of 0ittsburgh, 0ennsylvania are the direct owners of International Dease. =@> Dos Angeles, #alifornia =?> #alifornia =B> International Dease"s common stock is not publicly traded because the company is an indirect wholly owned subsidiary of American International Eroup. =A> American International Eroup, Inc., is the parent of the consolidated group. American International is a holding company with businesses that include insurance, and related products, financial services, and asset management.

b.

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

SOLUTIONS TO E8ERCISES E4-1 7,'*(.' -C4#(+ Q, &*(#%& #% C#%&#'(!)*(#% P$#+ && -. c G. d :AI#0A Adapted; @. d ?. b B. a

E4-2 7,'*(.' -C4#(+ Q, &*(#%& #% C#%&#'(!)*(#% 9AICPA A!).* !: -. c G. a @. d ?. c C?..,... H C-,7..,... ! C-,@..,...

E4-3 B)&(+ E'(;(%)*(#% E%*$0 #ommon +tock I /roadway #orporation Additional 0aid!In #apital 'etained Earnings Investment in /roadway #ommon +tock G..,... @..,... -..,...

A..,...

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-4 E'(;(%)*(%- E%*$( & 5(*4 D("" $ %*()' a. Eliminating entries2 E=-> #ommon +tock I /rown #ompany 'etained Earnings 4ifferential Investment in /rown #ompany +tock #omputation of differential 3air value of consideration given /ook value of /rown's assets /ook value of /rown's liabilities ,et book value 4ifferential E=G> Inventory /uildings and E uipment =net> Eoodwill 4ifferential b. G.,... @7,... ?@,...

-..,...

C6B,... =G6,...>

C-..,... =B7,...> C ?@,...

B,... G.,... -6,...

?@,...

Journal entries used to record transactions, adjust account balances, and close income and revenue accounts at the end of the period are recorded in the company's books and change the reported balances. $n the other hand, eliminating entries are entered only in the consolidation workpaper to facilitate the preparation of consolidated financial statements. As a result, they do not change the balances recorded in the company's accounts and must be reentered each time a consolidation workpaper is prepared.

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-5 B)')%+ S4 Eliminating entries2

* C#%&#'(!)*(#%

E=-> #ommon +tock I Thorne #orporation 'etained Earnings 4ifferential Investment in Thorne #orporation +tock Eliminate investment balance. #omputation of differential 3air value of consideration given /ook value of Thorne's assets /ook value of Thorne's liabilities ,et book value 4ifferential E=G> Inventory Eoodwill /uildings =net> 4ifferential Assign differential.

-G.,... G?.,... @B,...

@5B,...

CA?.,... =G6.,...>

C@5B,... =@A.,...> C @B,...

@A,... -5,...

G.,... @B,...

4-14

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-6 A+2,(&(*(#% 5(*4 D("" $ %*()' a. Eoodwill is CA.,..., computed as follows2 /ook value of #onger's net assets2 #ommon stock outstanding 'etained earnings 3air value increment2 Dand =C-..,... ! C6.,... /uildings =C?..,... ! CGG.,...> 3air value of net assets 3air value of consideration given Eoodwill b. Eliminating entries needed2 E=-> #ommon +tock I #onger #orporation 'etained Earnings 4ifferential Investment in #onger #orporation +tock Eliminate investment balance2 CGA.,... H C?7.,... ! C6.,... ! C-@.,... E=G> Dand /uildings Eoodwill 4ifferential Assign differential. 6.,... -@.,... GA.,... C 6.,... -@.,... C G.,... -6.,...

CG-.,... G..,... C?-.,... =?7.,...> C A.,...

?7.,...

G.,... -6.,... A.,...

GA.,...

4-15

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-7 B)')%+ S4 a. Eliminating entry2

* W#$<.). $

E=-> #ommon +tock I 3aith #orporation 'etained Earnings Investment in 3aith #orporation +tock Eliminate investment balance. b. /lank #orporation and 3aith #orporation #onsolidated /alance +heet *orkpaper 4ecember @-, G.KG Item #ash Accounts 'eceivable Inventory /uildings and E uipment =net> Investment in 3aith #orporation +tock Total 4ebits Accounts 0ayable ,otes 0ayable #ommon +tock /lank #orporation 3aith #orporation 'etained Earnings Total #redits /lank #orp. AB,... 67,... --.,... GG.,... -B.,... A@G,... 5G,... -B.,... -..,... G5.,... A@G,... 3aith #orp. -6,... @7,... A.,... -B.,... GAB,... @B,... 6.,... A.,... 5.,... GAB,... =-> A.,... =-> 5.,... -B.,...

A.,... 5.,...

-B.,...

Eliminations 4ebit L #redit

#onsol! Idated 6@,... -G?,... -7.,... @7.,...

=->-B.,...

L 7?7,... -G7,... G@.,... -..,...

-B.,...

G5.,... 7?7,...

4-16

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-8 B)')%+ S4

* W#$<.). $ 5(*4 D("" $ %*()'

a. Eliminating entries2 E=-> #ommon +tock I 3aith #orporation 'etained Earnings 4ifferential Investment in 3aith #orporation +tock Eliminate investment balance. E=G> Inventory /uildings and E uipment =net> 4ifferential Assign 4ifferential. b. A.,... 5.,... @5,...

-65,...

G?,... -B,...

@5,...

/lank #orporation and 3aith #orporation #onsolidated /alance +heet *orkpaper 4ecember @-, G.KG Item /lank #orp. GA,... 67,... --.,... GG.,... -65,... A@G,... 5G,... -B.,... -..,... G5.,... A@G,... GAB,... @B,... 6.,... A.,... 5.,... GAB,... =-> A.,... =-> 5.,... GG6,... 3aith #orp. -6,... @7,... A.,... -B.,... Eliminations 4ebit #redit #onsol! idated ??,... -G?,... -5?,... @6B,... =->-65,... =G> @5,...

#ash Accounts 'eceivable Inventory /uildings and E uipment =net> Investment in 3aith #orporation +tock 4ifferential Total 4ebits Accounts 0ayable ,otes 0ayable #ommon +tock /lank #orporation 3aith #orporation 'etained Earnings Total #redits

=G> G?,... =G> -B,... =-> @5,...

7?7,... -G7,... G@.,... -..,...

GG6,...

G5.,... 7?7,...

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-9 W#$<.). $ "#$ W4#''0 O5% ! S,/&(!()$0 a. Eliminating entry2 E=-> #ommon +tock I 0remium /uilders 'etained Earnings Inventory /uildings and E uipment =net> #ash and 'eceivables Investment in 0remium /uilders +tock Eliminate investment balance. b. -?.,... -.,... 7,... -G,...

G,... -A7,...

