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Can anyone assist with the attached questions? (Formulas are required) 16. Topic: Consolidatio n in subsequent years, noncontrolli n g interest LO 2 (All dollar
Can anyone assist with the attached questions? (Formulas are required)
16. Topic: Consolidatio n in subsequent years, noncontrolli n g interest LO 2 (All dollar amounts are in thousands) