ConsolidationAfterTwoYears.xls-Part 1 (c) John Bildersee 2002

Transcription

1 ConsolidationAfterTwoYears.xls-Part 1 (c) John Bildersee 2002 Cost of acquisition 1,200,000 Life Proportionate Discount Annual Book value of Subsidiary 1,000,000 Purchase premium 300,000 Revaluation Adjustmnt Expense P's ownership position 90% Revaluation of inventory 50, ,000 45,000 45,000 Capital stock of subsidiary 500,000 Revaluation of PPE 200, , ,000 12,000 (a portion of book value) Revaluation of patents ,000 75,000 Original entry (Period beginning position on P's Books) Investment in S 1,200,000 Cash (or other) 1,200,000 Consolidation (Part 1) - Elimination of period beginning entry (1) (2) Capital stock - S 500,000 Inventory - P 45,000 Retained Earnings - S 500,000 PPE - P 180,000 Purchase Premium 300,000 Patents - P - Investment in S 1,200,000 Goodwill 75,000 MI - S 100,000 Purchase Premium 300,000 Part 2 - Events for the period Year number 1 P's ownership position 90% Subsidiary's income 350,000 P's equity in S's income 315,000 Subsidiary's dividends 100,000 P's equity in dividends 90,000 Adjustments - equity income to P based on fair values on P's books P's Equity in S's income (book value) 315,000 Investment in Subsidiary Acco Sale of Inventory 45,000 1,200,000 Extra Depreciation 12, ,000 - Extra amortization ,000 Impairments - 90,000 Total 57,000 1,368,000 (Ending balance in investment acct) P's Equity in S's income (fair value) 258,000 Income entry for year Investment in S 315,000 - Investment in S (Extra Exp) - 57,000 P's equity in income - 258,000

2 ConsolidationAfterTwoYears.xls-Part 1 (c) John Bildersee 2002 Dividends for year (P) Dividends for year (S to P) Cash (or D/R) 90,000 Dividends 90,000 Investment in S 90,000 Cash (or D/P) 90,000 (Insert 1 for payment, anything else for receivable) 1 Consolidation (Part 2) - Period Eliminations (3) (3) P's equity in income 258,000 Investment in S 90,000 Investment in S 258,000 Dividends 90,000 (4) (5) CGS 45,000 MI in income 35,000 Depreciation expense 12,000 Dividends - S 10,000 Amortization expense - MI - S 25,000 Impairment - Inventory - P 45,000 Minority Interest Acc Dep - P 12, Acc Amort - P Goodwill (Ending balance in MI acct) (If = 1, then no entry; otherwise elimination of receivable and payable necessary) (6) D/P - D/R -

3 ConsolidationAfterTwoYears.xls - Part 2 (c) John BIldersee 2002 Eliminations Income Statement P S Debits Credits Consolidated Sales 1,960,000 1,300,000 3,260,000 P's Equity in income of S 258,000 3) 258,000 - Inventory 1/1 100, ,000 Purchases 900, ,000 Less: Inventory 12/31 75, ,000 Less: CGS 925, ,000 4) 45,000 1,580,000 Less: Operating expenses 480, ,000 4) 12, ,000 4) - Less: Impairment 4) - - Less: Minority interest in income 5) 35,000 35,000 Net income 813, , ,000 Balance Sheet Cash and Receivables 275, ,000 6) - 635,000 Inventory 75, ,000 2) 45,000 4) 45, ,000 Investment in S 1,368,000 1) 1,200,000-3) 90,000 3) 258,000 Other investments 100, ,000 Purchase Premium 1) 300,000 2) 300,000 - Land 200, , ,000 PPE 2,000,000 1,000,000 2) 180,000 3,180,000 Less: Accumulated Depreciation 800,000-4) 12, ,000 Patents - - 2) - - Less: Accumulated Amortization - - 4) - - Goodwill - 2) 75,000 4) - 75,000 Total Assets 3,218,000 1,950,000 4,043,000 Current liabilities 175, ,000 6) - 375,000 Other liabilities 730, ,000 1,230,000 Capital Stock 800, ,000 1) 500, ,000 Retained Earnings - 1/1 900, ,000 1) 500, ,000 Net income 813, , ,000 Less: Dividends 200, ,000 3) 90, ,000 5) 10,000 Retained Earnings - 12/31 1,513, ,000 1,513,000 Minority interest in S 1) 100,000 5) 25, ,000 Liabilities and Owners' Equity 3,218,000 1,950,000 4,043,000