Eold Enterprises and 0remium /uilders #onsolidated /alance +heet *orkpaper January -, G.KB Eold Enter! Item prises 6.,... -B.,... ?@.,... -A7,... 6G7,... -..,... ?..,... G..,... -G7,... 6G7,... 0remiu m /uilders @.,... @B.,... 6.,... ?A.,... --.,... G..,... -?.,... -.,... ?A.,... =->-?.,... =-> -.,... -A5,... =->

Eliminations 4ebit 7,... =-> #redit G,...

#onsol! idated -.6,... B.7,... BGG,...

#ash and 'eceivables Inventory /uildings and E uipment =net> Investment in 0remium +tock Total 4ebits #urrent Diabilities Dong!Term 4ebt #ommon +tock Eold 0remium 'etained Earnings Total #redits c.

=-> -G,... =->-A7,...

-,-@7,... G-.,... A..,... G..,...

LLLLLLLL -A5,...

-G7,... -,-@7,...

Eold Enterprises and +ubsidiary #onsolidated /alance +heet January -, G.KB C -.6,... B.7,... BGG,... C-,-@7,... #urrent Diabilities Dong!Term 4ebt #ommon +tock 'etained Earnings Total Diabilities M +tockholders' E uity C G-.,... A..,... @G7,... C-,-@7,...

#ash and 'eceivables Inventory /uildings and E uipment =net> Total Assets

CG..,... -G7,...

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-10 C#;.,*)*(#% #" C#%&#'(!)* ! B)')%+ & a. Inventory b. Dand c. /uildings and E uipment 3air value of consideration given /ook value of net assets at ac uisition 3air value increment for2 Inventory Dand /uildings and e uipment 3air value of net assets at ac uisition /alance assigned to goodwill C -?.,... C A.,... C BB.,... C B7A,... C?B.,... G.,... =-.,...> 7.,... =B@.,...> C ?A,...

d. Eoodwill2

e. Investment in Astor #orporation2 ,othing would be reported( the balance in the investment account is eliminated.

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-11 7,'*(.' -C4#(+ Q, &*(#%& #% B)')%+ S4 -. G. @. d b c CG-B,... CG@,... C-,-.5,... H H H C-@.,... N C6B,...

* C#%&#'(!)*(#%

C-56,... I =C?.B,... ! CGAB,... N C-B,... N CG.,...> Total Assets of Top #orp. Dess2 Investment in +un #orp. /ook value of assets of Top #orp. /ook value of assets of +un #orp. Total book value 0ayment in e)cess of book value =C-56,... ! C-?.,...> Total assets reported C 6??,... =-56,...> C A?A,... ?.B,... C-,.B-,... B6,... C-,-.5,...

?.

C7.-,B..

=CA-,B.. N C5B,... N CG6.,...> N =CG6,... N C@7,... N CG..,...> The amount reported by Top #orporation The amount reported by Top #orporation

B. A.

d a

CGB7,B.. C?.7,B..

H H

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Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-12 C#%&#'(!)*(#% E%*$( & "#$ W4#''0 O5% ! S,/&(!()$0 a. Journal entries recorded by Trim #orporation2 =-> Investment in 'ound #orporation +tock #ash 'ecord investment. #ash Investment in 'ound #orporation +tock 'ecord dividends from 'ound #orporation. Investment in 'ound #orporation +tock Income from +ubsidiary 'ecord e uity!method income. ?..,... ?..,...

=G>

GB,...

GB,...

=@>

6.,...

6.,...

b.

Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in 'ound #orporation +tock Eliminate income from subsidiary. E=G> #ommon +tock O 'ound #orporation 'etained Earnings, January Investment in 'ound #orporation +tock Eliminate beginning investment balance. 6.,... GB,... BB,...

-G.,... G6.,...

?..,...

4-21

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-13 B)&(+ C#%&#'(!)*(#% E%*$( & "#$ F,''0 O5% ! S,/&(!()$0 a. Journal entries recorded by 0urple #ompany2 =-> Investment in Amber #orporation +tock #ash 'ecord investment. =G> #ash Investment in Amber #orporation +tock 'ecord dividends from Amber #orporation. =@> Investment in Amber #orporation +tock Income from +ubsidiary 'ecord e uity!method income. b. Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in Amber #orporation +tock Eliminate income from subsidiary. E=G> #ommon +tock O Amber #orporation 'etained Earnings, January Investment in Amber #orporation +tock Eliminate beginning investment balance. B.,... G.,... @.,... B..,... B..,...

G.,...

G.,...

B.,...

B.,...

@..,... G..,...

B..,...

4-22

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-14 W4#''0 O5% ! S,/&(!()$0 5(*4 D("" $ %*()' a. Journal entries recorded by *inston #orporation2 =-> Investment in #anton #orporation +tock #ash 'ecord investment. =G> #ash Investment in #anton #orporation +tock 'ecord dividends from #anton #orporation. =@> Investment in #anton #orporation +tock Income from +ubsidiary 'ecord e uity!method income. =?> Income from +ubsidiary Investment in #anton #orporation +tock Amorti%e differential assigned to e uipment2 C?,... H CG6,... P 7 years b. Eliminating entries 4ecember @-, G.K@2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in #anton #orporation +tock Eliminate income from subsidiary. E=G> #ommon +tock O #anton #orporation 'etained Earnings, January 4ifferential Investment in #anton #orporation +tock Eliminate beginning investment balance. E=@> E uipment 4ifferential Assign beginning differential. E=?> 4epreciation E)pense Accumulated 4epreciation Amorti%e differential related to e uipment. GA,... -G,... -?,... -76,... -76,...

-G,...

-G,...

@.,...

@.,...

?,...

?,...

A.,... 5.,... G6,...

-76,...

G6,...

G6,...

?,...

?,...

4-23

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-15 B)&(+ C#%&#'(!)*(#% W#$<.). $ a. Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in +haw #orporation +tock Eliminate income from subsidiary. #ommon +tock O +haw #orporation 'etained Earnings, January Investment in +haw #orporation +tock Eliminate beginning investment balance. @.,... -.,... G.,...

E=G>

-..,... B.,...

-B.,...

4-24

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-15 =continued> b. /lake #orporation and +haw #orporation #onsolidation *orkpaper 4ecember @-, G.K@ /lake Item +ales Income from +ubsidiary #redits 4epreciation E)pense $ther E)penses 4ebits Income, carry forward 'et. Earnings, Jan. Income, from above 4ividends 4eclared 'et. Earnings, 4ec. @-, carry forward #urrent Assets 4epreciable Assets Investment in +haw #orporation +tock 4ebits #urrent Diabilities Dong!Term 4ebt #ommon +tock /lake #orporation +haw #orporation 'etained Earnings, from above #redits #orp. G..,... @.,... +haw #orp. -G.,... Eliminations 4ebit =-> @.,... #redit #onsol! idated @G.,... @G.,... ?.,... -6.,... =GG.,...> -..,... G@.,... -..,... @@.,... =?.,...> G5.,... GB.,... BB.,... =-> G.,... =G>-B.,...

