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software Computer equipment Communications equipment Research and development asset Patent Goodwill Total assets Long-term debt Common stock - Anywhere Tech Common stock - Cloud Computing Retained earnings Noncontrolling interest Total liabilities and equity Cloud Computing Adjustments & Eliminations Debit Credit Consolidated Balances
NCI
Consideration transferred Noncontrolling interest fair value Acquisition-date fair value Book value Excess fair over book value Research and development asset Goodwill
Given Data P06-25: Percent of outstanding voting stock of Cloud Computing acquired by Anywhere Tech Company Amount paid by Anywhere Tech for Cloud computing shares Fair value of Cloud Computing research project Fair value of Cloud Computing shares not owned by Anywhere Tech Post-Acquisition Balance Sheets: Anywhere Tech $ 45,000 840,000 965,000 1,050,000 900,000 $ 3,800,000 (925,000) (2,500,000) (375,000) $ (3,800,000) $ Cloud Computing $ 25,000 140,000 40,000 320,000 175,000 700,000 (600,000) (25,000) (75,000) (700,000)
Cash Investment in Cloud Computing Capitalized software Computer equipment Communications equipment Patent Total assets Long-term debt Common stock-Anywhere Tech Common stock - Cloud Computing Retained earnings Total liabilities and equity
Student Name: Class: Problem 06-40 ALBUQUERQUE, INCORPORATED General Journal Part a. Account
Debit
Credit
Part b. Account
Debit
Credit
Given Data P06-40: Number of shares of Marmon Company acquired by Albuquerque, Inc. Purchase price of shares Marmon book value at acquisition date Assessed fair value of noncontrolling interest Marmon's present stockholders' equity: Common stock ($10 par value) Additional paid-in capital Retained earnings Total Part a. Number of shares issued by Marmon Issue price per share Shares purchased by Albuquerque Part b. Number of shares issued by Marmon Issue price per share Shares purchased by Albuquerque
$ $ $
5,000 47 -
4,000 33 -
Student Name: Class: Problem 06-43 FRED, INC. AND HERMAN CORPORATION - Allocation of Acquisition-date Excess Fair Value Consideration transferred Noncontrolling interest fair value Acquisition-date fair value Book value acquired Fair value in excess of book value Annual Excess Amortizations
Excess cost allocated to accounts based on fair value: Patents Customer list Total
Life (years)
Common stock (Herman) Retained earnings, 1/1/13 (Herman) Investment in Herman Noncontrolling interest in Herman
(To eliminate Herman's stockholders' equity accounts and record beginning year balance for noncontrolling interest)
Bonds payable Premium on bonds payable Interest income Investment in parent bonds Interest expense Gain on retirement of bond
(To eliminate intra-entity balances created by acquisition of bond and to recognize the related retirement gain)
b. Calculations Herman's reported income for 2013 Excess fair value amortization 2012 unrealized gain recognized in 2013 2013 unrealized gain Herman's realized income for 2013 Noncontrolling interest ownership Noncontrolling interest's share of subsidiary's income Noncontrolling interest, 1/1/13 Noncontrolling interest's share of Herman's income Noncontrolling interest's share of Herman's dividends Noncontrolling interest, 12/31/13 c. Consolidation worksheet adjustments - intra-entity bonds Original gain on retirement Interest income recorded on investment 2013 Interest expense recorded on liability in 2013 Required increase as of January 1, 2014 Bonds payable Premium on bonds payable Interest income Investment in Herman Investment in Fred's bonds Interest expense
(To remove accounts pertaining to intra-entity bonds. "Investment in Herman" is adjusted here rather than retained earnings because equity method is used)
Given P06-43: Herman Corporation common stock purchased by Fred, Inc. Cash paid for stock purchase Book value of Herman's assets and liabilities Fair value of noncontrolling interest Herman patents (12-year remaining life) were undervalued by Herman customer list acquisition-date fair value Life of customer list in years Intra-entity inventory transfers: Original Cost to Herman $ 80,000 100,000 90,000 Transfer Ending Price Balance at to Fred Transfer Price $ 100,000 $ 20,000 125,000 40,000 120,000 30,000 50% 15,000 22,000 20,000 8% 21,386 6% 18,732 25,000 300,000 4,000 100,000 60% 312,000 300,000 208,000 90,000 130,000 10
$ $ $ $ $
2013 inventory transfers not paid for by Fred at year end Book value of land sold by Fred to Herman Sale price of land sold by Fred to Herman Face value of Fred's bonds purchased by Herman Cash interest rate of bonds purchased by Herman Fred's book value of bond liability at repurchase date Effective yield of bonds Herman's bond acquisition price based on effective rate of 10% Herman's reported accounts for 2013: Net income Beginning retained earnings Dividends paid Common stock
$ $ $ $ $ $ $ $ $
