Professional Documents
Culture Documents
by Jeanne M. David, Ph.D., Univ. of Detroit Mercy to accompany Advanced Accounting, 10th edition by Floyd A. Beams, Robin P. Clement, Joseph H. Anthony, and Suzanne Lowensohn
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2009 Calculations
Defer the unrealized gain, with full effect to Park Park's Income from Stan 90%(70) 10 = $53 Noncontrolling interest share 10%(70) = $7 Elimination entry for 2009 Worksheet Gain on sale of land Land
Pearson Education, Inc. publishing as Prentice Hall
10
10
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10
10
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2013 Calculations
Recognize the previously deferred gain, with full effect to Park Park's Income from Stan 90%(90) + 10 = $91 Noncontrolling interest share 10%(90) = $9 Elimination entry for 2013 Worksheet Investment in Stan 10 Gain on sale of land 10
Pearson Education, Inc. publishing as Prentice Hall 6-8
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Downstream Example
Perry owns 80% of Soper, acquired at cost equal to fair value. On 1/1/09, Perry sells equipment to Soper at a $30 profit. The equipment has a remaining life of 5 years from 1/1/09. Soper disposes of the equipment at book value at the end of 5 years. Soper's income is $70 in 2009, $80 per year for 2010 to 2012, and $90 in 2013.
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2009 Calculations
Defer the unrealized gain and amortize it over 5 years with full effect to Perry 30 gain / 5 years = $6 Perry's Income from Soper 80%(70) 30 + 6 = $32 Noncontrolling interest share 20%(70) = $14 Elimination entry for 2009 Worksheet
Gain on sale of equipment Equipment Accumulated depreciation Depreciation expense
Pearson Education, Inc. publishing as Prentice Hall
30 30 6
6
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Entries (cont.)
Worksheet entries for 2011
Investment in Soper Accumulated depreciation Equipment Accumulated depreciation Depreciation expense 18 12
30 6 6 12 18 30 6 6
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2013 Calculations
Recognize the remaining deferred gain, with full effect to Perry Perry's Income from Soper 80%(90) + 6 = $78 Noncontrolling interest share 20%(90) = $18 Elimination entries for 2013 Worksheet Investment in Soper 6 Accumulated depreciation 24 Equipment 30 Accumulated depreciation 6 Depreciation expense 6
Pearson Education, Inc. publishing as Prentice Hall 6-18
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Upstream Example
Pail owns 70% of Shovel, acquired at cost equal to fair value. On 1/1/09, Shovel sells equipment to Pail at a $40 profit. The equipment has a remaining life of 5 years from 1/1/09. Pail Uses the equipment for four years, then sells it at a profit at the start of 2013. Shovel's income is $70 in 2009, $80 per year for 2010 to 2012, and $90 in 2013.
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2009 Calculations
Defer the unrealized gain and amortize it over 5 years sharing the gain 40 gain / 5 years = $8 Pail's Income from Shovel 70%(70 40 + 8) = $26.6 Noncontrolling interest share 30%(70 40 + 8) = $11.4 Elimination entry for 2009 Worksheet Gain on sale of equipment 40 Equipment 40 Accumulated depreciation 8 Depreciation expense 8
Pearson Education, Inc. publishing as Prentice Hall 6-22
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2013 Calculations
Recognize the remaining deferred gain, sharing the impact with controlling and noncontrolling interests Unamortized gain = 1 year at $8 Pail's Income from Shovel 70%(90 + 8) = $68.6 Noncontrolling interest share 30%(90 + 8) = $29.4 Elimination entries for 2013 Worksheet Investment in Shovel 5.6 Noncontrolling interests 2.4 Accumulated depreciation 32.0 Equipment 40.0 Accumulated depreciation 8.0 Gain on sale of equipment 8.0
Pearson Education, Inc. publishing as Prentice Hall 6-27
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