G@.,... -G.,... GB,... -B,... -.B,... 7B,... =-@.,... =5.,.. > .> -..,... @.,... G@.,... -..,... @@.,... =?.,...> G5.,... -?B,... @GB,... -7.,... A?.,... B.,... -..,... G..,... @@.,... ?.,... -G.,... -..,... 7.,... @@.,... B.,... @.,... 6.,... =-.,.. .> 7.,... -.B,... GGB,...

@.,... =G> B.,... @.,... =-> -.,... 6.,... -.,...

6..,... 5.,... GG.,...

=G>-..,.. . 6.,... -6.,.. . -.,... -6.,...

G..,...

G5.,... A?.,...

G5.,... 6..,...

4-25

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-16 B)&(+ C#%&#'(!)*(#% W#$<.). $ "#$ S +#%! Y )$ a. Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in +haw #orporation +tock Eliminate income from subsidiary. #ommon +tock O +haw #orporation 'etained Earnings, January Investment in +haw #orporation +tock Eliminate beginning investment balance. @B,... -B,... G.,...

E=G>

-..,... 7.,...

-7.,...

4-26

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-16 =continued> b. /lake #orporation and +haw #orporation #onsolidation *orkpaper 4ecember @-, G.K? Item +ales Income from +ubsidiary #redits 4epreciation E)pense $ther E)penses 4ebits Income, carry forward 'et. Earnings, Jan. Income, from above 4ividends 4eclared 'et. Earnings, 4ec. @-, #arry forward #urrent Assets 4epreciable Assets Investment in +haw #orporation +tock 4ebits #urrent Diabilities Dong!Term 4ebt #ommon +tock /lake #orporation +haw #orporation 'etained Earnings, from above #redits /lake #orp. G@.,... @B,... GAB,... GB,... -B.,... =-7B,... > 5.,... G5.,... 5.,... @6.,... =B.,...> @@.,... G-.,... @..,... -5.,... 7..,... 7.,... -..,... G..,... @A.,... B.,... -G.,... -..,... 5.,... @A.,... =G>-..,.. . -.B,.. . G.B,.. . -B,.. . G.B,.. . +haw #orp. -?.,... -?.,... -B,... 5.,... =-.B,... > @B,... 7.,... @B,... -.B,... =-B,...> 5.,... -B.,... G-.,... =-> G.,... =G>-7.,... Eliminations 4ebit #redit #onsol! idated @7.,... @7.,... ?.,... G?.,... =G6.,...> 5.,... G5.,... 5.,... @6.,... =B.,...> @@.,... @A.,... B-.,...

=-> @B,...

@B,.. . =G> 7.,... @B,... =-> -B,... -.B,.. . -B,...

67.,... -G.,... GG.,... G..,...

@@.,... 7..,...

@@.,... 67.,...

4-27

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-17 C#%&#'(!)*(#% W#$<.). $ 5(*4 D("" $ %*()' a. Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in +hort #ompany +tock Eliminate income from subsidiary. #ommon +tock O +hort #ompany 'etained Earnings, January 4ifferential Investment in +hort #ompany +tock Eliminate beginning investment balance. 4epreciable Assets =net> 4ifferential Assign beginning differential. 4epreciation E)pense 4epreciable Assets =net> Amorti%e differential. GB,... -.,... -B,...

E=G>

-..,... B.,... @.,...

-6.,...

E=@>

@.,...

@.,...

E=?>

B,...

B,...

4-2

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-17 =continued> b. Qennelly #orporation and +hort #ompany #onsolidation *orkpaper 4ecember @-, G.KB Qennelly #orp. G..,... GB,... GGB,... GB,... -.B,... =-@.,... > 5B,... G@.,... 5B,... @GB,... =?.,...> G6B,... -B,... @.,... 7.,... @GB,... -5B,... +hort #o. -G.,... -G.,... -B,... 7B,.. . =5.,...> @.,.. . B.,... @.,... 6.,... =-.,...> 7.,... B,... ?.,... A.,... GGB,... Eliminations 4ebit #redit #onsol! idated @G.,... @G.,... ?B,... -6.,... =GGB,...> @.,... =G> B.,... @.,... =-> -.,... 6.,... -.,... 5B,... G@.,... 5B,... @GB,... =?.,...> G6B,... G.,... 7.,... -@.,... B7B,...

Item +ales Income from +ubsidiary #redits 4epreciation E)pense $ther E)penses 4ebits Income, carry forward 'et. Earnings, Jan. Income, from above 4ividends 4eclared 'et. Earnings, 4ec. @-, carry forward #ash Accounts 'eceivable Inventory 4epreciable Assets =net> Investment in +hort #ompany +tock

=-> GB,... =?> B,...

=@> @.,...

=?> B,... =-> -B,... =G> -6.,... =@> @.,...

4ifferential 4ebits Accounts 0ayable ,otes 0ayable #ommon +tock Qennelly #orporation +hort #ompany A@B,... B.,... -..,... G..,... @@.,... ?.,... -G.,... -..,...

=G> @.,...

75B,... 5.,... GG.,...

=G>-..,.. .

G..,...

4-2!

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

'etained Earnings, from above #redits

G6B,... A@B,...

7.,... @@.,...

6.,... G?.,...

-.,... G?.,...

G6B,... 75B,...

4-30

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-18 C#%&#'(!)*(#% W#$<.). $ "#$ S,/&(!()$0 a. Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in Erowth #ompany +tock Eliminate income from subsidiary. #ommon +tock O Erowth #ompany 'etained Earnings, January Investment in Erowth #ompany +tock Eliminate beginning investment balance. @B,... -B,... G.,...

E=G>

-..,... 7.,...

-7.,...

4-31

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-18 =continued> b. Dand #orporation and Erowth #ompany #onsolidation *orkpaper 4ecember @-, G.K? Dand Item +ales Income from +ubsidiary #redits 4epreciation E)pense $ther E)penses 4ebits Income, carry forward 'et. Earnings, Jan. Income, from above 4ividends 4eclared 'et. Earnings, 4ec. @-, carry forward #urrent Assets 4epreciable Assets Investment in Erowth #ompany +tock 4ebits Accum. 4epreciation #urrent Diabilities Dong!Term 4ebt #ommon +tock Dand #orporation Erowth #ompany 'etained Earnings, from above #redits #orp. G@.,... @B,... GAB,... GB,... -B.,... =-7B,... > 5.,... @-6,... 5.,... ?.6,... =B.,...> @B6,... G@6,... B..,... -5.,... 5G6,... G..,... 7.,... -..,... G..,... ?B.,... 5.,... B.,... -G.,... -..,... 5.,... ?B.,... =G>-..,.. . -.B,.. . G.B,... -B,... Erowth #o. -?.,... Eliminations 4ebit #redit =-> @B,... #onsol! idated @7.,... @7.,... ?.,... G?.,... LLLLLLLL L @B,... =G> 7.,... @B,... LLLLLLLL L -.B,... =-> -B,... -B,... LLLLLLL L =G6.,...> 5.,... @-6,... 5.,... ?.6,... =B.,...> @B6,... @66,... 6..,... =-> G.,... =G>-7.,...

