P4-1

#1: Goodwil at December 31, 2020:

$ 800,000 Goodwill = 1,600,000 x 50% =

#2 Noncontrolling Interest Share for 2020:

$ 180,000 Adjusted Income = 2,000,000
8 (years) = 80,000 ; 800,000
Non-Controlling Int Share = 72

#3 Consolidated retained earnings at December 31, 2019:

$ 3,340,000

#4 Consolidated retained earnings at December 31, 2020:

$ 4,510,000 3,340,000 + (8,000,000 - 6,37

#5 Consolidated net income for 2020:

$ 2,170,000 10,000,000 - (6,370,000 + 1,20

#6 Noncontrolling interest at December 31, 2019:

$ 1,480,000 Plant assets = 640,000 - (80,00
4,800,000 + 0 + 320,000 + 800

#7 Noncontorlling interest at December 31, 2020:

$ 1,560,000 Plant assets = 640,000 - (80,00
5,200,000 + 0 + 240,000 + 800
 Calculations:

odwill = 1,600,000 x 50% = 800,000

justed Income = 2,000,000 - 1,200,000 = 800,000 ; 1,600,000 x 40% = 640,000 ; 640,000 /

years) = 80,000 ; 800,000 - 80,000 = 720,000
n-Controlling Int Share = 720,000 x 25% = 180,000

340,000 + (8,000,000 - 6,370,000 + 540,000) -1,000,000 = 4,510,000

,000,000 - (6,370,000 + 1,200,000) = 2,430,000 ; 2,430,000 - 260,000 = 2,170,000

ant assets = 640,000 - (80,000 x 4) = 320,000

800,000 + 0 + 320,000 + 800,000 = 5,920,000 ; 5,920,000 x 25% = 1,480,000

ant assets = 640,000 - (80,000 x 5) = 240,000

200,000 + 0 + 240,000 + 800,000 = 6,240,000 ; 6,240,000 x 25% = 1,560,000
 Initial Calculations:
4,800,000 / 75% = 6,400,000
6,400,000 - 4,800,000 = 1,600,000

Excess Allocated:
10% to inventories 1,600,000 x 10% =160,000

40% to plant assets 1,600,000 x 40% = 640,000

50% to goodwill 1,600,000 x 50% = 800,000
P4-5

Pam Corporation and Subsidiary Consolidation Workpaper

for year ended December 31, 2016
Pam 70% Sun Debits Credits

Income Statement
Sales $ 1,600,000 $ 1,400,000
Income from Sun $ 119,000 $ - a $ 119,000
Cost of Sales $ (600,000) $ (800,000) c $ 10,000
Depreciation Expense $ (308,000) $ (120,000) d $ 4,000
e $ 14,000
Other Expense $ (320,000) $ (280,000) f $ 2,000
Net Income
Noncontrolling interest share i $ 51,000
Controlling share of Net Income $ 491,000 $ 200,000

Retained Earnings Statement

Retained Earnings - Pam $ 600,000 $ -
Retained Earnings - Sun $ - $ 200,000 b $ 200,000
Dividends $ (400,000) $ (100,000) a $ 70,000
i $ 30,000
Net Income $ 491,000 $ 200,000
Retained Earnings - December 31 $ 691,000 $ 300,000

Balance Sheet
Cash $ 172,000 $ 120,000
Accounts Receivable $ 200,000 $ 140,000 g $ 20,000
Dividends receivables $ 28,000 $ - h $ 28,000
Inventories $ 300,000 $ 200,000
Other current assets $ 140,000 $ 60,000
Land $ 100,000 $ 200,000
Buildings - net $ 280,000 $ 320,000 c $ 28,000 d $ 4,000
Equipment - net $ 1,140,000 $ 660,000 c $ 42,000 e $ 14,000
Investment in Sun $ 1,029,000 $ - a $ 49,000
b $ 980,000
Excess Allocated to Trademarks c $ 80,000 f $ 2,000
Excess Allocated to Goodwill c $ 40,000
Total Unamortized excess b $ 200,000 c $ 200,000
Total Assets $ 3,389,000 $ 1,700,000

Accounts payable $ 400,000 $ 170,000 g $ 20,000

Dividends payable $ 200,000 $ 40,000 h $ 28,000
Other Liabilities $ 98,000 $ 190,000
Capital sotck $ 2,000,000 $ 1,000,000 b $ 1,000,000
Retained Earnings $ 691,000 $ 300,000
Total Equities $ 3,389,000 $ 1,700,000

