Solutions: Chapter 2 : Separate and consolidated Financial Statements

Date of Consolidation

#1. PP & SS Company

Consideration transferred
Cash 300,000
contingent consideration 15,000
Fair value of subsidiary 315,000
Fair value of net assets
Receivables 80,000
Inventory 70,000
Bldg (75T+40T) 115,000
Equipment 25,000
customer list 22,000
R&D 30,000
sub-total 342,000
current liab - 10,000
long-term liab - 50,000 282,000
Goodwill 33,000
or
Consideration transferred 300,000
Contingent consideration 15,000
Fair value of subsidiary 315,000
Less: Book value of net assets
Assets 250000
Liability -60000 190,000
Allocated excess 125,000
Over/under valuation of assets & liab
Increase in building 40,000
customer list 22,000
R&D 30,000 92,000
Goodwill 33,000

#2&3 Platek Ent.

100%
Company fair vlue 600,000 600,000
Book value of interest acquired
Common stock 15,000

Retained earnings 255,000

Total equity 270,000
Excess or differential #2: d 330,000
Less: Adjustments
inventories 55,000
Plant assets 175,000 #3: d debit
Total 230,000
Goodwill 100,000

#4&5 Platek Ent.

100%
Company fair vlue 150,000 150,000
Book value of interest acquired
Common stock 40,000

Retained earnings 52,000

Total equity 92,000
Excess or differential #4: d 58,000
Less: Adjustments
inventories 6,000
Bldgs & equipment 30,000
Total 36,000
Goodwill 22,000 #5: b

#6-8 Wilton Company

push down acctg
Book value Fair Value Revaluation
inventory 80000 85000 5000
land 50000 60000 10000
bldg& equipt 200000 250000 50000
revaluation capital 65000#6: d

#7 0a (Assets are revalued/adjusted in the books of sub.)

#8 50000/10 5,000 b

#9-10 Pinehallow
Total Parent
100% 100%
Company fair vlue 1,500,000 1,500,000 #9: a
FV of net assets 1,400,000 1,400,000
goodwill #10: a 100,000 100,000

Fairvalue of assets 50000+350000+700000+1000000 2,100,000

liab. 700,000
net assets 1,400,000

#11-14 Add-on Company

Cash & receivables 35,000
Inventory 60,000 #11:c
Land 125,000
Bldgs & Equipt 250,000
470,000
A/P 65,000
BP 150,000
215,000
net assets 255,000
Total Parent NCI
100% 100% 0%
Company fair vlue 300,000 300,000 nci-full
FV of net assets 255,000 255,000 - nci-partial
Goodwill #12:c 45,000 45,000
full partial

Total Parent NCI

100%
Company fair vlue 300,000 300,000
Book value of interest acquired
Common stock 100,000

Retained earnings 115,000

Total equity 215,000
Excess or differential #13:d 85,000
Less: Adjustments
inventories (15,000)
Land 25,000
Bldgs & equipment 30,000
Total 40,000
Goodwill 45,000

#14 0a

#15-#19 PC Company
#15 2400000-400000 2,000,000 b

Investment in S 2,500,000 #16: b

Common stock 100,000
APIC 2,400,000

APIC 400000
Retained Earnings 250000
Cash 650000

Eliminating entries
Capital stock 560,000
RE 280,000
Accum. OCI 195,000 #17: a
Customer lists 700,000 #19: b
Goodwill 800,000 #18: a
Treasury Stock 35,000
Investment in S 2,500,000
Total
Company Fair value 2,500,000
Less: book value of SHE
Capital stock 560,000
RE 280,000
Accum. OCI 195,000
Treasury stock (35,000) 1,000,000
Excess: 1,500,000
adjustment
Customer list 700,000
Goodwill 800,000

#20 Pagach Company

b Bonds payable at P300,000 less discount of P50000

#21 Noeder Company

Total Parent
100% 100%
Company fair vlue 1,000,000 1,000,000
FV of net assets 1,400,000 1,400,000
gain a (400,000) (400,000)

#22-23 NN Company
Total Parent
100% 100%
Company fair vlue 1,500,000 1,500,000
FV of net assets 950,000 950,000
goodwill #22: b 550,000 550,000

Fairvalue of assets 100000+200000+450000+1000000 1750000

liab. 800,000
net assets 950,000

#23: RE 2,000,000 a

#24: d

#25-#29 BB Corp. & SS Ent.

BB SS Consolidated

Cash 60000 35000 95000

A/R 90000 50000 130000140000-10000
Inventory 120000 90000 210000
Land 70000 50000 105000
Bldgs & Equip(net) 160000 130000 290000
Investment in sS 110000
Goodwill 30000
Total Assets 610000 355000 860000

A/P 75000 55000 120000 130000-10000

Wages pay 30000 20000 50,000
Notes pay 250000 200000 450000
Common stock #29 100000 30000 100000
Retained Earnings 155000 50000 140000
Total liab. & SHE 610000 355000 860000

#25 inventory 120000+90000 210,000 d

#26
Company fair value(investment) 110,000 a
Book value
CS 30,000.0
RE 50,000.0 80,000
differential or excess 30,000 a

#27 Parent Consolidated Sub.