-?.,... -B,... 5.,... =-.B,.. .> @B,... 7.,... @B,... -.B,... =-B,...> 5.,... -B.,... @..,...

-,-66,... G5.,... -G.,... GG.,... G..,...

@B6,... 5G6,...

@B6,.. . G.B,... -,-66,...

4-32

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

E4-19 P,&4-D#5% A++#,%*(%a. Entry to record ac uisition of Douis stock on books of Jefferson2 Investment in Douis #orporation +tock #ash 765,... 765,...

b. Entry to record revaluation of assets on books of Douis #orporation2 Dand /uildings E uipment 'evaluation #apital -B,... B.,... G.,...

6B,...

c. Investment elimination entry in consolidation workpaper =no other entries needed>2 #ommon +tock I Douis #orporation Additional 0aid!In #apital 'etained Earnings 'evaluation #apital Investment in Douis #orporation +tock G..,... ?GB,... 75,... 6B,...

765,...

4-33

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

SOLUTIONS TO PROBLE7S P4-20 A&&(-%; %* #" D("" $ %*()' (% W#$<.). $ a. Teresa #orporation and +ally Enterprises #onsolidated /alance +heet *orkpaper January -, G.K? Teresa #orp. ?.,... 5B,... 6.,... ?..,... G5.,... 5.B,... -7B,... A.,... -..,... @..,... G7.,... 5.B,... @6.,... AB,... -B,... B.,... -..,... -B.,... @6.,... =->-..,... =->-B.,... @@.,... +ally Enter! prises G.,... ?.,... 5.,... G@.,... Eliminations 4ebit #redit #onsol! idated A.,... -@B,... -7.,... A?.,... =->G5.,... =G> ?.,...

Item #ash and 'eceivables Inventory Dand /uildings and E uipment Investment in +ally Enterprises +tock 4ifferential Eoodwill Total 4ebits Accumulated 4epreciation Accounts 0ayable ,otes 0ayable #ommon +tock Teresa #orporation +ally Enterprises 'etained Earnings Total #redits b.

=G> -.,... =-> ?.,... =G> @.,...

@.,... -,.@B,... G?.,... 7B,... -B.,... @..,...

@@.,...

G7.,... -,.@B,...

Teresa #orporation and +ubsidiary #onsolidated /alance +heet January -, G.K? #ash and 'eceivables Inventory Dand /uildings and E uipment Dess2 Accumulated 4epreciation Eoodwill Total Assets Accounts 0ayable ,otes 0ayable #ommon +tock 'etained Earnings Total Diabilities and +tockholders' E uity C A.,... -@B,... -7.,... ?..,... @.,... C75B,... C 7B,... -B.,... B7.,... C75B,...

CA?.,... =G?.,...>

C@..,... G7.,...

4-34

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-21 C#;.,*)*(#% #" C#%&#'(!)* ! B)')%+ & a. Inventories =C--.,... N C-7.,...> CG6.,...

b.

/uildings and E uipment =net> =C@B.,... N C@7B,...>

C7GB,...

c.

Investment in 4ecibel stock will be fully eliminated and will not appear in the consolidated balance sheet.

d.

Eoodwill 3air value of consideration given 3air value of 4ecibel's net assets2 #ash and receivables Inventory /uildings and e uipment =net> Accounts payable ,otes payable 3air value of net identifiable assets Eoodwill to be reported

CG6.,... C ?.,... -7.,... @7B,... =5.,...> =GB.,...> =G?B,...> C @B,...

,ote2 Eoodwill on books of 4ecibel is not an identifiable asset and therefore is not included in the computation of 4ecibel's net identifiable assets at the date of ac uisition.

e.

#ommon +tock

C?..,...

f.

'etained Earnings

C-.B,...

4-35

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-22 B)')%+ S4

* C#%&#'(!)*(#% 9AICPA A!).* !: #ase Inc. and 3rey Inc. #onsolidated /alance +heet *orkpaper 4ecember @-, G.K? #ase 3rey Inc. @@.,... 6@B,... -,.?B,... @..,... -,56.,... Eliminations 4ebit #redit #onso l! idated -,-BB,... G,57B,... @,@BB,... -,G..,... A,BBB,... =->G,A6.,... @6B,... ?,67B,... =-> GB.,... =G> GB.,... -,GB.,... -A,?5.,.. . @,A-.,... @,G..,... @,G..,... G,-..,... LLLLLLLLL G,5@.,... ?,@6.,... -A,?5.,.. .

Item #ash Accounts and $ther 'eceivables Inventory Dand 4eprec. Assets =net> Investment in 3rey Inc. +tock Dong!Term Investments and $ther Assets 4ifferential Total 4ebits Accounts 0ayable and $ther #urrent Diabilities Dong!Term 4ebt #ommon +tock, CGB 0ar Additional 0aid!In #apital 'etained Earnings Total #redits

Inc. 6GB,... G,-?.,... G,@-.,... AB.,... ?,B7B,... G,A6.,... 6AB,... -?,.?B,.. . G,?AB,... -,5..,... @,G..,... G,-..,... ?,@6.,.. . -?,.?B,.. .

=G> GB.,...

-,-?B,... -,@..,... -,...,... -5.,... -,G?.,... ?,67B,...

=-> -,...,... =-> -5.,... =-> -,G?.,... G,5@.,...

4-36

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-23 C#%&#'(!)* ! B)')%+ S4 a. Eliminating entries2 E=->

#ommon +tock O Dake #orporation 'etained Earnings 4ifferential Investment in Dake #orporation +tock Eliminate investment balance. /uildings and E uipment Accumulated 4epreciation 4ifferential Assign differential.

-..,... -G.,... @G,...

GBG,...

E=G>

?.,...

6,... @G,...

b.

Thompson #ompany and Dake #orporation #onsolidated /alance +heet *orkpaper 4ecember @-, G.K@ Thompso n #o. @.,... -..,... A.,... B..,... GBG,... 5?G,... G@.,... 6.,... ?.,... -..,... G..,... G5G,... 5?G,... ?A.,... 7B,... -.,... 7.,... 6B,... -..,... -G.,... ?A.,... #onsol ! idated B.,... -?.,... --.,... 65.,... =->GBG,... =G> @G,... =G> 6,...

Item #ash Accounts 'eceivable Dand /uildings and E uipment Investment in Dake #orporation +tock 4ifferential Total 4ebits Accum. 4epreciation Accounts 0ayable Ta)es 0ayable ,otes 0ayable #ommon +tock 'etained Earnings Total #redits

Dake #orp. G.,... ?.,... B.,... @B.,...

Eliminations 4ebit #redit

=G> ?.,... =-> @G,...

-,-5.,... @-@,... 5.,... --.,... -6B,... G..,... G5G,... -,-5.,...

=->-..,... =->-G.,... G5G,...

G5G,...

