Nama : Marselinus Aditya Hartanto Tjungadi

NIM : A31113316
Advanced Accounting 2 (Akuntansi Keuangan Lanjutan 2)

Problem 8-6

1 Investment in Sod December 31, 2012

Investment in Sod January 2, 2011 $ 98,000
Increase for 2011 ($30,000 retained earnings increase 70%) 21,000
Purchase of additional 20% interest June 30, 2012 37,000
Increase for income for 2012:
($30,000 1/2 year 70%) + ($30,000 1/2 year 90%) 24,000
Dividends 2012: ($10,000  90%) (9,000)
Investment in Sod December 31, 2012 $171,000

2 Goodwill December 31, 2012

January 2, 2011 purchase:
Cost of 70% interest $ 98,000

Implied fair value of Sod ($98,000 / 70%) $140,000

Less: Book value of Sod 120,000
Goodwill $ 20,000

June 30, 2012 purchase:

Cost of 20% interest $ 37,000

Implied fair value of Sod ($37,000 / 20%) $185,000

Less: Book value of Sod 165,000
Goodwill - December 31, 2012 $ 20,000

3 Consolidated net income

Sales $600,000
Cost of sales (400,000)
Expenses (70,000)
Consolidated net income 130,000
Noncontrolling interest share * 6,000
Controlling share of net income $124,000

* Noncontrolling share is 10% for full year plus

20% for ½ year.
Alternative:
Pot’s reported income = Controlling share of net income $124,000

4 Consolidated retained earnings December 31, 2012

Beginning retained earnings $200,000
Add: Controlling share of Consolidated net income — 2012 124,000 Less:
Dividends (64,000)
Consolidated retained earnings — ending $260,000
Alternative solution:
Pot’s reported ending retained earnings = Consolidated
retained earnings — ending $260,000

5 Noncontrolling interest December 31, 2012

Equity of Sod December 31, 2012 $170,000
Goodwill 20,000
Fair value of Sod $190,000
Noncontrolling interest percentage 10%
Noncontrolling interest December 31, 2012 $ 19,000
Problem 8-7

Pod Corporation and Subsidiary

Consolidated Income Statement for the year
ended December 31, 2012 (in thousands)
Sales $3,200
Cost of sales (1,900)
Gross profit 1,300
Depreciation expense (700)
Other expenses (150)
Consolidated net income 450
Noncontrolling interest share (($150,000 20%) (33.75)
($150,000 1/4 year  10%)
Controlling share of Consolidated net income $ 416.25
Note:
Should also add Gain on revaluation of investment of $66,750 to Consolidated
income statement.
Calculation:
Implied fair value of Subsidiary $95,000/0.1 = $950,000 Fair
value of original investment $950,000 x 70% = $665,000 Less:
Carrying value of original investment 598,250
Gain on revaluation of investment $66,750

Carrying value of original investment= $600,000 + ($150,000 x 3/12 x 70%) –

($40,000 x 70%) = $598,250

Schedule to allocate Saw’s income and dividends

Saw’s income: Controlling

share:
($150,000 x 70% x 3/12) + ($150,000 x 80% x 9/12) = 116,250
Noncontrolling share:
($150,000 x 30% x 3/12) + ($150,000 x 20% x 9/12) = 33,750

Saw’s dividends:
Controlling share:
($40,000 x 70%) + ($40,000 x 80%) = $60,000
Noncontrolling share:
($40,000 x 30%) + ($40,000 x 20%) = $20,000

Problem 8-8
Preliminary computations
Cost October 1, 2011 $ 82,400

Implied fair value of Sat ($82,400 / 80%) $103,000

Book value on October 1 acquisition date:
Book value on January 1, 2011 $70,000
Add: Income January 1 to October 1
($24,000 3/4 year) 18,000
Deduct: Dividends March 15 (5,000)
Book value October 1 83,000
Goodwill $ 20,000

Income from Sat for 2011

Share of Sat’s net income ($24,000 1/4 year 80%) $ 4,800
Less: Unrealized profit in Sat’s ending inventory (1,000)
Income from Sat $ 3,800

* Preacquisition income ($24,000 3/4 year 100%) $18,000

* Preacquisition dividends ($5,000  80%) $ 4,000

* Noncontrolling interest share ($6,000 20%) $ 1,200

* Under GAAP, preacquisition earnings are not shown as a

reduction of consolidated net income. Rather, we only
include earnings and dividends subsequent to the acquisition
date. Preacquistion amounts are disclosed in required pro-
forma disclosures for acquisitions. The worksheet on the
following page reflects these adjustments.

Pop Corporation and Subsidiary

Consolidation Working Papers for
the year ended December 31, 2011

Adjustments and Consolidated

Pop Sat 80% Eliminations Statements
Income Statement
Sales $ 112,000 $ 50,000 a 12,000 $ 112,500
c 37,500
Income from Sat 3,800 b 3,800
Cost of sales 60,000* 20,000* d 1,000 a 12,000 54,000*
c 15,000
Operating expenses 25,100* 6,000* c 4,500 26,600*
Consolidated net income 31,900
Noncontrolling int. share f 1,200 1,200*
Controlling share of NI $ 30,700 $ 24,000 $ 30,700

Retained Earnings
Retained earnings — Pop $ 30,000 $ 30,000
Retained earnings — Sat $ 20,000 e 20,000
Net income 30,700 24,000 30,700
Dividends 20,000* 10,000* b 4,000
c 5,000
f 1,000 20,000*
Retained earnings
December 31 $ 40,700 $ 34,000 $ 40,700

Balance Sheet
Cash $ 5,100 $ 7,000 $ 12,100
Accounts receivable 10,400 17,000 g 6,000 21,400
Note receivable 5,000 10,000 15,000
Inventories 30,000 16,000 d 1,000 45,000
Plant assets — net 88,000 60,000 148,000
Investment in Sat 82,200 b 200
e 82,400
Goodwill e 20,000 20,000
$ 220,700 $ 110,000 $ 261,500

Accounts payable $ 15,000 $ 16,000 g 6,000 $ 25,000

Notes payable 25,000 10,000 35,000
Capital stock 140,000 50,000 e 50,000 140,000
Retained earnings 40,700 34,000 40,700
$ 220,700 $ 110,000

Noncontrolling interest — beginning c 13,000

e 7,600
Noncontrolling interest December 31 f 200 20,800
$ 261,500
* Deduct

Working paper entries:

a Sales 12,000
Cost of sales 12,000

b Income from Sat 3,800

Investment in Sat 200
Dividends 4,000

c Sales 37,500
Cost of sales 15,000
Operating expenses 4,500
Dividends 5,000
Noncontrolling interest 13,000

d Cost of sales 1,000

Inventories 1,000

e Retained earnings — Sat 20,000

Goodwill 20,000
Capital stock 50,000
Investment in Sat 82,400
Noncontrolling interest 7,600

f Noncontrolling interest share 1,200

Dividends 1,000
Noncontrolling interest 200

g Accounts payable 6,000

Accounts receivable 6,000