P4-4

Consolidation workpapers from separate financial statements

Pop Corporation and Subsidiary

Consolidation Workpapers
for the year ended December 31, 2016
(in thousands)

Pop Son 75% Adjusments and eliminations

Income Statement
Sales $ 1,600 $ 400
Income from Son $ 72 $ 72
Cost of sales $ 1,000 $ 200
Other expense $ 388 $ 104
Consolidated net income
Noncontrolling share $ 24
Controlling share of net income $ 284 $ 96

Retained Earning
Retained Earning-Pop $ 720
Retained Earning-Son $ 136 $ 136
Controlling share of net income $ 284 $ 96
Dividends $ 200 $ 64

Retained Earning-Dec 31 $ 804 $ 168

Balance Sheet
Cash $ 236 $ 60
Account receivable $ 320 $ 80
Dividends receivable from Son $ 24
Inventories $ 380 $ 40
Note receivable from Pop $ 20
Land $ 260 $ 120
Buildings-net $ 680 $ 320
Equipment-net $ 520 $ 200
Investment in Son $ 744

Goodwill $ 224
$ 3,164 $ 840

Account payable $ 340 $ 40

Note payable to Son $ 20 $ 20
Dividends payable $ 32 $ 24
Capital stock, $10 par $ 2,000 $ 600 $ 600
Retained earnings $ 804 $ 168
$ 3,164 $ 840
Non controlling interest January 1
Non controlling interest December 31
$ 1,100

Supporting Calculation
Son's value at acquisition :
Book value at December 31, 2016 $ 768
Less : 2016 Net income $ (96)
Add : 2016 Dividends $ 64
Book value on January 1, 2016 $ 736

Purchase price of Pop's 75% share $ 720

Implied fair value of Son ($720 / 75%) $ 960
Son's book value $ 736
Excess allocated to Goodwill $ 224
Noncontrolling interest (25% X $960) $ 240

Son's Adjusted Income

Son's net income $ 96
Less : Amortization of Goodwill $ -
Son's adjusted income $ 96
Pop's 75% share $ 72
Noncontrolling interest 25% share $ 24
6

sments and eliminations Consolidated

Statements

$ 2,000

$ 1,200
$ 492
$ 308
$ 24
$ 284

$ 720

$ 284
$ 48
$ 16 $ 200
$ 804

$ 296
$ 400
$ 24
$ 420
$ 20
$ 380
$ 1,000
$ 720
$ 24
$ 720
$ 224
$ 3,440

$ 380
 $ 8
$ 2,000
$ 804

$ 240
$ 8 $ 248
$ 1,100 $ 3,440