4-37

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-24 C#;.$ 4 %&(3 P$#/' ;6 C#%&#'(!)*(#% (% S,/& 2, %* P $(#! a. Journal entries recorded by Thompson #ompany2 =-> #ash Investment in Dake #orporation +tock 'ecord dividends from subsidiary. Investment in Dake #orporation +tock Income from +ubsidiary 'ecord e uity!method income. Income from +ubsidiary Investment in Dake #orporation +tock Amorti%e differential2 C?.,... P -. years -G,... -G,...

=G>

@G,...

@G,...

=@>

?,...

?,...

b.

Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in Dake #orporation +tock Eliminate income from subsidiary. #ommon +tock O Dake #orporation 'etained Earnings, January 4ifferential Investment in Dake #orporation +tock Eliminate beginning investment balance. /uildings and E uipment Accumulated 4epreciation 4ifferential Assign differential. 4epreciation E)pense Accumulated 4epreciation Amorti%e differential. Accounts 0ayable Accounts 'eceivable Eliminate intercorporate receivablePpayable. G6,... -G,... -A,...

E=G>

-..,... -G.,... @G,...

GBG,...

E=@>

?.,...

6,... @G,...

E=?>

?,...

?,...

E=B>

G,B..

G,B..

4-3

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-24 =continued> c. Thompson #ompany and Dake #orporation #onsolidation *orkpaper 4ecember @-, G.K? Thompso n #o. A-.,... G6,... A@6,... ?7.,... @B,... B7,... =BAG,...> 7A,... G5G,... 7A,... @A6,... =@.,...> @@6,... 7?,... -@.,... A.,... B..,... GA6,... -,.@G,... GAB,... 7-,... B6,... -..,... G..,... @@6,... -,.@G,... ?5B,... 5@,... -7,... A.,... 6B,... -..,... -?.,... ?5B,... =B> G,B.. =G> @G,... Dake #orp. G?.,... G?.,... -@.,... -6,... A.,... =G.6,...> @G,... -G.,... @G,... -BG,... =-G,...> -?.,... ?G,... B@,... B.,... @B.,... Eliminations 4ebit #redit =-> G6,... #onsol! idated 6B.,... 6B.,... A..,... B7,... --7,... =77?,... > 7A,... G5G,... 7A,... @A6,... =@.,...> @@6,... --A,... -6.,B.. --.,... 65.,...

Item +ervice 'evenue Income from +ubsidiary #redits #ost of +ervices 0rovided 4epreciation E)pense $ther E)penses 4ebits Income, carry forward 'et. Earnings, Jan. Income, from above 4ividends 4eclared 'et. Earnings, 4ec. @-, carry forward #ash Accounts 'eceivables Dand /uildings and E uipment Investment in Dake #orporation +tock 4ifferential 4ebits Accum. 4epreciation Accounts 0ayable Ta)es 0ayable ,otes 0ayable #ommon +tock Thompson #ompany Dake #orporation 'etained Earnings, from above #redits

=?>

?,...

@G,... =G> -G.,... @G,... =-> -G,... -BG,... =B> =@> ?.,... =-> -A,... =G>GBG,... =@> @G,... =@> =?> 6,... ?,... -G,... G,B..

-,G5A,B.. @7.,... 6B,B.. --6,... -6B,... G..,...

=G>-..,... -BG,... @GA,B.. -G,... @GA,B..

@@6,... -,G5A,B..

4-3!

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-25 A+2,(&(*(#% )* O*4 $ *4)% F)($ =)', #" N * A&& *& a. $wnership ac uired for CG6.,...2 E=-> #ommon +tock O /est #ompany 'etained Earnings 4ifferential Investment in /est #ompany +tock Eliminate investment balance. E=G> Dand Eoodwill Inventory 4ifferential Assign differential. b. $wnership ac uired for CGB-,...2 6.,... -7B,... 6.,... -7B,... GB,...

G6.,...

G.,... -G,...

7,... GB,...

E=-> #ommon +tock O /est #ompany 'etained Earnings 4ifferential Investment in /est #ompany +tock Eliminate investment balance. E=G> Dand 4ifferential Inventory 'etained Earnings Assign differential.

?,... GB-,...

G.,... ?,...

7,... -7,...

4-40

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-26 I%* $+#$.#$)* R + (3)/' & )%! P)0)/' & a. Eliminating entries2 E=-> #ommon +tock O ,ormal #ompany #apital in E)cess of 0ar 4ifferential 'etained Earnings Investment in ,ormal #ompany +tock Eliminate investment balance. E=G> Eoodwill 4ifferential Assign differential. E=@> /onds 0ayable Investment in ,ormal #ompany /onds Eliminate intercompany bonds. E=?> Accounts 0ayable Accounts 'eceivable Eliminate intercompany receivablePpayable. -B.,... -?.,... G.,...

B,... @.B,...

G.,...

G.,...

B.,...

B.,...

-.,...

-.,...

4-41

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-26 =continued> b. Qim #orporation and ,ormal #ompany #onsolidated /alance +heet *orkpaper January -, G.K7 Item #ash Accounts 'eceivable Inventory /uildings and E uipment Investment in2 ,ormal #ompany +tock ,ormal #ompany /onds 4ifferential Eoodwill Total 4ebits Accumulated 4epreciation Accounts 0ayable /onds 0ayable #ommon +tock Qim #orporation ,ormal #ompany #apital in E)cess of 0ar 'etained Earnings Total #redits c. 555,... -A.,... B.,... G..,... @..,... G65,... 555,... ?6.,... 7B,... G.,... -..,... -B.,... -?.,... =B,...> ?6.,... Qim #orp. 7.,... 5.,... 6?,... ?..,... @.B,... B.,... =-> G.,... =G> G.,... ,ormal #ompany @B,... AB,... 6.,... @..,... Eliminations 4ebit #redit =?> -.,... #onsol! idated -.B,... -?B,... -A?,... 7..,...

=->@.B,.. . =@> B.,... =G> G.,...

G.,... -,-@?,... G@B,... A.,... GB.,... @..,...

=?> -.,... =@> B.,... =->-B.,... =->-?.,... LLLLLLLLL @5.,...

=-> B,... @5.,...

G65,... -,-@?,...

Qim #orporation and +ubsidiary #onsolidated /alance +heet January -, G.K7 #ash Accounts 'eceivable Inventory /uildings and E uipment Dess2 Accumulated 4epreciation Eoodwill Total Assets Accounts 0ayable /onds 0ayable #ommon +tock 'etained Earnings Total Diabilities and +tockholders' E uity C-.B,... -?B,... -A?,... ?AB,... G.,... C655,... C A.,... GB.,... B65,... C655,...

C7..,... =G@B,...>

C@..,... G65,...

4-42

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

4-43

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-27 B)')%+ S4 a.

* C#%&#'(!)*(#%

Entry on 0rimary's books to record ac uisition of +treet stock2 Investment in +treet +tock /onds 0ayable AB.,... AB.,...

