A. Pam owns 80% of Sue, acquired at book value. Sue's net income for 2010 is $220.

On 1/1/12, Pam has $20,000 bonds outstanding with an unamortized premium of $200. Bonds mature in 10 years. Straight-line amortization. Interest is 10%, payable semi-annually.

On 1/1/12, Sue acquires $2,000 of Pam's bonds on the open market at $1900. Straight line.

Require:

1.Portion of bonds retired: ________

2.Gain on retirement: __________

3.Pam's Investment in Sue: ___________

4.Noncontrolling interest share: ________

5.Showin a table the allocation in the Pam's Books and Sue Books

B.Pod acquired Sap in a series of acquisitions, resulting in a total 90% ownership.

Interest

Investment

Date

Acquired

Cost

April 1

10%

14,000

July 1

10%

16,000

October 1

70%

195,000

90%

225,000

The total book value and fair value of Sap's net assets on October 1 (date control was acquired) was $220,000

Require:

1. Cost of 90% of Sap_______________

2. The implied value of Sap_______________

3. Book value_____________

4. Goodwill____________

5. Sap's income allocation for the year, show in a table.

6. Pod's Worksheet Entries

C. On 1/1/11 Poe acquires 80% of Saw. On 1/1/12 Saw acquires 70% of Tub.

Earnings and dividends for 2010:

Poe

Saw

Tub

Separate earnings

$100

$50

$40

Dividends

60

30

20

Equity Method Entries

Require:

1.Saw Journals entries.

2.Poe Journals entries

3.On separate income statements:

a.Poe's net income = __________

b.Saw's "Income from Tub" = __________

c.Poe's "Income from Saw" = ___________

4.For consolidated statements:

a.Noncontrolling interest share = __________