CASE 1:

1.

DCM CO.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF JANUARY, 20x1
Assets
Cash 30,000
Accounts Receivables 84,000
Inventory 142,000
Equipment 520,000
Accumulated Depreciation (64,000)
Goodwill 6,000
TOTAL 718, 000
Liabilities and Equity
Accounts Payable 52,000
Bonds Payable 60,000
TOTAL LIABILITIES 112,000
Share Capital 340,000
Share Premium 130,000
Retained earnings 100,000
Owners of Parent 570,000
Non-controlling interest 36,000
TOTAL EQUITY 606,000

TOTAL LIABILITIES AND EQUITY 718,000

****GOODWILL COMPUTATION:
Consideration Transferred 150,000
NCI (180,000 x 20%) 36,000
Total 186,000
FV (180,000)
Goodwill 6,000
CASE 2:
2．GOODWILL COMPUTATION
Consideration transferred 300,000
Previously held equity interest -
Total 300,000
Parent’s Proportionate share (360,000 x 75%) (270,000)
Goodwill- Owners Parent 30,000
Fair value of NCI (360,000/75%) x 25%) 100,000
NCI Proportionate Share (360,00 x 25%) (90,000)
Goodwill- NCI 30,000
Goodwill- Dec 31, 20x1 40,000

ANALYSIS OF SUBSIDIARY’S NET ASSETS

MH Co. Jan 1, 20x1 Dec 31, 20x1 Net Change
Net assets @ CA 300,000 376,000 76,000
FVA 60,000 50,000 10,000)
Net assets @FV 360,000 426,000 66,000

FVA 1/1/x1 Useful Life Depreciation FVA 12/31/x1

Building 60,000 6 yrs. 10,000 50,000

3.
Total asset from parent 1,672,000
Total asset of subsidiary 496,000
Investment in subsidiary (300,000)
Fair Value adjustments-net 30,000
Goodwill-net 40,000
CONSOLIDATED TOTAL ASSETS 1,958,000
4. NON-CONTROLLING INTEREST IN NET ASSETS
Subsidiary’s net assets @ FV 426,000
NCI % 25%
Total 106,500
Goodwill 10,000
Non-controlling interest in net assets 116,500

5. CONSOLIDATED RETAINED EARNINGS

Parent’s retained earnings 440,000
Parent’s share in net change 49,500
Consolidated Retained earnings 489,500

Net change in XYZ’s net assets　　 66,000

DCM Co’s interest in MH CO’s 　25%
DCM’s share in the net　in MH Co’s 　 49,500

6.
Share Capital 940,000
Retained Earnings 489,500
Owners of Parent 　　　1,429,500
Non-controlling interest 116,500
Total Equity 1,546,000

CASE 3:
7. CONSOLIDATED PROFIT OR LOSS
Profits of DCM CO & MH CO 320,000
Depreciation of FVA (10, 000)
Consolidated Profit 310,000
8. Owner’s Parent 9. NCI Consolidated
Parent’s profit before FVA 240,000 n/a 240,000
Share in MH’s profit before FVA 60,000 20,000 80,000
Depreciation of FVA (7,500) (2,500) (10,000)
TOTAL 292,500 17,500 310,000

CASE 4:
10.
Sales of Parent 1,000,000
Sales of Subsidiary 700,000
Intercompany sales during the year (squeeze) (87,000)
Consolidated Sales 1,613,000

11.
Downstream Upstream Total
Sales price of intercompany sale 15,000 72,000
Cost of intercompany sale (12,000) (60,000)
Profit from intercompany sale 3,000 12,000
Unsold portion s of yr. end 3/4 ¼
Unrealized Gross Profit 2,250 3,000 5,250

Cost of sale of parent 400,000

Cost of sale of subsidiary 350,000
Intercompany sales during the yr. (87,000)
Unrealized profit in ending inventory 5,250
Realized profit in beginning inventory -
Depreciation of FVA on inventory -
Consolidated Cost of Sales 668,250
12.
Ending inventory of parent 300,000
Ending inventory of subsidiary 80,000
Unrealized profit in ending inventory (5,250)
Consolidated Ending Inventory 374,750