,ote2 The bonds go directly to the stockholders of +treet and are not recorded on the books of +treet. b. Eliminating entries2 E=-> #ommon +tock I +treet #ompany Additional 0aid!In #apital 'etained Earnings 4ifferential Investment in +treet +tock E=G> Inventory Dand /uildings and E uipment 0atent 4iscount on /onds 0ayable Eoodwill 4ifferential E=@> #urrent 0ayables 'eceivables G..,... -@.,... -?6,... -7G,... ?,... G.,... B.,... ?.,... -.,... ?6,... A,B..

AB.,...

-7G,... A,B..

The 3A+/ now re uires that no allowance accounts be carried forward from the ac uiree in a business combination. Fowever, because of immateriality and the short! lived nature of the carry forward subse uent to the date of combination, the allowance in this problem has not been offset against the receivable. If such an offset is desired, the following elimination entry would be made2 E=?> Allowance for /ad 4ebts 'eceivables -,... -,...

4-44

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-27 =continued> c. 0rimary #orporation and +treet #ompany #onsolidated /alance +heet *orkpaper January G, G.K6 Item #ash 'eceivables Inventory Investment in +treet +tock Dand /uildings and E uipment 0atent Eoodwill 4iscount on /onds 0ayable 4ifferential Total Assets Allowance for /ad 4ebts Accumulated 4epreciation #urrent 0ayables /onds 0ayable #ommon +tock Additional 0aid!In #apital 'etained Earnings Total Diabilities and E uity 0rimary #orp. -G,... ?-,... 6A,... AB.,... BB,... 5A.,... B.,... A7.,... =G> =G> =G> =G> G.,... B.,... ?.,... ?6,... +treet #ompany 5,... @-,... A6,... =G> ?,... Eliminations 4ebit #redit =@> A,B.. =->AB.,.. . #onsol! idated G-,... AB,B.. -B6,...

-GB,... -,A6.,... ?.,... ?6,... -.,... G,-?7,B.. @,...

=G> -.,... =->-7G,... -,6.?,.. . G,... ?--,... @6,... 6B.,... @..,... -..,... -.@,... -,6.?,.. . 6G6,... -,... GG.,... G5,... -..,... G..,... -@.,... -?6,... 6G6,... =@> A,B..

=G>-7G,.. .

=->G..,... =->-@.,... =->-?6,... 6G6,B.. LLLLLLLL L 6G6,B. .

A@-,... A.,B.. 5B.,... @..,... -..,... -.@,... G,-?7,B..

4-45

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-27 =continued> d. 0rimary #orporation and +ubsidiary #onsolidated /alance +heet January G, G.K6 #ash 'eceivables Dess2 Allowance for /ad 4ebts Inventory Dand /uildings and E uipment Dess2 Accumulated 4epreciation 0atent Eoodwill Total Assets #urrent 0ayables /onds 0ayable Dess2 4iscount on /onds 0ayable +tockholders" E uity #ommon +tock Additional 0aid!In #apital 'etained Earnings Total Diabilities and +tockholders' E uity C AB,B.. =@,...> C G-,... AG,B.. -B6,... -GB,... -,.?5,... ?.,... ?6,... C-,B.@,B.. C A.,B.. 5?.,...

C-,A6.,... =A@-,...>

C 5B.,... =-.,...> C @..,... -..,... -.@,...

B.@,... C-,B.@,B..

4-46

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-28 C#%&#'(!)*(#% W#$<.). $ )* E%! #" F($&* Y )$ #" O5% $&4(. a. Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in 'oller #ompany +tock Eliminate income from subsidiary. #ommon +tock O 'oller #ompany 'etained Earnings, January 4ifferential Investment in 'oller #ompany +tock Eliminate beginning investment balance. /uildings and E uipment Eoodwill 4ifferential Assign beginning differential. 4epreciation E)pense Accumulated 4epreciation Amorti%e differential2 CG,... H CG.,... P -. years Eoodwill Impairment Doss Eoodwill *rite down goodwill for impairment. GG,... -A,... A,...

E=G>

A.,... ?.,... G6,...

-G6,...

E=@>

G.,... 6,...

G6,...

E=?>

G,...

G,...

E=B>

B,B..

B,B..

4-47

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-28 =continued> b. 1ill #orporation and 'oller #ompany #onsolidation *orkpaper 4ecember @-, G.K6 Item +ales Income from +ubsidiary #redits #ost of Eoods +old *age E)pense 4epreciation E)pense Interest E)pense $ther E)penses Eoodwill Impairment Doss 4ebits Income, carry forward 'et. Earnings, Jan. Income, from above 4ividends 4eclared 'et. Earnings, 4ec. @-, carry forward #ash Accounts 'eceivable Inventory Dand /uildings and E uipment Investment in 'oller #ompany +tock 4ifferential Eoodwill 4ebits 1ill #orp. GA.,... GG,... G6G,... -GB,... ?G,... GB,... -G,... -@,B.. =G-7,B.. > A?,B.. -.G,... A?,B.. -AA,B.. =@.,...> -@A,B.. -5,B.. 7.,... 5.,... @.,... @B.,... -@?,... =G> G6,... =@> 6,... 'oller #o. -6.,... -6.,... --.,... G7,... -.,... ?,... B,... =-BA,... > G?,... ?.,... G?,... A?,... =-A,...> ?6,... G-,... -G,... GB,... -B,... -B.,... Eliminations 4ebit #redit =-> GG,... #onsol! idated ??.,... ??.,... G@B,... A5,... @7,... -A,... -6,B.. B,B.. =@6-,...> B5,... -.G,... B5,... -A-,... =@.,...> -@-,... ?.,B.. 6G,... --B,... ?B,... BG.,... =-> A,... =G>-G6,... =@> G6,... =B> B,B..

=?> G,... =B> B,B.. LLLLLLLL G5,B.. =G> ?.,... G5,B.. LLLLLLLL A5,B.. =-> -A,... -A,...

LLLLLLLL

=@> G.,...

A5@,B..

GG@,...

G,B.. 6.B,...

4-4

Chapter 04 - Consolidation of Wholly Owned Subsidiaries

P4-28 =continued> 1ill #orp. -?B,... ?B,... -7,... -B.,... G..,... -@A,B.. A5@,B.. 'oller #o. ?.,... -A,... 5,... B.,... A.,... ?6,... GG@,... =G> A.,... A5,B.. -6B,B.. -A,... -6B,B.. Eliminations 4ebit #redit =?> G,... #onso l! idated -67,... A-,... GA,... G..,... G..,... -@-,... 6.B,...

Item Accum. 4epreciation Accounts 0ayable *ages 0ayable ,otes 0ayable #ommon +tock 1ill #orporation 'oller #ompany 'etained Earnings, from above #redits

4-4!

