a. Compute the amount of the goodwill as of January 1, 20x7. Goodwill at acquisition $1,116,900.00 $124,100.00 Goodwill as of January 1, 20x7: Fair value of consideration given by Posey Fair value of noncontrolling interest at acquisition Total Book value of net assets at acquisition Differential at acquisition Increase in fair value of land Goodwill at acquisition $1,241,000.00 Common Stock+Premium Stock+Retained Earnings $1,161,000.00 $80,000.00 $30,000.00 $50,000.00 b. Compute the balance of Posey's Investment in Stargell Stock account as of January 1, 20x7. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Balance in investment Stargell stockholders' equity, January 1, 20X7 Common stock Premium on common stock Retained earnings Stockholders' equity, January 1, 20X7 Posey's ownership share Book value of shares held by Posey Differential at January 1, 20X7 Inventory sale deferred Balance in Investment in Stargell Stock account, January 1, 20X7 $487,000.00 $267,000.00 $457,000.00 $1,211,000.00 90% $1,089,900.00 $72,000.00 (80,000 * 0.90) $4,500.09 (16,667 * 30% * 90%) $1,157,399.91 e. Compute the gain or loss on the constructive retirement of Stargell's bonds that should appear Gain Gain on constructive retirement of Stargell's bonds: Original proceeds from issuance of Stargell bonds Premium amortized to January 1, 20X7: ($10,000 / 10) 6 Book value of bonds at constructive retirement Price paid for Stargell bonds by Posey Gain on constructive retirement of Stargell's bonds (1,000,000 $1,010,000.00 *101/100) (1,000,000 *101- 100*6/10) $6,000.00 $1,004,000.00 (1,000,000 $980,000.00 *0.98) $24,000.00 c. Compute the income that should be assigned to the noncontrolling interest in the 20x7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Income to noncontrolling interest $154,000.00 (801,000+50,000-426,000-65,000-206,000) $5,000.10 (16,667*0.30) $24,000.00 Stargell's 20X7 net income * Add: 20x6 intercompany profit realized in 20x7 Constructive gain on retirement of bonds Less: Unrealized intercompany profit on 20X7 transfer Portion of constructive gain on bond retirement recognized currently by separate affiliates Impairment of goodwill $5,400.00 (18,000*0.30) $6,000.00 (24,000/4) $25,000.00 (50,000/2) * $801,000.00 $50,000.00 $851,000.00 Net income calculations Sales Other income Total Revenue Expenses cogs other expenses depreciation Total expenses Net income $426,000.00 $206,000.00 $65,000.00 $697,000.00 $154,000.00 d. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Total noncontrolling interest Total noncontrolling interest, December 31, 20x6: Stargell's stockholders' equity, $1,211,000.00 (1,116,900+124,100-30,000) December 31, 20X6 Unrealized profit on intercompany $5,000.10 sale of inventory Stargell's realized equity, December $1,205,999.90 31, 20X6 Differential assigned to land $30,000.00 Differential assigned to goodwill $50,000.00 $1,285,999.90 Noncontrolling interest's 10% proportionate share Total noncontrolling interest, $128,599.99 December 31, 20X6 A Record the basic consolidation entry. Accounts Debit Credit A B Record the amortized excess value differential entry. Record the excess value (differential) reclassification entry. D Record the reversal of last year's deferral. B E Record the deferral of the 20x7 unrealized profits on the inventory transfer. Record the elimination of the intercompany holdings of Posey's bonds. G Record the entry to eliminate the intercompany interest receivables/payables. D H Record the entry to eliminate the accrued interest on the intercompany bonds. E Record the entry to eliminate the intercompany holdings of Stargell's bonds. F Record the entry to eliminate the intercompany dividend payable/receivable. G Consolidated Financial Statement Worksheet December 31, 20X7 Consolidation Entries DR CR Posey Co. Stargell Corp. Consolidated Income Statement Sales Other Income Less: COGS Less: Depr. & Amort. Expense Less: Other Expenses Goodwill Impairment Loss Gain on Bond Retirement Income from Stargell Corp. Consolidated Net Income NCI in Net Income Controlling Interest in NI Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance Balance Sheet Assets Cash Current Receivables Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Stargell Stock Investment in Stargell Bonds Investment in Posey Bonds Goodwill Total Assets Liabilities & Equity Current Payables Bonds Payable Premium on Bonds Payable Less: Accumulated Depreciation Investment in Stargell Stock Investment in Stargell Bonds Investment in Posey Bonds Goodwill Total Assets Liabilities & Equity Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings NCI in NA of Stargell Corp. Total Liabilities & Equity On December 31, 20X7, trial balances for Posey and Stargell appeared as follows: HOME $ Posey Manufacturing Debit Credit $ 49,500 121,500 317,000 1,243,800 Stargell Corporation Debit 39,000 90,100 364,900 Item Cash Current Receivables Inventory Investment in Stargell Stock Investment in Stargell Bonds Investment in Posey Bonds 985,000 Land Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared 1,241,000 2,940,000 1,829,000 184,000 632,000 61,000 200,000 518,000 1,915,000 426,000 65,000 206,000 51,000 $ $ 1,050,000 699,190 200,000 Accumulated Depreciation Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings, January 1 Sales Other Income Income from Stargell Corp. Total 597,000 213,000 1,000,000 3,000 487,000 267,000 910,000 610,000 2,848,950 3,010,000 143,000 132,660 $ 9,603,800 457,000 801,000 50,000 $ 9,603,800 $ 3,875,000 $ 3,875,000 a. Compute the amount of the goodwill as of January 1, 20x7. Goodwill at acquisition $1,116,900.00 $124,100.00 Goodwill as of January 1, 20x7: Fair value of consideration given by Posey Fair value of noncontrolling interest at acquisition Total Book value of net assets at acquisition Differential at acquisition Increase in fair value of land Goodwill at acquisition $1,241,000.00 Common Stock+Premium Stock+Retained Earnings $1,161,000.00 $80,000.00 $30,000.00 $50,000.00 b. Compute the balance of Posey's Investment in Stargell Stock account as of January 1, 20x7. