1. McGuire Company acquired 90 percent of Hogan Company on January 1, 2010, for $234,000 cash. This amount is reflective of Hogan?s total fair value. Hogan?s stockholders? equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan?s net assets revealed the following: Book Value Fair Value Buildings (10- year life) $ 10,000 $ 8,000 Equipment (4-year life) 14,000 18,000 Land 5,000 12,000 Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years. In consolidation at December 31, 2011, what total adjustment is necessary for Hogan?s Equipment account? 2. On January 1, 2014, New Westbury Inc. acquired some of the outstanding bonds of its parent company Old Westbury Inc. The bond had a carrying value of $80,010 in the books of Old Westbury, and New Westbury paid $81,937 of them. (1) Does New Westbury report loss or gain associated with this transaction in its internal accounting books (if yes, explain how much and gain or loss)? (2) Does Old Westbury report loss or gain associated with this transaction in its consolidated financial statements (if yes, explain how much and gain or loss)? 3. Company A is the parent and company B is the subsidiary. Company A issued the 10-year bonds with a total face value of $500,000 in Jan. 1, 2005. Issuance price is $466,448. Yield is 8% and coupon rate is 7%. On Jan. 1, 2006 (one year later), company B acquired all of those bonds for $534,010. This investment generates at 6% actual rate of return. Write the consolidating entry [B] (intra-entity debt) on Dec. 31,2006. For A (Original Issuer) Interest Payment Interest Expense Amortization Carrying Value Unamortized Discount 1/1/2005 466,448 33,552 12/31/2005 35,000 37,315.80 2,315.80 468,764 31,236 12/31/2006 35,000 ? 2,501.10 471,265 ? 12/31/2007 35,000 3,7701.20 2,701.20 473,966 ? For B (Investor) Interest Received Interest Revenue Amortization Investment (Carrying Value) 1/1/2006 534,010 12/31/2006 35,000 ? 2959.40 531,051 12/31/2007 35,000 31,863 3,137 527,914 ENTRY [B]:

1. McGuire Company acquired 90 percent of Hogan Company on January 1, 2010, for $234,000 cash. This amount is reflective of Hogan's total fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following: Buildings (10- year life) Equipment (4-year life) Land Book Value $ 10,000 14,000 5,000 Fair Value $ 8,000 18,000 12,000 Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years. In consolidation at December 31, 2011, what total adjustment is necessary for Hogan's Equipment account? 2. On January 1, 2014, New Westbury Inc. acquired some of the outstanding bonds of its parent company Old Westbury Inc. The bond had a carrying value of $80,010 in the books of Old Westbury, and New Westbury paid $81,937 of them. (1) Does New Westbury report loss or gain associated with this transaction in its internal accounting books (if yes, explain how much and gain or loss)? (2) Does Old Westbury report loss or gain associated with this transaction in its consolidated financial statements (if yes, explain how much and gain or loss)? 3. Company A is the parent and company B is the subsidiary. Company A issued the 10year bonds with a total face value of $500,000 in Jan. 1, 2005. Issuance price is $466,448. Yield is 8% and coupon rate is 7%. On Jan. 1, 2006 (one year later), company B acquired all of those bonds for $534,010. This investment generates at 6% actual rate of return. Write the consolidating entry [B] (intra-entity debt) on Dec. 31,2006. For A (Original Issuer) Interest Payment 1/1/2005 12/31/2005 35,000 12/31/200 35,000 6 12/31/200 35,000 7 Interest Expense Amortizatio n 2,315.80 2,501.10 Carrying Value 466,448 468,764 471,265 Unamortized Discount 33,552 31,236 ? 37,315.80 ? 3,7701.20 2,701.20 473,966 ? For B (Investor) Interest Received 1/1/2006 12/31/200 6 12/31/200 7 ENTRY [B]: Interest Revenue Amortizatio n Investment (Carrying Value) 35,000 ? 2959.40 534,010 531,051 35,000 31,863 3,137 527,914