P4-29 C#%&#'(!)*(#% W#$<.). $ )* E%! #" S +#%! Y )$ #" O5% $&4(. a. Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in 'oller #ompany +tock Eliminate income from subsidiary. #ommon +tock O 'oller #ompany 'etained Earnings, January 4ifferential Investment in 'oller #ompany +tock Eliminate beginning investment balance. /uildings and E uipment Eoodwill 'etained Earnings, January 4ifferential Accumulated 4epreciation Assign beginning differential. 4epreciation E)pense Accumulated 4epreciation Amorti%e differential2 CG,... H CG.,... P -. years @?,... G.,... -?,...

E=G>

A.,... ?6,... GA,...

-@?,...

E=@>

G.,... G,B.. B,B..

GA,... G,...

E=?>

G,...

G,...

4-50

P4-29 =continued> b. 1ill #orporation and 'oller #ompany #onsolidation *orkpaper 4ecember @-, G.K5 Item +ales Income from +ubsidiary #redits #ost of Eoods +old *age E)pense 4epreciation E)pense Interest E)pense $ther E)penses 4ebits Income, carry forward 'et. Earnings, Jan. Income, from above 4ividends 4eclared 'et. Earnings, 4ec. @-, carry forward #ash Accounts 'eceivable Inventory Dand /uildings and E uipment Investment in 'oller #ompany +tock 4ifferential Eoodwill 4ebits 1ill #orp. 'oller #o. Eliminations 4ebit #redit =->@?,... #onsol! idated ?5.,... ?5.,... GB5,... BB,... @7,... -A,... @5,... =?.A,...> 6?.... -@-,... 6?,... G-B,... =@.,...> -6B,... 77,B.. 55,... -G-,... 7B,... BG.,... =-> -?,... =G>-@?,... =@> GA,...

G5.,... G..,... @?,... LLLLLLL @G?,... G..,... -?B,... --?,... @B,... G.,... GB,... -.,... -G,... ?,... G@,... -A,... =G?.,... =-A?,... > > 6?,... @A,... -@A,B.. 6?,... GG.,B.. =@.,...> -5.,B.. ?B,B.. 6B,... 57,... B.,... @B.,... -?6,... ?6,... @A,... 6?,... =G.,...> A?,... @G,... -?,... G?,... GB,... -B.,...

=?> G,... LLLLLLLL @A,... =G> ?6,... =@> B,B.. @A,... LLLLLLLL 65,B.. =-> G.,... G.,... LLLLLLLL

=@> G.,...

77B,B..

G?B,...

=G> GA,... =@> G,B..

G,B.. 65B,...

4-51

P4-29 =continued> 1ill #orp. -7.,... B-,... -?,... -B.,... G..,... -5.,B.. 77B,B.. 'oller #o. B.,... -B,... A,... B.,... A.,... =G> A.,... A?,... G?B,... 65,B.. -56,... G.,... -56,... Eliminations 4ebit #redit =@> G,... =?> G,... #ons ol! idated GG?,... AA,... G.,... G..,... G..,... -6B,... 65B,...

Item Accum. 4epreciation Accounts 0ayable *ages 0ayable ,otes 0ayable #ommon +tock 1ill #orporation 'oller #ompany 'etained Earnings, from above #redits

4-52

P4-29 =continued> c. 1ill #orporation and +ubsidiary #onsolidated /alance +heet 4ecember @-, G.K5 C 77,B.. 55,... -G-,... 7B,... CBG.,... =GG?,...> G5A,... G,B.. CA7-,... C AA,... G.,... G..,... CG..,... -6B,... @6B,... CA7-,...

#ash Accounts 'eceivable Inventory Dand /uildings and E uipment Dess2 Accumulated 4epreciation Eoodwill Total Assets Accounts 0ayable *ages 0ayable ,otes 0ayable #ommon +tock 'etained Earnings Total Diabilities and +tockholders' E uity 1ill #orporation and +ubsidiary #onsolidated Income +tatement <ear Ended 4ecember @-, G.K5 +ales #ost of Eoods +old *age E)pense 4epreciation E)pense Interest E)pense $ther E)penses Total E)penses #onsolidated ,et Income

C?5.,... CGB5,... BB,... @7,... -A,... @5,... =?.A,...> C 6?,...

1ill #orporation and +ubsidiary #onsolidated 'etained Earnings +tatement <ear Ended 4ecember @-, G.K5 'etained Earnings, January -, G.K5 G.K5 ,et Income 4ividends 4eclared, G.K5 'etained Earnings, 4ecember @-, G.K5 C-@-,... 6?,... CG-B,... =@.,...> C-6B,...

4-53

P4-30 C#;.$ 4 %&(3 P$#/' ;6 W4#''0 O5% ! S,/&(!()$0 a. Journal entries recorded by 0ower #orporation2 =-> #ash Investment in &pland 0roducts +tock 'ecord dividends from &pland 0roducts. Investment in &pland 0roducts +tock Income from +ubsidiary 'ecord e uity!method income. Income from +ubsidiary Investment in &pland 0roducts +tock Amorti%e differential2 CB.,... P -. years -.,... -.,...

=G>

@.,...

@.,...

=@>

B,...

B,...

b.

Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in &pland 0roducts +tock Eliminate income from subsidiary. #ommon +tock O &pland 0roducts 'etained Earnings, January 4ifferential Investment in &pland 0roducts +tock Eliminate beginning investment balance2 C@.,... H CB.,... I :=CB.,... P -.> ) ? years; /uildings and E uipment Accumulated 4epreciation 4ifferential Assign beginning differential. 4epreciation E)pense Accumulated 4epreciation Amorti%e differential. Accounts 0ayable #ash and 'eceivables Eliminate intercorporate receivablePpayable. GB,... -.,... -B,...

E=G>

-..,... 5.,... @.,...

GG.,...

E=@>

B.,...

G.,... @.,...

E=?>

B,...

B,...

E=B>

-.,...

-.,...

4-54

P4-30 =continued> c. 0ower #orporation and &pland 0roducts #ompany #onsolidation *orkpaper 4ecember @-, G.KB Item +ales Income from +ubsidiary #redits #ost of Eoods +old 4epreciation E)pense Inventory Dosses 4ebits Income, carry forward 'et. Earnings, Jan. Income, from above 4ividends 4eclared 'et. Earnings, 4ec. @-, carry forward #ash and 'eceivables Inventory Dand /uildings and E uipment Investment in &pland 0roducts +tock 4ifferential 4ebits Accum. 4epreciation Accounts 0ayable ,otes 0ayable #ommon +tock 0ower #orporation &pland 0roducts 'etained Earnings, from above #redits 0ower #orp. G..,... GB,... GGB,... -G.,... GB,... -B,... =-A.,...> AB,... @-6,... AB,... @6@,... =@.,...> @B@,... ?@,... GA.,... 6.,... B..,... G@B,... -,--6,... G.B,... A.,... G..,... @..,... @B@,.. . -,--6,... @6B,... -.B,... G.,... B.,... -..,... --.,... @6B,... =B> -.,... =G> @.,... &pland 0roducts -..,... LLLLLLL -..,... B.,... -B,... B,... =7.,...> @.,... 5.,... @.,... -G.,... =-.,...> --.,... AB,... 5.,... 6.,... -B.,... Eliminations 4ebit #redit =-> GB,... =?> B,... LLLLLLLLL #onsol! idated @..,... @..,... -7.,... ?B,... G.,... =G@B,... > AB,... @-6,... AB,... @6@,... =@.,... > @B@,... 56,... @B.,... -A.,... 7..,...