Land 70000 105,000 35,000
Book value 50,000
net amt eliminated 15,000
cost 10,000
selling price 25,000 c

#28 Cons. Accts pay 120,000 d

Cons. AR 130,000
AR-BB corp 90,000
AR-SS Ent 50,000 140,000
intercompany AR 10,000

AP-BB 75,000
AP-SS 55,000 130,000
less: intercom AP 10,000
Cons. AP 120,000

#29. common stock 100,000 #29

#30-#32 San Corporation

with control premium Total Parent NCI
100% 80% 20%
Company fair vlue 737,400 600,000 137,400
FV of net assets 687,000 549,600 137,400
goodwill 50,400 50,400 -
#30: a
Consideration transferred 600,000
less: controll pemium 170,400
429,600
divide by 80%
Total 537,000
add: control premium 170,400
Fair value of subsidiary 707,400

Book value of sub 540000-105000 435,000

land understatement 420000-264000 156,000
Bldg understatement 96,000
Fair value of net assets 687,000

Total Parent NCI

100% 80% 20%
Company fair vlue 774,900 627,600 147,300
FV of net assets 687,000 549,600 137,400
goodwill #31: b 87,900 78,000 9,900

Consideration transferred 600,000

add: controll pemium 27,600
627,600

Total Parent NCI

100% 80% 20%
Company fair vlue 738,900 600,000 138,900
FV of net assets 687,000 549,600 137,400
goodwill #32:c 51,900 50,400 1,500

Consideration transferred 600,000

less: controll pemium 44,400
555,600
divide by 80%
Total 694,500
add: control premium 44,400
Fair value of subsidiary 738,900

#33: P Company
Consideration transferred 13,000,000
FV of net assets
Assets (exclude goodwill) 156,000,000
liability 140,000,000 16,000,000
Gain on acquisition (negative excess) - 3,000,000 b

#34-#37 Smart Company

Fair value of nci given Total Parent NCI
100% 60% 40%
Company fair vlue 12,360,000 7,560,000 4,800,000 #37: c
FV of net assets 8,400,000 5,040,000 3,360,000 #36: b
goodwill 3,960,000 2,520,000 1,440,000
#35: c #34:b

#38-#41 Pencil Company

fair value of sub. Given Total Parent NCI
100% 75% 25%
Company fair vlue 11,640,000 9,000,000 2,640,000 #41:c
FV of net assets 9,600,000 7,200,000 2,400,000 #40:b
goodwill 2,040,000 1,800,000 240,000
#39:c #38:d
none of the above
#42-#45 Press Company
Step Acquisition

Consideration transferred 2,592,000 60%

Fair value of the 15% previously held
2592000/60% 4320000
15% 648,000 15%
3,240,000 75%
Total Parent NCI
100% 75% 25%
Company fair vlue 4,320,000 3,240,000 1,080,000 #45: c
FV of net assets 3,840,000 2,880,000 960,000 #44: b
goodwill 480,000 360,000 120,000
#43: c #42: b
#46-#49 Bristle Company

Total Parent NCI

100% 75% 25%
Company fair vlue 400,000 300,000 100,000 nci-full
FV of net assets 335,000 251,250 83,750 nci-partial
Goodwill #49: 6 65,000 48,750 16,250
full partial

Total assets 450,000

adj. inventory (5,000)
land 10,000
50,000
FV of assets 505,000
liabilities 170,000
FV of net assets 335,000

#46 inventory 65000b

#47 land 100000d
#48 Bldg & equipt 300000d
#49 goodwill 65,000 c
#50 investment 0a
#51 NCI 100,000 d

#52-#58 Jonathan Corp

Total Parent NCI
100% 80% 20%
Company fair vlue 200,000 160,000 40,000 nci-full
FV of net assets 185000 185,000 148,000 37,000 nci-partial
Goodwill 15,000 12,000 3,000
full partial
Total assets 230,000
adj. inventory 5,000
land 20,000
25,000
FV of assets 255,000
liabilities 70,000
FV of net assets 185,000

#52 total inventory 90000+45000 135000 b

#53 goodwill 15,000 d
#54 total assets 610000-160000+255000+15000 720,000 a
#55 total liabiities 110000+95000+30000+40000 275,000 c
#56 NCI 40,000 c
#57 Retained earnings 205,000 a
#58 Equity 200000+205000+40000 445,000 a

#59-#60 Poole Company

Total Parent NCI
100% 75% 25%
Company fair vlue 586,667 440,000 146,667 nci-full
FV of net assets 702000-142000 560000 420,000 140,000 nci-partial
Goodwill 26,667 20,000 6,667
full partial

#59 inventory 132000+60000 192,000 d

#60 total assets 1278000-440000+702000+26667 ### b

#61-#69 PP Corporation
Total Parent NCI
100% 70% 30%
Company fair vlue 215,000 150,500 64,500 nci-full
FV of net assets 175,000 122,500 52,500 nci-partial
40,000 28,000 12,000
full partial
Total assets 405,000
adj. inventory 15,000
land 20,000
35,000
FV of assets 440,000
liabilities 265,000
FV of net assets 175,000

