ACC401 Chp4HW

ACC401 Advanced Accounting
Homework Week 3
Chapter 4
Exercise 4-2
Workpaper entries 12/31/13 Cost Method
Investment in S Co
Retained Earnings 1/1 - P Co
($160,000 $50,000)*.90)
99,000
99,000
Dividend Income
Dividends Declared - S Co
9,000
9,000
Parent
Share
Purchase price and implied value
Less: Book value:
Difference between IV and BV
Allocated to undervalued land
Balance
465,000
450,000
15,000
(15,000)
0
NonControlling
Share
51,667
50,000
1,667
(1,667)
0
Common Stock - S Co
450,000
Retained Earnings 1/1/13 - S Co
160,000
Land
16,667
Investment in S Co ($465,000 + $99,000)
Non-controlling Interest ($51,667 + .10 x ($160,000 $50,000)
Entire
Value
516,667
500,000
16,667
(16,667)
0
564,000
62,667
Exercise 4-7
a
Journal entries
Investment in sales (150,000*.85)
Retained earnings
Cash
Investment in sales (50,000*.85)
161500
161500
42500
42500
Workpaper
Equity Income
Dividends Declared
Investment in Sales
161,500
Common Stock
100,000
42,500
119,000

Other Contributed Capital
Retained Earnings 1/1
Difference between IV & BV
Investment in Sales ($350,000 + $83,300)
Non-controlling interest ($61,765 + $14,700)
Goodwill
Difference IV & BV
40,000
238,000
131,765
433,300
76,465
131,765
131,765
Problem 4-1
A Cost Method
2009
Investment in Singer Co.
Cash
4,972,000
Cash ($500,000*.90)
Dividend Income
450,000
Cash ($500,000*.90)
Dividend Income
450,000
Cash ($500,000*.90)
Dividend Income
450,000
Cash ($500,000*.90)
Liquidating dividend
450,000
4,972,000
450,000
2010
450,000
2011
450,000
2012
450,000
B Partial Equity Method

2009
Cash
Cash ($500,000*.90)
Equity Income
($1,997,800*.90)
4,972,000
4,972,000
450,000
450,000
1,798,020
1,798,020
2010
Cash ($500,000*.90)
450,000

Equity Income
($500,000*.90)
428,400
450,000
428,400

2011
Cash ($500,000*.90)
450,000
Equity Income ($179,600*.90)

161,640
Cash ($500,000*.90)
450,000

291,420
450,000
161,640
2012
450,000
291,420
C Complete Equity Method

Parent
Share
Purchase price and implied value
Less: Book value:
Undervalued depreciable assets (15 year life)
Balance
4,972,000
4,961,160
10,840
(10,840)
0
NonEntire
Controlling
Value
Share
552,444 5,524,444
551,240 5,512,400
1,204
12,044
(1,204)
(12,044)
0
0
2009
Cash
Cash ($500,000*.90)
Equity Income ($1,997,800*.90)
4,972,000
4,972,000
450,000
450,000
1,798,020
1,798,020
Equity Income ($10,840/15 years)

723
Cash ($500,000*.90)
450,000

428,400
723
2010
450,000
428,400
723

723
2011
Cash ($500,000*.90)
450,000

161,640

723
Cash ($500,000*.90)
450,000

291,420

723
450,000
161,640
723
2012
450,000
291,420
723
Problem 4-10 Consolidated statements workpaper

Poco
Solo
Company Company
Income Statement
Sales
Equity in Subsidiary Income
Total Revenue
Cost of Goods Sold
Other Expenses
Total Cost and Expense
Net Income
Noncontrolling Interest
Net Income to Retained Earnings
Retained Earnings Statement
Poco Company
Solo Company
Net Income from above
Dividends Declared
Poco Company
Solo Company
Eliminating Entries
Dr.
Cr.
760,000
164,000
924,000
410,000
100,000
510,000
414,000
410,000
414,000
205,000
164,000
60,000
205,000
60,000
164,000
N-C Interest Consolidated

Balance
1,170,000
164,000
410,000
125,000
80,000
205,000
205,000
41,000
41,000
50,000
414,000
50,000
41,000
(30,000)
434,000
1,170,000
535,000
180,000
715,000
455,000
(41,000)
414,000
414,000
(30,000)
(15,000)
250,000
224,000
12,000
12,000
(3,000)
38,000
434,000
Balance Sheet
Cash
Inventory
Investment in Solo
Difference b/w Implied & Book
Value
Land
Goodwill
Total
Accounts Payable
Common Stock:
Poco Company
Solo Company
Other Contributed Capital
Poco Company
Solo Company
Retained Earnings from above
Noncontrolling Interest 1/1
Noncontrolling Interest 12/31
161,500
210,000
402,000
125,000
195,000
286,500
405,000
67,500
75,000
152,000
250,000
67,500
150,000
848,500
470,000
225,000
67,500
984,000
154,500
35,000
189,500
67,500
200,000
200,000
150,000
150,000
434,000
35,000
250,000
35,000
224,000
848,500
470,000
544,000
60,000
60,000
12,000
62,500
544,000
38,000
62,500
100,500
434,000
100,500
984,000

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ACC401 Advanced Accounting

ACC401 Advanced Accounting

B Partial Equity Method

Investment in Singer Co.

ACC401 Advanced Accounting

Equity Income ($179,600*.90)

Equity Income ($323,800*.90)

C Complete Equity Method

Equity Income ($10,840/15 years)

Investment in Singer Co.

Equity Income ($10,840/15 years)

ACC401 Advanced Accounting

Equity Income ($179,600*.90)

Equity Income ($10,840/15 years)

Equity Income ($323,800*.90)

Equity Income ($10,840/15 years)

Problem 4-10 Consolidated statements workpaper

N-C Interest Consolidated

ACC401 Advanced Accounting

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