a. 4-41. (Consolidated worksheet) Consideration transferred by Adams $603,000 Noncontrolling interest fair value 67,000 Acquisition-date total fair value $670,000 Analysis of the Acquisition and annual excess amortization (alternate method): Consideration transferred by Adams $603,000 Noncontrolling interest fair value 67,000 Acquisition-date total fair value $670,000 Book value of Barstow (CS + RE 12/31/19) (460,000) Excess fair value over book value 210,000 Excess fair value assigned to specific Remaining Annual excess accounts based on fair value life amortizations Land $30,000 Buildings (20,000) 10 years ($2,000) Equipment 40,000 5 years 8,000 Patents 50,000 10 years 5,000 Notes payable 20,000 5 years 4,000 Goodwill 90,000 indefinite -0- Total excess of fair over book$210,000 $15,000 b. Because investment income is exactly 90 percent of Barstow's reported earnings, Adams apparently is applying the partial equity method. C., d. Explanation of Consolidation Entries Found on Worksheet Entry *c-Converts Adams's financial records from the partial equity method to the equity method by recognizing amortization for 2020. Total expense was $15,000 but only 90 percent (or $13,500) applied to the parent. Entry SEliminates subsidiary's stockholders' equity while recording noncontrolling interest balance as of January 1, 2021. Entry A-Records unamortized allocation balances as of January 1, 2021. The acquisition method attributes 10 percent of these amounts to the noncontrolling interest Entry Eliminates intra-entity income accrual for 2021. Entry DEliminates intra-entity dividend transfers. Entry ERecords amortization expense for current year. Columnar Entry-Recognizes noncontrolling interest's share of Barstow's net income as follows: Net income attributable to noncontrolling interest (Columnar Entry) Barstow reported income $120,000 Excess amortization expenses 2021 (15,000) Adjusted income of Barstow $105,000 Noncontrolling interest ownership 10% Net income attributable to noncontrolling interest.. $10.500 Copyright 2021 McGraw-Hill Education. All rights reserved. a. 4-41. (Consolidated worksheet) Consideration transferred by Adams $603,000 Noncontrolling interest fair value 67,000 Acquisition-date total fair value $670,000 Analysis of the Acquisition and annual excess amortization (alternate method): Consideration transferred by Adams $603,000 Noncontrolling interest fair value 67,000 Acquisition-date total fair value $670,000 Book value of Barstow (CS + RE 12/31/19) (460,000) Excess fair value over book value 210,000 Excess fair value assigned to specific Remaining Annual excess accounts based on fair value life amortizations Land $30,000 Buildings (20,000) 10 years ($2,000) Equipment 40,000 5 years 8,000 Patents 50,000 10 years 5,000 Notes payable 20,000 5 years 4,000 Goodwill 90,000 indefinite -0- Total excess of fair over book$210,000 $15,000 b. Because investment income is exactly 90 percent of Barstow's reported earnings, Adams apparently is applying the partial equity method. C., d. Explanation of Consolidation Entries Found on Worksheet Entry *c-Converts Adams's financial records from the partial equity method to the equity method by recognizing amortization for 2020. Total expense was $15,000 but only 90 percent (or $13,500) applied to the parent. Entry SEliminates subsidiary's stockholders' equity while recording noncontrolling interest balance as of January 1, 2021. Entry A-Records unamortized allocation balances as of January 1, 2021. The acquisition method attributes 10 percent of these amounts to the noncontrolling interest Entry Eliminates intra-entity income accrual for 2021. Entry DEliminates intra-entity dividend transfers. Entry ERecords amortization expense for current year. Columnar Entry-Recognizes noncontrolling interest's share of Barstow's net income as follows: Net income attributable to noncontrolling interest (Columnar Entry) Barstow reported income $120,000 Excess amortization expenses 2021 (15,000) Adjusted income of Barstow $105,000 Noncontrolling interest ownership 10% Net income attributable to noncontrolling interest.. $10.500 Copyright 2021 McGraw-Hill Education. All rights reserved