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Balance in investment Stargell stockholders' equity, January 1, 20X7 Common stock Premium on common stock Retained earnings Stockholders' equity, January 1, 20X7 Posey's ownership share Book value of shares held by Posey Differential at January 1, 20X7 Inventory sale deferred Balance in Investment in Stargell Stock account, January 1, 20X7 $487,000.00 $267,000.00 $457,000.00 $1,211,000.00 90% $1,089,900.00 $72,000.00 (80,000 * 0.90) $4,500.09 (16,667 * 30% * 90%) $1,157,399.91 e. Compute the gain or loss on the constructive retirement of Stargell's bonds that should appear Gain Gain on constructive retirement of Stargell's bonds: Original proceeds from issuance of Stargell bonds Premium amortized to January 1, 20X7: ($10,000 / 10) 6 Book value of bonds at constructive retirement Price paid for Stargell bonds by Posey Gain on constructive retirement of Stargell's bonds (1,000,000 $1,010,000.00 *101/100) (1,000,000 *101- 100*6/10) $6,000.00 $1,004,000.00 (1,000,000 $980,000.00 *0.98) $24,000.00 c. Compute the income that should be assigned to the noncontrolling interest in the 20x7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Income to noncontrolling interest $154,000.00 (801,000+50,000-426,000-65,000-206,000) $5,000.10 (16,667*0.30) $24,000.00 Stargell's 20X7 net income * Add: 20x6 intercompany profit realized in 20x7 Constructive gain on retirement of bonds Less: Unrealized intercompany profit on 20X7 transfer Portion of constructive gain on bond retirement recognized currently by separate affiliates Impairment of goodwill $5,400.00 (18,000*0.30) $6,000.00 (24,000/4) $25,000.00 (50,000/2) * $801,000.00 $50,000.00 $851,000.00 Net income calculations Sales Other income Total Revenue Expenses cogs other expenses depreciation Total expenses Net income $426,000.00 $206,000.00 $65,000.00 $697,000.00 $154,000.00 d. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.) Total noncontrolling interest Total noncontrolling interest, December 31, 20x6: Stargell's stockholders' equity, $1,211,000.00 (1,116,900+124,100-30,000) December 31, 20X6 Unrealized profit on intercompany $5,000.10 sale of inventory Stargell's realized equity, December $1,205,999.90 31, 20X6 Differential assigned to land $30,000.00 Differential assigned to goodwill $50,000.00 $1,285,999.90 Noncontrolling interest's 10% proportionate share Total noncontrolling interest, $128,599.99 December 31, 20X6 A Record the basic consolidation entry. Accounts Debit Credit A B Record the amortized excess value differential entry. Record the excess value (differential) reclassification entry. D Record the reversal of last year's deferral. B E Record the deferral of the 20x7 unrealized profits on the inventory transfer. Record the elimination of the intercompany holdings of Posey's bonds. G Record the entry to eliminate the intercompany interest receivables/payables. D H Record the entry to eliminate the accrued interest on the intercompany bonds. E Record the entry to eliminate the intercompany holdings of Stargell's bonds. F Record the entry to eliminate the intercompany dividend payable/receivable. G Consolidated Financial Statement Worksheet December 31, 20X7 Consolidation Entries DR CR Posey Co. Stargell Corp. Consolidated Income Statement Sales Other Income Less: COGS Less: Depr. & Amort. Expense Less: Other Expenses Goodwill Impairment Loss Gain on Bond Retirement Income from Stargell Corp. Consolidated Net Income NCI in Net Income Controlling Interest in NI Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance Balance Sheet Assets Cash Current Receivables Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Stargell Stock Investment in Stargell Bonds Investment in Posey Bonds Goodwill Total Assets Liabilities & Equity Current Payables Bonds Payable Premium on Bonds Payable Less: Accumulated Depreciation Investment in Stargell Stock Investment in Stargell Bonds Investment in Posey Bonds Goodwill Total Assets Liabilities & Equity Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings NCI in NA of Stargell Corp. Total Liabilities & Equity On December 31, 20X7, trial balances for Posey and Stargell appeared as follows: HOME $ Posey Manufacturing Debit Credit $ 49,500 121,500 317,000 1,243,800 Stargell Corporation Debit 39,000 90,100 364,900 Item Cash Current Receivables Inventory Investment in Stargell Stock Investment in Stargell Bonds Investment in Posey Bonds 985,000 Land Buildings & Equipment Cost of Goods Sold Depreciation & Amortization Other Expenses Dividends Declared 1,241,000 2,940,000 1,829,000 184,000 632,000 61,000 200,000 518,000 1,915,000 426,000 65,000 206,000 51,000 $ $ 1,050,000 699,190 200,000 Accumulated Depreciation Current Payables Bonds Payable Premium on Bonds Payable Common Stock Premium on Common Stock Retained Earnings, January 1 Sales Other Income Income from Stargell Corp. Total 597,000 213,000 1,000,000 3,000 487,000 267,000 910,000 610,000 2,848,950 3,010,000 143,000 132,660 $ 9,603,800 457,000 801,000 50,000 $ 9,603,800 $ 3,875,000 $ 3,875,000