EXERCISE 4-2

Cost
Fair value
Book value

$
800,000
$ 1,000,000
$
900,000

Difference fair and book value

Allocated to patent
(a) Allocated to goodwill

$
$
$

100,000
20,000
80,000

Patent amortization
(b) Patent value, December 31, 2017

$
$

2,000
12,000

PR
Investment in Theo AB on 1 January, 2014
Fair value of total net assets on 1 Jan , 2014
Book value of total net assets on 1 Jan, 2014
Allocation to goodwill
Allocation to noncontrolling interest

$ 10,000
$ 12,500
$ 10,000
$ 2,500
$ 2,500

PROBLEM 4-2
LIAM AB CORPORATION AND SUBSIDIARY CONSOLIDATION WORKING PAPER
FOR THE YEAR ENDED DECEMBER 31, 2014
Adjustments and Elimination
Liam AB
Theo AB
Debits
Income Statement
Sales
$ 67,000 $ 30,500
Income from Theo AB
$
1,200
a. $
1,200
Cost of sales
$ (42,000) $ (25,000)
Expenses
$ (21,900) $ (4,000)
Noncontrolling Interest Share
b. $
300
Net Income
Add: Beginning Retained Earnings
Deduct: Dividends

$
4,300 $
$ 11,600 $
$ (3,000) $

1,500
8,000 c. $
(500)

Ending Retained Earnings

$ 12,900

9,000

Balance Sheet
Cash
A/R, net
Dividends Receivable
Inventories
Other Current Assets
Land
Buildings, net
Equipment, net
Investment in Theo AB

$
800
$
1,300
$
400
$
2,600
$
1,200
$
3,000
$
3,200
$
2,200
$ 10,800

$
$
$
$
$
$
$
$

600
800
400
1,800
4,200
3,600
2,400

d.

c. $
$ 25,500
$
1,000
$
2,500
$
4,100
$
5,000
$ 12,900

Total Liabilities and Equity

$ 25,500

a.
b.

a.
c.

Goodwill
Total Assets
A/P
Dividends Payable
N/P
Capital Stock, $10 par
Retained Earnings
Noncontrolling Interest

8,000

$ 13,800
$
400
$
500 d. $
$
1,900
$
2,000 c. $
$
9,000

2,500

400
2,000
b.
c.

$ 13,800

ents and Eliminations

Credits

$
$

$
$

$
$

Consolidated Statement
$
$
$
$
$

97,500
(67,000)
(25,900)
300

$
$

4,900
11,600

(3,000)

12,900

$
$
400 $
$
$
$
$
$
800
10,000 $
$

1,400
2,100
3,000
3,000
7,200
6,800
4,600

$
$
$
$
$
$

30,600
1,400
2,600
6,000
5,000
12,900

200
2,500 $

2,700

30,600

400
100

2,500