CASE 5:
13.
Historical Cost 144,000
Accumulated Depreciation 86,400)
Depreciation based on historical cost (14,400)
Carrying Amount 43,200

14.
Equipment-net (DCM Co.) 480,000
Equipment-net (MHCo.) 228,000
CA of equipment sold in MH’s books (54,000)
CA of equipment sold in DM’s books x sale 43,200
Consolidated Equipment-Net 697,200

15.
Depreciation expense (DCM Co.) 48,000
Depreciation expense (MH Co.) 14,400
Depreciation in MH’s book (18,000)
Depreciation in DCM’s book-sale 14,400
Consolidated Depreciation Expense 58,800
16.

DCM CO.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 20x1
Assets
Equipment 708,000
Other assets 294,000
Goodwill 27,000
TOTAL ASSETS 1,029,000

Liabilities and Equity

Liabilities 114,000
Share Capital 720,000
Retained earnings 132,000
NCI 63,000
TOTAL LIABILITIES AND EQUITY 1,029,000

Consideration Transferred 216,000

Non-controlling interest 63,000
Total 279,000
Fair Value (252,000)
Goodwill 27,000

Share capital 120,000

Share Premium -
Retained Earnings 132,000
Net assets of carrying amount 252,000
FVA -
FV of net identifiable acquired 252,000
 DCM CO.
CONSOLIDATED STATEMENT OF PROFIT/LOSS
AS OF DECEMBER 31, 20x1
Revenue (360K + 96K) 456,000
Depreciation expenses (62,400)
Other expenses (60,000)
Gain on Sale of Equipment 14, 400

Profit for the year 348, 000

Profit attributable to owner of the parent 261,000

Profit attributable to NCI 87,000
Profit for the year 348,000

CASE 6:
17.
MH assets at fair value 300,000
Multiplied by: NCI percentage 25%
Total Non-Controlling Interest in assets 75,000

18.
DCM Co reatained earnings-Dec 31, 20x1 420,000
DCM Co. share in net asset change 180,000
Unamortized deferred gain -
Consolidated Retained earnings 600,000

Acquisition Consolidation Net Change

Total net asset of CA 240,000 480,000
FVA at acquisition date - -
Subsidiaries net asset at FV 240,000 480,000 240,000

19. Profit or loss attributable to owners of parent and NCI

Owners of Parent NCI Consolidated
DCM Co. profit before FVA 600,000 - 600,000
Share in MH Co. profit before FVA 148,500 49,500 198,000
Depreciation of FVA - - -
Share in impairment loss - - -
Profit 748,500 49,500 798,000

CASE 7:
20.
Acquisition Cost (320,000)
Carrying amount of bonds payable 300,000
Loss on extinguishment on bond (20,000)

21.
Bonds payable issued by parent 300,000
Portion acquired by subsidiary (300,000)
Consolidated total bonds payable ---
22.

DCM CO.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 20x1
Assets
Investment in bonds 320,000
Other assets (650K + 64K) 714,000
Goodwill 58,500
TOTAL ASSETS 1,092,000

Liabilities and Equity

Accounts payable (52K + 150K) 202,000
Bond Payable @ FA - eliminated 300,000
Total Liabilities 502,000
Share Capital (parent) 350,000
Retained earnings 182,000
NCI in net asset 58,500
TOTAL LIABILITIES AND EQUITY 1,092,000

DCM CO.
CONSOLIDATED STATEMENT OF PROFIT/LOSS
AS OF DECEMBER 31, 20x1
Revenue (390K + 156K) 546,000
Operating expenses (412,100)
Interest expense (3,000)
Profit for the year 130,900
Profit attributable to owner of the parent 124,400
Profit attributable to NCI 6,500
Profit for the year 130,900