LLLLLLLLL @.,... =G> 5.,... @.,... LLLLLLLLL -G.,...

=-> -.,... -.,... =B> -.,...

=@> B.,... =-> -B,... =G>GG.,... =@> @.,... =@> G.,... =?> B,...

-,@.6,... @@B,... 7.,... GB.,... @..,...

=G>-..,... -G.,... @-.,... -.,...

@B@,...

@-.,... -,@.6,...

4-55

P4-31 C#;.$ 4 %&(3 P$#/' ;6 D("" $ %*()' A..#$*(#%; %* a. Journal entries recorded by Jersey #orporation2 =-> Investment in Dime #ompany +tock #ash Ac uisition of Dime #ompany stock. #ash Investment in Dime #ompany +tock 'ecord dividends from Dime #ompany. Investment in Dime #ompany +tock Income from +ubsidiary 'ecord e uity!method income. Income from +ubsidiary Investment in Dime #ompany +tock Amorti%e differential assigned to depreciable assets2 =C@@,... P -- years> G.@,... G.@,...

=G>

G.,...

G.,...

=@>

A.,...

A.,...

=?>

@,...

@,...

4-56

P4-31 =continued> b. Eliminating entries2 E=-> Income from +ubsidiary 4ividends 4eclared Investment in Dime #ompany +tock Eliminate income from subsidiary. #ommon +tock O Dime #ompany 'etained Earnings, January 4ifferential Investment in Dime #ompany +tock Eliminate beginning investment balance. Eoodwill /uildings and E uipment 4ifferential Assign beginning differential. 4epreciation E)pense Accumulated 4epreciation Amorti%e differential related to depreciable assets. Accounts 0ayable Accounts 'eceivable Eliminate intercorporate receivablePpayable. B7,... G.,... @7,...

E=G>

B.,... -..,... B@,...

G.@,...

E=@>

G.,... @@,...

B@,...

E=?>

@,...

@,...

E=B>

-A,...

-A,...

4-57

P4-31 =continued> c. Jersey #orporation and Dime #ompany #onsolidation *orkpaper 4ecember @-, G.K7 Jersey Item +ales Income from +ubsidiary #redits #ost of Eoods +old 4epreciation E)pense $ther E)penses 4ebits Income, carry forward 'et. Earnings, Jan. Income, from above 4ividends 4eclared 'et. Earnings, 4ec. @-, carry forward #ash Accounts 'eceivable Inventory Dand /uildings and E uipment Investment in Dime #ompany +tock 4ifferential Eoodwill 4ebits Accum. 4epreciation Accounts 0ayable 1ortgages 0ayable #ommon +tock Jersey #orporation Dime #ompany 'etained Earnings, from above #orp. 7..,... B7,... 7B7,... B..,... GB,... 7B,... =A..,...> -B7,... G5.,... -B7,... ??7,... =B.,... > @57,... 6G,... B.,... -7.,... 6.,... B..,... G?.,... =G> B@,... =@> G.,... Dime #o. ?..,... ?..,... GB.,... -B,... 7B,... =@?.,...> A.,... -..,... A.,... -A.,... =G.,...> -?.,... GB,... BB,... -..,... G.,... -B.,... =-> B7,... Eliminations 4ebit #redit #onsol ! idated -,-..,... -,-..,... 7B.,... ?@,... -B.,... =5?@,... > -B7,... G5.,... -B7,... =-> G.,... G.,... ??7,... =B.,...> @57,... -.7,... 65,... G7.,... -..,... A6@,...

=?>

@,...

A.,... =G> -..,... A.,... L -A.,...

=B> -A,... =@> @@,... =-> @7,... =G> G.@,... =@> B@,...

-,-GG,... -BB,... 7.,... G..,... @..,... @57,..

@B.,... 7B,... @B,... B.,... B.,... -?.,...

G.,... -,GA5,... G@@,... 65,... GB.,... @..,...

=B> -A,...

=?>

@,...

=G> B.,... -A.,... G.,...

@57,...

4-5

#redits

. -,-GG,...

@B.,...

@@G,...

@@G,... -,GA5,...

4-5!

P4-32A P,&4-D#5% A++#,%*(%a. Entry to record ac uisition of Dindy stock on books of Ereenly2 Investment in Dindy #ompany +tock #ash b. 5@B,... 5@B,...

Entry to record revaluation of assets on books of Dindy #ompany at date of combination2 Inventory Dand /uildings E uipment 'evaluation #apital 'evalue assets to reflect fair values at date of combination. B,... 6B,... -..,... 7.,...

GA.,...

c.

Investment elimination entry in consolidation workpaper prepared 4ecember @-, G.KA =no other entries needed>2 #ommon +tock O Dindy #ompany Additional 0aid!In #apital 'etained Earnings 'evaluation #apital Investment in Dindy #ompany +tock -..,... ?..,... -7B,... GA.,...

5@B,...

d.

E uity!method entries on the books of Ereenly during G.K72 #ash Investment in Dindy #ompany +tock 'ecord dividend from Dindy #ompany. Investment in Dindy #ompany +tock Income from Dindy #ompany 'ecord e uity!method income. B.,... B.,...

66,...

66,...

4-60

P4-32A =continued> e. Eliminating entries in consolidation workpaper prepared 4ecember @-, G.K7 =no other entries needed>2 E=-> Income from Dindy #ompany 4ividends 4eclared Investment in Dindy #ompany +tock Eliminate income from subsidiary. #ommon +tock O Dindy #ompany Additional 0aid!In #apital 'etained Earnings, January 'evaluation #apital Investment in Dindy #ompany +tock Eliminate beginning investment balance. 66,... B.,... @6,...

E=G>

-..,... ?..,... -7B,... GA.,...

5@B,...

f.

Eliminating entries in consolidation workpaper prepared 4ecember @-, G.K6 =no other entries needed>2 E=-> Income from Dindy #ompany 4ividends 4eclared Investment in Dindy #ompany +tock Eliminate income from subsidiary. #ommon +tock O Dindy #ompany Additional 0aid!In #apital 'etained Earnings, January 'evaluation #apital Investment in Dindy #ompany +tock Eliminate beginning investment balance2 CG-@,... H C-7B,... N C66,... ! CB.,... C57@,... H C5@B,... N C66,... ! CB.,... 5.,... B.,... ?.,...

E=G>

-..,... ?..,... G-@,... GA.,...

57@,...

4-61