C4: Differential = fv of consideration-bv of NIA diff = GW + FV Excess, GW = FV of considFV of NIA Cons S/E=Ps S.E.

+NCI, GW = NCI +SE

1.Brindle Company purchased 100 percent of Monroe Company's voting common stock for $648,000 on January 1, 20X4. At that
date, Monroe reported assets of $690,000 and liabilities of $230,000. The book values and fair values of Monroe's assets were equal
except for land, which had a fair value $108,000 more than book value, and equipment, which had a fair value $80,000 more than
book value. The remaining economic life of all depreciable assets at January 1, 20X4, was five years. Monroe reported net income of
$68,000 and paid dividends of $34,000 in 20X4. Investment Income = 68000-(80000/5) = 52000
GoldEnterprisesacquired100percentofPremiumBuildersstockonDecember31, Common stock 140,000
20X4. Balance sheet data for Gold and Premium on January 1, 20X5, are as follows Retained earnings 10,000
Enterprises Gold Enterprises
Premium Builders
D C Consol Investment in Premium Builders 150,000

Cash and Receivables 80,000 30,000 2000 108,000

Buildings & equipment (net)12,000
Inventory 150,000 350,000 7000 507,000 Inventory 7,000
Buildings & Equipment (net) 430,000 80,000 12000 522,000 Investment in Premium Builders 17,000
Investment in Premium Stock 167,000 167000 0 Cash and receivables 2,000
Total Assets 827,000 460,000 1,137,000
Current Liabilities 100,000 110,000 210,000
Long-Term Debt 400,000 200,000 600,000
Common Stock 200,000 140,000 140000 200,000
Retained Earnings 127,000 10,000 10000 127,000
TotalLiabilities&StockholdersEquity
827,000 460,000 1,137,000
Atthedateofthebusinesscombination,Premiumscashandreceivableshadafair
value of $28,000, inventory had a fair value of $357,000, and buildings and equipment
2. had a fair value of $92,000.
3. On January 1, 20X1, Big Company (Big) bought 30% of the outstanding stock of Little Company (Little) for $110,000 which provided Big with
the ability to significantly influence the decisions of Little. Little reported assets of $400,000 and liabilities of $100,000 on that date. As part of its
analysis before buying these shares, Big determined that Little owned a patent that had not been recorded despite having a remaining useful life of
five years and a value of $20,000. During 20X1, Little reported net income of $70,000 and paid cash dividends of $30,000. What investment income
should Big report for 20X1? Investment Income = 30% * 70,000 20000/5*30% = 19,800
C3. NCI = NCI% * Subs BV,.. Consolidated S.E = Ps S.E. + NCI,.. Consolidate R.E.= Ps R.E. = Beg R.E.+NI-Dividend
4. Xing Corporation owns 80 percent of the voting common shares of Adams Corporation. Noncontrolling interest was assigned $24,000 of income
in the 20X9 consolidated income statement. What amount of net income did Adams Corporation report for the year? = 24000*5=120000
5. Beta Company acquired 100 percent of the voting common shares of Standard Video Corporation, its bitter rival, by issuing bonds with a par value
and fair value of $150,000. Immediately prior to the acquisition, Beta reported total assets of $500,000, liabilities of $280,000, and stockholders'
equity of $220,000. At that date, Standard Video reported total assets of $400,000, liabilities of $250,000, and stockholders' equity of $150,000.
Included in Standard's liabilities was an account payable to Beta in the amount of $20,000, which Beta included in its accounts receivable.
Total consolidated assets = 500k+400k-20k(AR)
= 880k
Total Liab = 150k+280k+250k-20k(AP) = 660k
Consolidated S.E. = 220K

Pete Inc. Acquires Sake for Cash 2,500, C.S of

1,If par value of cs is $1, and you receive 2000
shares, what is investment in sake? Debit
Investment in sake 3,500, Credit cash 2,500, C.S.
Ex.) Unit A is assigned $100k of goodwill from merger, A+L assigned = 200 and APIC 980. (MV = Par + APIC)
$320,000 , FV of NAs = $280k. 320k-280k = 40k implied value of gw
Good will impairment = carrying amount of GW Implied value of gw. So. 100k-40k= 60k of gw impairment.
C4: Differential = fv of consideration-bv of NIA diff = GW + FV Excess, GW = FV of considFV of NIA Cons S/E=Ps S.E.+NCI, GW = NCI +SE
Wilhelm
Kaiser Company
Corporation Q: Total Assets in Cons B.S. =
Consolid 200000+140000+350000+250000-
Item Debit Credit Debit Credit Debit Credit
ated 118000-80000= 742000
Q: Total Liab on Cons B.S. =
Current 100k+100k+80k+50k= 330k
$200,000 $140,000 340000
Assets
Q: Retained Earnings refer to bottom
Depreciable
350,000 250,000 80000 520000
Assets Pale Company was established on January 1, 20X1.
Investment Along with other assets, it immediately purchased land
in Kaiser for $80,000, a building for $240,000, and equipment
162,000 162000 0
Company for $90,000. On January 1, 20X5, Pale transferred these
Stock assets, cash of $21,000, and inventory costing $37,000
Depreciatio to a newly created subsidiary, Bright Company, in
27,000 10,000 37000 exchange for 10,000 shares of Brights $6 par value
n Expense
Other stock. Pale uses straight-line depreciation and useful
95,000 60,000 155000 lives of 40 years and 10 years for the building and
Expenses
equipment, respectively, with no estimated residual
Dividends values. Prepare the journal entry that Pale recorded
20,000 10,000 30000
Declared when it transferred the assets to Bright, and the
entry that Bright recorded for the receipt of assets
Accumulate and issuance of common stock to Pale.
d
$118,000 $80,000 80000 -118000
Depreciatio
n
Investment in408,000
Bright Company common stock
Total
742000 AccumulateddepreciationBuildings
24,000
Assets
Current AccumulateddepreciationEquipment
36,000
100,000 80,000 -180000
Liabilities Inventory 37,000
Long-Term
100,000 50,000 -150000 Equipment 90,000
Debt
Common Land 80,000
100,000 50,000 50000 -100000
Stock Cash 21,000
Retained
150,000 100,000 100000 -150000 Buildings 240,000
Earnings
Sales 250,000 110,000
Income Cash 21,000
from 36,000 Equipment 90,000
Subsidiary Land 80,000
$854,000 $854,000 $470,000 $470,000
Buildings 240,000
=250k-27k-
Parent NI = NI=164K = 95k+36k 40,000 = Sub Income
Inventory 37,000
RE = Beg RE + NI - Div Common stock 60,000
Retained =150k+164 Additional paid-in capital348,000
Earinings k-20k NCI =0.1*(50k+100k+40k-10k)
AccumulateddepreciationBuildings
24,000
=100k+294
S.E. k+18k 412k =18000^
AccumulateddepreciationEquipment
36,000
On January 1, 20X8, Wilhelm Corporation acquired 90 percent of Kaiser Company's voting stock, at underlying
book value. The fair value of the noncontrolling interest was equal to 10 percent of the book value of Kaiser at
that date. Wilhelm uses the equity method in accounting for its ownership of Kaiser. On December 31, 20X9,
the trial balances of the two companies are as follows: