LATIHAN PRAKTIKUM AKUNTANSI KEUANGAN LANJUTAN FATA 2016

LAB 4

CONSOLIDATED FINANCIAL STATEMENT

Multiple Choice

1. The retained earnings that appear on the consolidated balance sheet of a parent company
and its 60%-owned subsidiary are:
a. The parent company’s retained earnings plus 100% of the subsidiary’s retained
earnings
b. The parent company’s retained earnings plus 60% of the subsidiary’s retained
earnings
c. The parent company’s retained earnings
d. Pooled retained earnings

2. Iron Industries owns 8,000,000 shares of Spangles Corporation’s outstanding common

stock (80% interest). The remaining 2,000,000 outstanding common shares of Spangles
Corporation are held by Clinton Company. On Iron Industries’ consolidated financial
statements, Clinton Company is considered:
a. An investee
b. An associated company
c. An affiliated company
d. A non-controlling interest

3. A 60% owned subsidiary should not be consolidated when,

a. Control of the subsidiary does not lie with the parent company
b. There is a dominant non-controlling interest in the subsidiary
c. Its operations are dissimilar from the parent company
d. Management feels consolidation would not provide the most meaningful financial
statements

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4. Wilson Corporation has several subsidiaries that are included in its consolidated financial
statements. In its December 31, 2019, trial balance, Wilson had the following intercompany
balances before eliminations:
Dr. Cr.
Current receivable due from Sam Co. $ 64,000
Noncurrent receivable from Sam Co. 228,000
Cash advance from Mark Corp. $12,000
Cash advance from Shoyo Co. 30,000
Intercompany payable to Shoyo Co. 202,000

In its December 31, 2019, consolidated balance sheet, what amount Wilson reports as
intercompany receivable?
a. $0
b. $72,000
c. $292,000
d. $304,000
5. Steve Enterprise’s current receivables from affiliated companies at December 31, 2019,
are:
i. a $178,000 cash advance to Marvel Corporation (Steve Enterprise owns 35% of the
voting stock of Marvel and accounts for the investment by the equity method),
ii. a receivable of $590,000 from Kuro Corporation for administrative and selling services
(Kuro is 100% owned by Steve and is included in Steve’s consolidated financial
statement), and
iii. a receivable of $350,000 from Earl Corporation for merchandise sales on credit (Earl is
a 90% owned, unconsolidated subsidiary of Steve accounted for by the equity method).

Steve Enterprise has the beginning balance of $100,000 for its current receivables account.
In the current assets section of its December 31, 2019, consolidated balance sheet, Steve
should report receivables in the amount of:

a. $100,000
b. $628,000

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c. $690,000
d. $1,218,000

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Mini Essay

1. What is a controlling and non-controlling interest?

2. What is the sequence of workpaper adjustments and eliminations, when preparing a
consolidated financial statement?

3. Parker Corporation paid $2,000,000 for an 80 percent interest in Spider Corporation on

January 1, 2019; Spider’s total book value was $2,000,000. The excess was allocated to
undervalued equipment that amounted to $125,000, and the rest of the excess to goodwill.
Calculate the goodwill that should appear in the consolidated balance sheet of Parker and
Subsidiary at January 1, 2019.

4. Akunpad Enterprise acquired 80% of PAW Corp. for $5,500,000 at January 1, 2019. At its
acquisition, PAW Corp.’s equity consist of common stock of $3,550,000, additional paid
in capital of $1,200,000 and retained earnings of $1,185,000. PAW Corp.’s assets and
liabilities partially consists of: ($000)
Book Value Fair Value
Account Receivable 500 300
Inventories 800 700
Land 3000 3500
Building 1800 2000
Equipment 450 800
Account Payable 200 550
Notes Payable 900 850
Bonds Payable 1000 1200
Other Liabilities 840 840

Prepare a schedule of allocation of excess fair value over book value of PAW’s Corp. net
identifiable assets!

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Grand Essay

SR Corporation is a 70% percent-owned subsidiary of TS Corporation, acquired by TS for

$3,500,000 on January 2, 2019. TS gains control of SR directly by acquiring the company.
The statement of financial position information for the two companies immediately after the
acquisition was as follows (in $ 000):

TS SR
ASSETS Book Fair
Value Book Value
Value
Cash 700 450 450
Receivable - net 1600 675 675
Inventories 1975 785 850
Land 1725 500 1125
Building 1475 1135 980
Equipment - net 1800 580 950
Investment in SR 3500
Total Assets 12,775 4125 5,030

LIABILITY AND
EQUITY
Account Payable 825 575 575
Other Liabilities 650 125 550
Share Capital, $5 par 10,500 2800
Retained Earnings 800 625
Total Liability and Equity 12,775 4125

Prepare an Excess of FV over BV & Allocation to Net Identifiable Assets and the working paper
entries in order to make the consolidated balance sheet for TS Corporation and Subsidiary at
January 2, 2019.

