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 D-Eliminates 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 2 3 4 5 ADAMS CORPORATION AND BARSTOW, INC. Consolidation Worksheet For Year Ending December 31, 2021 Non- controlling Interest Consolidated Totals Credit 6 7 8 Adams Barstow 9 Accounts Corp. Inc. Debit 10 Revenues (940,000) (280,000) 11 Cost of goods sold 480,000 90,000 12 Depreciation expense 100,000 55,000 13 Amortization expense 14 Interest expense 40.000 15,000 15 Investment income (108,000) 16 Separate company net income (428,000) (120,000) 17 Consolidated net income 18 Ni to noncontrolling interest 19 NI to Adams Corporation 20 21 Retained earnings, 1/1 (1,367,000) (340,000) 22 23 Net income (428,000) (120,000) 24 Dividends declared 110,000 70,000 25 Retained earnings, 12/31 (1,685,000) (390,000) 26 27 Current assets 610,000 250,000 28 Investment in Barstow 702,000 29 30 31 32 Land 380.000 150,000 33 Buildings 490,000 250,000 34 Equipment 873,000 150,000 35 Patents 36 Goodwill 37 Total assets 3,055,000 800,000 38 39 Notes payable (860,000) (230,000) 40 Common stock (510,000) (180,000) 41 Retained earnings, 12/31 (1,685,000) (390,000) 42 Noncontrolling interest 43 44 45 Total liabilities and equity (3.055,000) (800,000) 46 47 Parentheses indicate credit balance. 48 Use the narrow columns next to the consolidating debits and credits to code your entries (S A, etc.). 49 50 0 0 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 D-Eliminates 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 2 3 4 5 ADAMS CORPORATION AND BARSTOW, INC. Consolidation Worksheet For Year Ending December 31, 2021 Non- controlling Interest Consolidated Totals Credit 6 7 8 Adams Barstow 9 Accounts Corp. Inc. Debit 10 Revenues (940,000) (280,000) 11 Cost of goods sold 480,000 90,000 12 Depreciation expense 100,000 55,000 13 Amortization expense 14 Interest expense 40.000 15,000 15 Investment income (108,000) 16 Separate company net income (428,000) (120,000) 17 Consolidated net income 18 Ni to noncontrolling interest 19 NI to Adams Corporation 20 21 Retained earnings, 1/1 (1,367,000) (340,000) 22 23 Net income (428,000) (120,000) 24 Dividends declared 110,000 70,000 25 Retained earnings, 12/31 (1,685,000) (390,000) 26 27 Current assets 610,000 250,000 28 Investment in Barstow 702,000 29 30 31 32 Land 380.000 150,000 33 Buildings 490,000 250,000 34 Equipment 873,000 150,000 35 Patents 36 Goodwill 37 Total assets 3,055,000 800,000 38 39 Notes payable (860,000) (230,000) 40 Common stock (510,000) (180,000) 41 Retained earnings, 12/31 (1,685,000) (390,000) 42 Noncontrolling interest 43 44 45 Total liabilities and equity (3.055,000) (800,000) 46 47 Parentheses indicate credit balance. 48 Use the narrow columns next to the consolidating debits and credits to code your entries (S A, etc.). 49 50 0 0