Noncontrolling Interest January 1 b $ 420,000

Noncontrolling Interest December 31 i $ 21,000
$ 1,838,000 $ 1,838,000
 Calculations:
Consolidation
Statements

$ 3,000,000 1,600,000 + 1,400,000 = 3,000,000

$ - 119,000 - 119,000 = 0
$ (1,410,000) 600,000 + 800,000 + 10,000 = 1,410,000
308,000 + 120,000 + 4,000 + 14,000 = 446,000
$ (446,000)

$ (602,000) 320,000 + 280,000 + 2,000 = 602,000

$ 542,000 3,000,000 - 1,410,000 - 446,000 - 602,000 = 542,000
$ (51,000)
$ 491,000

$ 600,000 600,000 - 0 = 600,000

$ -
400,000 + 100,000 - 70,000 - 30,000 = 400,000
$ (400,000)

$ 491,000
$ 691,000

$ 292,000 172,000 + 120,000 = 292,000

$ 320,000 200,000 + 140,000 - 20,000 = 320,000
$ - 28,000 - 28,000 = 0
$ 500,000 300,000 + 200,000 = 500,000
$ 200,000 140,000 + 60,000 = 200,000
$ 300,000 100,000 + 200,000 = 300,000
$ 624,000 280,000 + 320,000 + 28,000 - 4,000 = 624,000
$ 1,828,000 1,140,000+ 660,000 + 42,000 - 14,000 = 1,828,000
1,029,000 - 49,000 - 980,000 = 0
$ -

$ 78,000 80,000 - 2,000 = 78,000

$ 40,000 40,000 - 0 = 40,000
$ - 200,000 - 200,000 = 0
$ 4,182,000

$ 550,000 400,000 + 170,000 - 20,000 = 550,000

$ 212,000 200,000 + 40,000 - 20,000 = 212,000
$ 288,000 98,000 + 190,000 = 288,000
$ 2,000,000 2,000,000 + 1,000,000 - 1,000,000 = 2,000,000
$ 691,000

1,400,000 x 30% = 420,000

$ 441,000 420,000 + 21,000 = 441,000
$ 4,182,000
 Initial Calculations:
Fair Value = 980,000 / 70% = 1,400,000

Book Value of Sun = 1,000,000 + 200,000 =1,200,000

Excess Fair Value = 1,400,000 - 1,200,000 =200,000
Noncontrolling Interest (30% of Fair Value) = 1,400,000 x 30% = 420,000

Undervalued Inventory = 10,000

Undervalued Building = 28,000 with 7 year life
Undervalued Equipment = 42,000 with 3 year life
Trademark = 80,000 with 40 year life
10,000 + 28,000 + 42,000 + 80,000 = 160,000
Remainder of 200,000 to Goodwill = 200,000 - 160,000 = 40,000

Net income = 200,000

Undervalued Invenotry (full value) = 10,000
1 year of depreciation of Building = 28,000 / 7 = 4,000
1 year of depreciation of equipment = 42,000 / 3 = 14,000
1 year of amoritization of trademark = 80,000 / 40 = 2,000
Adjusted Income of Sun = 200,000 - 10,000 - 4,000 - 14,000 - 2,000 = 170,000
Pam's 70% controlling interest value = 170,000 x 70% = 119,000
Sun's 30% noncontrolling interest value = 170,000 x 30% = 51,000

Journal Entries for 2016

a) Income for Sun (170,000 x 70%) $ 119,000

Dividends (100,000 x 70%) $ 70,000
Investment in Sun $ 49,000

b) Capital Stock for Sun $ 1,000,000

Retained Earnings for Sun as of Jan 1 $ 200,000
Excess of Fair Value $ 200,000
Investment in Sun $ 980,000
Noncontrolling interest (Jan 1) $ 420,000

c) Undervalued Inventories $ 10,000

Undervalued Building $ 28,000
Undervalued Equipment $ 42,000
 Trademarks $ 80,000
Goodwill $ 40,000
Excess Fair Value $ 200,000

d) Depreciation Expense (28,000 / 7) $ 4,000

Undervalued Building (1 year) $ 4,000

e) Depreciation Expense (42,000 / 3) $ 14,000

Undervalued Equipment (1 year) $ 14,000

f) Other Expenses (80,000 / 40) $ 2,000

Amortization of Trademark (1 year) $ 2,000

g) Accounts Payable $ 20,000

Accounts Receivable $ 20,000

h) Dividneds Payable $ 28,000

Dividends Receivable $ 28,000

i) Noncontrolling Interest value (30%) $ 51,000

Dividends of Sun (100,000 x 30%) $ 30,000
Noncontrolling interest $ 21,000