4 ConsolidationAfterTwoYears.xls - Part 3 (c) John Bildersee 2002 P's ownership position= 90% Initial Purchase Premium= 300,000 Remaining Purchase premium= 243,000 Life Acc Dep Annual Exp Previous impairment = - Remaining revaluation of inventory Previous amortization of premium 57,000 Remaining revaluation of PPE 180, ,000 12,000 Remaining Purchase Premium= 243,000 Remaining revaluation of patents Period beginning position on P's Books Investment in S 1,368,000 Minority Interest 125,000 Consolidation (Part 1) - Elimination of period beginning entry (1) (2) Inventory - P - Capital stock - S 500,000 PPE - P 180,000 Retained Earnings - S 750,000 Patents - P - Purchase Premium 243,000 Goodwill 75,000 Investment in S 1,368,000 Acc Depreciation 12,000 MI - S 125,000 Acc Amortization - Purchase Premium 243,000 Part 2 - Events for the period Year number 2 P's ownership position 90% Subsidiary's income 400,000 P's equity in S's income 360,000 Subsidiary's dividends 110,000 P's equity in dividends 99,000 Adjustments - equity income to P based on fair values on P's books P's Equity in S's income (book value) 360,000 Investment in Subsidiary Account Sale of Inventory - 1,368,000 Extra Depreciation 12, ,000 - Extra amortization ,750 Impairments 3,750 99,000 Total 15,750 1,613,250 (Ending balance in investment acct) P's Equity in S's income (fair value) 344,250 Income entry for year Investment in S 360,000 Investment in S (Extra Exp) 15,750 P's equity in income 344,250

5 ConsolidationAfterTwoYears.xls - Part 3 (c) John Bildersee 2002 Dividends for year (P) Dividends for year (S to P) Cash (or D/R) 99,000 Dividends 99,000 Investment in S 99,000 Cash (or D/P) 99,000 (Insert 1 for payment, anything else for receivable) 0 Consolidation (Part 2) - Period Eliminations (3) (3) P's equity in income 344,250 Investment in S 99,000 Investment in S 344,250 Dividends 99,000 (4) (5) CGS - MI in income 40,000 Depreciation expense 12,000 Dividends - S 11,000 Amortization expense - MI - S 29,000 Impairment 3,750 Inventory - P - Minority Interest Acc Dep - P 12, Acc Amort - P Goodwill 3, (Ending balance in MI acct) (If = 1, then no entry; otherwise elimination of receivable and payable necessary) (6) D/P 99,000 D/R 99,000

6 ConsolidationAfterTwoYears.xls - Part 4 (c) John Bildersee 2002 Eliminations Income Statement P S Debits Credits Consolidated Sales 2,210,000 1,560,000 3,770,000 P's Equity in income of S 344,250 3) 344,250 - Inventory 1/1 75, ,000 Purchases 1,120, ,000 Less: Inventory 12/31 80, ,000 Less: CGS 1,115, ,000 4) - 1,835,000 Less: Operating expenses 520, ,000 4) 12, ,000 4) - Less: Impairment 4) 3,750 3,750 Less: Minority interest in income 5) 40,000 40,000 Net income 919, , ,250 Balance Sheet Cash and Receivables 399, ,000 6) 99, ,000 Inventory 80, ,000 2) - 4) - 490,000 Investment in S 1,613,250 1) 1,368,000-3) 99,000 3) 344,250 Other investments 109, ,000 Purchase Premium 1) 243,000 2) 243,000 - Land 341, , ,000 PPE 2,400,000 1,250,000 2) 180,000 3,830,000 Less: Accumulated Depreciation 920, ,000 2) 12,000 1,044,000 4) 12,000 Patents - - 2) - - Less: Accumulated Amortization - - 2) - - 4) - Goodwill - 2) 75,000 4) 3,750 71,250 Total Assets 4,022,250 2,296,000 4,833,250 Current liabilities 320, ,000 6) 99, ,000 Other liabilities 700, ,000 1,200,000 Capital Stock 800, ,000 1) 500, ,000 Retained Earnings - 1/1 1,513, ,000 1) 750,000 1,513,000 Net income 919, , ,250 Less: Dividends 230, ,000 3) 99, ,000 5) 11,000 Retained Earnings - 12/31 2,202,250 1,040,000 2,202,250 Minority interest in S 1) 125,000 5) 29, ,000 Liabilities and Owners' Equity 4,022,250 2,296,000 4,833,250