Chapter 4: Consolidation of Wholly Owned Subsidiaries Acquired at More than Book Value

1. Tambahan jurnal dalam chapter ini:

a. Jurnal untuk amortization or write-off differential
Dr. Income from Investee xxx
Cr. Investment in Common Stock of Investee xxx
b. Jurnal untuk mencatat excess value (differential) reclassification entry
Dr. Land/Goodwill/Equipment xxx
Cr. Investment in Common Stock of Investee xxx
c. Jurnal untuk mencatat amortized excess value reclassification entry
Dr. Cost of Goods Sold (utk pengurangan persediaan) xxx
Dr. Depreciation Expense (utk Acc. Depr aset tetap) xxx
Dr. Goodwill Impairment Loss (utk pengurangan goodwill) xxx
Cr. Income from PT A xxx

2. Cara melihat konsolidasi yang dilakukan fair value = book value atau fair value>book value
Fair value of consideration (uang yang dikeluarkan utk akusisi) xxx
Book value of PT A’s net assets (dpt dari CS +RE)
Common stock-PT A xxx
Retained earnings-PT A xxx xxx
Difference between fair value and book value xxx

Contoh Soal:
E4-13
 Fair value of consideration (uang yang dikeluarkan utk akusisi) $395,000
Book value of Throne’s net assets (dpt dari CS +RE)
Common stock-Throne Corp $120,000
Retained earnings- Throne Corp $240,000 $(360,000)
Difference between fair value and book value $35,000

Book value calculation:

Total Investment = Common Stock Retained Earnings

Beginning book value $360,000 $120,000 $240,000

Basic Elimination Entry:

Dr. Common Stock $120,000
Dr. Retained Earnings $240,000
Cr. Investment in Throne Corp. $360,000

Excess value (differential) calculations:

Total = Buildings Inventory Goodwill

Balance $35,000 $(20,000) $36,000 *$19,000

*(36,000 – 20,000) + α = 35,000

α = 19,000
Excess value (differential) reclassification entry:
Dr. Inventory $36,000
Dr. Goodwill $19,000
Cr. Buildings $20,000
Cr. Investment in Throne Corp. $35,000

Investment in Throne Corp.

Acquisition price $395,000
$360,000 Basic elimination
$35,000 Reclassification entry
a. Fair value of consideration (uang yang dikeluarkan utk akusisi) $189,000
Book value of Faith’s net assets (dpt dari CS +RE)
Common stock-Faith Corp $60,000
Retained earnings- Faith Corp $90,000 $(150,000)
Difference between fair value and book value $39,000

Book value calculation:

Total Investment = Common Stock Retained Earnings

Beginning book value $150,000 $60,000 $90,000

Basic Elimination Entry:

Dr. Common Stock $60,000
Dr. Retained Earnings $90,000
Cr. Investment in Faith Corp. $150,000

Excess value (differential) calculations:

Total = Buildings Inventory Goodwill

Balance $39,000 *$15,000 **$24,000 0

*165,000-150,000
**84,000-60,000

Excess value (differential) reclassification entry:

Dr. Inventory $24,000
Dr. Buildings $15,000
Cr. Investment in Faith Corp. $39,000

Investment in Faith Corp.

Acquisition price $189,000
$150,000 Basic elimination
$39,000 Reclassification entry
b. December 31, 20X2, Equity-Method worksheet for consolidated balance sheet, 100 percent acquisition
at more than book value
Elimination Entries
Blank Corp. Faith Corp. Consolidated
Dr. Cr.
Balance Sheet
Assets
Cash $26,000 $18,000 $44,000
Accounts Receivable 87,000 37,000 124,000
Inventory 110,000 60,000 $24,000 194,000
Buildings & Equipment (net) 220,000 150,000 15,000 385,000
Investment in Faith Corp. 189,000 $189,000 0
Total Assets $632,000 $265,000 $39,000 $189,000 $747,000

Liabilities & Equity

Accounts Payable $92,000 $35,000 $127,000
Notes Payable 150,000 80,000 230,000
Common Stock 100,000 60,000 $60,000 100,000
Retained Earnings 290,000 90,000 90,000 290,000
Total Liabilities & $632,000 $265,000 $150,000 $0 $747,000
Shareholders’s Equity