Student Name: Class: Problem 06-46 AUSTIN, INC. AND RIO GRANDE CORPORATION Basic earnings per share - Austin, Inc. Consolidated net income to parent Austin's preferred dividends Earnings applicable to basic EPS Austin's outstanding common shares Basic earnings per share Diluted earnings per share - Austin, Inc. Rio Grande net income after amortization Interest saved assuming conversion of bonds (net of taxes) Income applicable to diluted earnings per share Shares outstanding Assumed conversion of warrants Assumed acquisition of treasury stock using proceeds of warrant conversion Assumed conversion of bonds Subsidiary shares applicable to diluted earnings per share Shares controlled by parent Portion owned by parent Austin's income and shared for diluted EPS calculation Shares used in diluted earnings per share computation Shares controlled by parent Portion owned by parent Income applicable to parent - diluted EPS Austin's income and shared for diluted EPS calculation Austin's separate income Income of Rio Grande to parent Preferred stock dividends Earnings applicable to diluted EPS Austin's outstanding common shares Assumed conversion of preferred stock Shares applicable to diluted earnings per share Diluted earnings per share
Revenues Cost of goods sold Operating expenses Equity in earnings of Rio Grande Individual company net income Consolidated net income Noncontrolling interest in Rio Grande's income Net income attributable to Austin Annual excess fair over book value amortization resulting from acquisition. Austin common stock - number of shares Austin preferred stock - number of shares Annual dividend paid to preferred stockholders Rio Grande common stock - number of shares Rio Grande stock warrants outstanding Cost to convert warrant to share of stock Number of warrants held by Austin Price of Rio Grande common stock Interest expense for Rio Grande convertible bonds Number of shares of common stock that can be exchanged for by convertible bonds
Austin Rio Grande Consolidated $ (700,000) $ (500,000) $ (1,200,000) 400,000 300,000 700,000 100,000 70,000 195,000 (84,000) $ (284,000) $ (130,000) $ (305,000) (21,000) (284,000)
$ $ $
Student Name: Class: Problem 06-47 Calculation of consolidated totals: Consideration transferred for common and preferred stock Skyler's book value Excess fair value assigned to intangible assets Annual amortization Ending Unrealized Gain Ending inventory (at transfer price) Markup Ending unrealized gain (increase made to cost of goods to deter gain) Effect of Intra-Entity Equipment Transfer: Transfer price: Recorded value Depreciation expense Accumulated depreciation Gain on sale Historical cost: Recorded value Depreciation expense Accumulated depreciation Acquisition-date Consolidated Worksheet Paisley, Inc. Skyler Corp. Consolidation Entries Debit Credit Consolidated Totals
Accounts Sales Cost of goods sold Expenses Gain on sale of equipment Net income Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31 Cash Accounts receivable Inventory Investment in Skyler Corp. Land, buildings, and equipment Accumulated depreciation Intangible assets Total assets Accounts payable Long-term liabilities Preferred stock Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and stockholders' equity
a. Consolidation entries Preferred Stock (Skyler) Common Stock (Skyler) Retained Earnings, 1/1 Investment in Skyler Corp.
(To eliminate subsidiary stockholder's equity accounts.)
- Try again!
Given Data P06-47: Percentage of Skyler Corporation outstanding stock acquired by Paisley, Inc. Amount Paisley paid for Skyler stock Price per share paid for Skyler's $100 par value preferred stock Price per share paid for Skyler's $20 par value common stock Amortization of excess fair value of intangible assets in years Amount of inventory Skyler sold to Paisley during the year Cost of inventory Skyler sold to Paisley Amount (at transfer price) not resold to outsiders by year end Amount Paisley owes Skyler for the last shipment of inventory Price of equipment Paisley sold to Skyler Book value of equipment Paisley sold to Skyler Original cost of equipment Paisley sold to Skyler Remaining life of equipment in years Salvage value of equipment Financial Statements For the Year Ending December 31 Paisley, Inc. (800,000) 528,000 180,000 (8,000) (100,000) (400,000) (100,000) 60,000 (440,000) 30,000 300,000 260,000 560,000 680,000 (180,000) 1,650,000 (140,000) (240,000) (620,000) (210,000) (440,000) (1,650,000) Skyler Corporation $ (400,000) 260,000 130,000 $ (10,000) $ (150,000) (10,000) $ (160,000) $ 40,000 100,000 180,000 500,000 (90,000) $ 730,000 $ (90,000) (180,000) (100,000) (200,000) (160,000) $ (730,000)
$ $ $ $ $ $ $ $ $ $ $
100% 560,000 180 38 10 90,000 60,000 18,000 28,000 20,000 12,000 30,000 4 -
Sales Cost of goods sold Expenses Gain on sale of equipment Net income Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31 Cash Accounts receivable Inventory Investment in Skyler Corporation Land, buildings, and equipment Accumulated depreciation Total assets Accounts payable Long-term liabilities P{referred stock Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and equity
$ $
$ $
$ $