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January 1, 2017, Heckert Company purchases a controlling interest in Aker Company. The following information is available:

a. Heckert Company purchases 1,600 shares of Aker Company outstanding stock on January 1, 2016, for $48,000 and purchases an additional 1,400 shares on January 1, 2017, for $51,800.

b. An analysis of the stockholders' equity accounts at December 31, 2016, and 2015, follows:

c. Aker Company's marketable securities consist of 1,500 shares of Heckert Company stock purchased on June 15, 2017, in the open market for $18,000. The securities are purchased as a temporary investment and are sold on January 15, 2018, for $25,000.

d. On December 10, 2017, Heckert Company declares a cash dividend of $0.50 per share, payable January 10, 2018, to stockholders of record on December 20, 2017. Aker Company pays a cash dividend of $1 per share on June 30, 2017, and distributes a 10% stock dividend on September 30, 2017. The stock is selling for $15 per share ex-dividend on September 30, 2017. Aker Company pays no dividends in 2016.

e. Aker Company sells machinery, with a book value of $4,000 and a remaining life of five years, to Heckert Company for $4,800 on December 31, 2017. The gain on the sale is credited to the other income account.

f. Aker Company includes all intercompany receivables and payables in its trade accounts receivable and trade accounts payable accounts.

g. During 2017, the following intercompany sales are made:

Heckert Company sells merchandise to Aker Company at cost. Aker Company sells merchandise to Heckert at the regular selling price to make a normal profit margin of 30%. There were no intercompany sales in prior years.

The trial balances of the two companies at December 31, 2017, are as follows:

Required

Prepare the worksheet necessary to produce the consolidated financial statements of Heckert Company and its subsidiary for the year ended December 31, 2017. Include the determination and distribution of excess and income distribution schedules. Assume any excess of cost over book value is attributable to goodwill.

Problem 8-9 Determination and Distribution of Excess Schedule Company Value Parent Price Fair Value of Subsidiary Less Book Value of Interest Acquired Common Stock Paid in Excess Retained Earnings Total Equity Interest Acquired Book Value Excess of Cost over Book Value Accounts Adjusted Goodwill NCI 75% 25% Worksheet Distribution Amortization/yr. 6,000 Total Analysis of Investment in Heckert Adjustment to fair value: Fair value of prior purchase Cost Gain Income distribution schedules: Subsidiary: Internally generated net income Gain on investment in Heckert Gain on sale of equip Unrealized profit in ending invventory Total NCI share DR CR Controlling share Parent Internally generated net income Adjustments Controlling share of Subsidiary Total Consolidated Worksheet Cash Marketable Securities Trade Accounts Receivable Allowance for Doubtful Accounts Intercompany Receivables Inventories Machinery and Equipment Accumulated Depreciation Investment in Aker Company Patents Goodwill Dividends Payable Trade Account Payable Intercompany Payables Common stock, $10 par - Heckert Paid-in Capital in Excess of Par- Heckert Retained earnings, Jan.1 - Heckert Common Stock, $10 par - Aker Paid-in Capital in Excess of Par - Aker Retained Earnings, Jan.1 - Aker Sales and Services Cost of Goods Sold Administrative and Selling Expenses Depreciation Expense Dividend Income Other Income Dividends declared - Heckert Dividends declared - Aker Gain on investment treasurey Stock (cost) Total Consolidated net income Trial Balance Heckert Aker 38,100 29,050 33,000 18,000 210,000 88,000 (6,800) (2,300) 24,000 275,000 135,000 514,000 279,000 (298,200) (196,700) 99,800 Eliminations Dr 35,000 (7,500) (195,500) (8,000) (174,050) (150,000) (36,000) (378,000) (850,000) 510,000 130,000 65,600 (3,000) (9,000) 7,500 (22,000) (14,000) (106,000) (530,000) 374,000 110,500 11,200 (3,700) 4,000 0 0 365,650 NCI share Controlling share NCI Controlling retained earnings Totals Eliminations and Adjustments: (Adj) (CY1) (CY2) (EL) (D)/(NCI) (TS) (F1) (IA) (IS) (EI) Adjust investment account for gain on prior investment Eliminate intercompany cash dividends. Eliminate intercompany dividends on shares of Heckert owned by Aker, agains the d Eliminate 75% of subsidiary equity against the investment account. Distribute excess and NCI adjustment to goodwill, according to the determination an Reclassify Aker's investment in Heckert as treasury stock at cost. Eliminate gain on machinery sale by Aker. Eliminate intercompany receivables and payables. Eliminate intercompany merchandise sales Eliminate ending inventory profit on Aker sales to Heckert Eliminations Cr Consol Net Inc. NCI 365,650 0 Control. R.E. Consol. Bal. Sht. 0 owned by Aker, agains the div payable account ding to the determination and distribution of excess schedule. 0 0