#61 inventory 130000+85000 215,000 d

#62 goodwill (partial) 28,000 a
#63 goodwill (full) 40,000 c
#64 total assets 791500-150500+40000+405000+35000 1,121,000 b
#65 total liabilities 61500+95000+280000+265000 701,500 d
#66 NCI (partial) 52,500 a
#67 NCI(full) 64,500 d
#68 RE 205,000 d
#69 Total SHE 150000+205000+64500 419,500 c

#70-#78 Park Corporaton

Total Parent NCI
100% 80% 20%
Company fair vlue 75,000 60,000 15,000 nci-full
FV of net assets 50000+15000 65,000 52,000 13,000 nci-partial
10,000 8,000 2,000

Total Parent NCI

Company fair vlue 75,000 60,000 15,000
Book value of interest acquired
SHE 50,000
Excess or differential 25,000
Less: Adjustments
inventories(60%x25000) 15,000
Goodwill 10,000

#70 goodwill (partial) 8,000 b

#71 goodwill (full) 10,000 c
#72 current assets 70000+20000+15000 105,000 a

noncurrent assets
Parent Sub. Proportionate Full
Basis Basis
90000 40000 130,000 130,000
Goodwill 10000 8,000 10,000
138,000 140,000
#73:c #74:d

#75 current liabilities 30000+10000+6000 46000b

#76 non-current liab 50000+54000 104000b

Stockholders equity
CS 80000 80000
NCI-partial 13000 15000
partial 93000 Full 95000
basis #77:b basis #78: c

#79-#82 Pamela Company

Total Parent
100% 75%
Company fair vlue 440,000 330,000
FV of net assets 565000-105000 460,000 345,000
Gain (20,000) (15,000)
#80: a
#79 144000d
#81 consolidated RE 204000a
#82 960000-330000+565000 1,195,000 d

#83-#88 BB Corporation
#83 15000a
#84 65000b
#85 a 70000BB 24000SS
#86 d 259000
#87 percent share168350/259000 0.65c
Total Parent NCI
100% 65% 35%
Company fair vlue 259,000 168,350 90,650
FV of net assets 250,000 162,500 87,500
goodwill 9,000 5,850 3,150

Fair value Sub. Assets

Cash 35000
A/R 50000
Inventory 90000
Bldgs 240000 185000 425000 240000
415000
a/p 31000
Wages pay 24000
np 110000
165000
net assets 250000

#88: a 120000 115000

#89 Lester Company

Total Parent NCI
100% 70% 30%
Company fair vlue 857,143 600,000 257,143
FV of net assets 640000+40000 680,000 476,000 204,000
goodwill b 177,143 124,000 53,143

#90 Price Company

P S Consolidated
land 150000 500000 650,000 a

#91 Prima Co
Bldg & equipt 350000fair value a

#92 Pavin Co
PIC 7500000+1700000-100000 9,100,000 b
Investment in S 4,200,000
common stock 2,500,000
PIC 1,700,000

PIC 100000
RE 200000
Cash 300000

#93 Paro Company

machinery 600000a

#94 Judd Company

Investment 1,500,000 increase in net assets c

#95 Pina Corp.

90000a

#96 GG Inc.
230,000 c

#97 JJ Inc
400,000 d

#98 Mr. C

0 0 c

#99 PP Corp
70,000 a

#100 WW Corp
0d

#101 BB Inc
500,000 d

#102 BB Inc
cost 45,000
amort 45000/10x2 9,000
 36,000 c
#103 TT Inc
Bldg
PP 510,000
Sub.(TT) 300,000
less: amort. (300000/10x3) 90,000 210,000
720,000 a
#104 Value Inc
1.not meeting 2. meeting
target target
100000x.75x10 750,000
100000x.8 800,000
750,000 800,000 b

#105 Potters
1.not meeting 2. meeting
250000x1.5x30 11,250,000
250000x1.8x30 13,500,000
11,250,000 13,500,000 c
#106 Three Kings
500000x1.7x25 21,250,000 c

#107 Pedro Ltd

Reverse acquisition
Pedro Corp Santi Corp
Shares Shares
Legal parent/ Legal sub./
Acquiree acquirer

currently issued shares 100 40

additional shares 150 60% 60 60%
Total shares 250 100
Fair value of shares 40
quoted price 16

Consideration transferred 40x40 1,600

BV of SHE of Pedro 300+800 1,100
allocated excess 500
FV BV
NonCurrent assets 1500 1300 (200)
deferred tax 200x30% 60
Goodwill 360 d

#108-#109 Prince Company

#108-push down acctg used Separate Consolidated

Bldg 500,000 1,700,000 #94 b

#109 push down acctg is not used

Separate Consolidated
bldg 400,000 1,700,000 #95: e

#110 Velway Corp

470,000 970,000 d

#111 Treadway Corp

390,000 810,000 c