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Jawaban
Multiple Choice
1. C
2. D
3. A
4. A
5. B
Mini Essay
1. A non-controlling interest (NCI), also known as minority interest, is an ownership
position whereby a shareholder owns less than 50% of outstanding shares and has no
control over decisions. Non-controlling interests are measured at the net asset value of
entities and do not account for potential voting rights. A controlling interest owns more
than 50% of outstanding shares and has control over the subsidiary. Controlling
interest is referred to as a parent company and will consolidate their financial
statements with their subsidiaries.

2. The steps in creating workingpaper entries for adjustment and eliminations are:

 Eliminate income from subsidiary company

 Enter NCI, NCI Share of subsidiary income and dividends
 Eliminate investment in subsidiary and subsidiary’s income
 Eliminate unamortized excess
 Eliminate intercompany transactions

3. (in: $000)
Implied FV of Spider ($2000/80%) $ 2500
Less: BV of Spider $ -2000
Excess FV over BV $ 500
Equipment Undervalue $ 125
Goodwill, 1 Jan 2019 $ 375

4. (in $000)
Implied FV of PAW ($5,500,000/80%) $ 6,875,000
BV of PAW ($3,550,000+1,200,000+1,185,000) -$ 5,935,000
Excess FV over BV $ 940,000

#Schedule of Allocation Excess to net identifiable assets

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Fair Value Book Value Amount

Account Overvalued 300 500 (200)
Receivable
Inventories Overvalued 700 800 (100)
Land Undervalued 3500 3000 500
Building Undervalued 2000 1800 200
Equipment Undervalued 800 1450 (650)
Account Undervalued 550 200 (350)
Payable
Notes Payable Overvalued 850 900 50
Bonds Payable Undervalued 1200 1000 (200)
Total Allocation (750)
Goodwill 1690
Excess FV over 940
BV

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Grand Essay
Answer: (in $ 000)

# Excess of FV over BV & Allocation to Net Identifiable Assets (in $ 000):

SR 70% interest acquired 3500
Implied FV of SR ($3500/70%) 5000
BV of SR Net Assets ($2800+$625) 3425
Total Excess of FV over BV 1575

Allocation to Net Identifiable Assets

# ($000)
BV FV Excess
Inventories 785 850 65 U
Land 500 1125 625 U
Building 1135 980 -155 O
Equipment - net 580 950 370 U
Other Liabilities 125 550 -425 U
Allocated to Net Identifiable Assets 480
Goodwill 1095
Total Excess of FV over BV 1575

#Working paper Entries

a. Reciprocal elimination (elimination Investment In & Subsidiary’s Equity)

Capital Stock $ 2,800,000

Retained Earning $ 625,000
Unamortized Excess $ 1,575,000
Investment In Rose (70%) $ 3,500,000
Non Controlling Interest (30%) $ 1,500,000

b. Unamortized Excess Allocation

Inventories $ 65,000
Land $ 625,000
Equipment $ 370,000
Goodwill $ 1,095,000
Building $ 155,000
Other Liabilities $ 425,000
Unamortized Excess $ 1,575,000

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TS & SUBSIDIARIES
CONSOLIDATED SOFP WORKPAPER
January 2, 2019 (in $000)

Adjusting &
Elimination Consolidated
TS Corp SR Corp
SOFP
Debit Credit
ASSETS
Cash 700 450 1150
Receivable- Net 1600 675 2275
Inventories 1975 785 b. 65 2825
Land 1725 500 b. 625 2850
Building-Net 1475 1135 b. 155 2455
Equipment-Net 1800 580 b. 370 2750
Investment in Rose 3500 a. 3500 0
Goodwill b. 1095 1095
Unamortized Excess a. 1575 b. 1575 0
Total Assets 12,775 4125 15,400

Liabilities & Equity

Account Payable 825 575 1400
Other Liabilities 650 125 b. 425 1200
Capital Stock, $5 par 10,500 2800 a. 2800 10,500
Retained Earnings TS 800 800
Retained Earnings SR 625 a. 625 0
Non Controlling Interest a. 1500 1500
Total Liabilities + Equity 12,775 4125 15,400

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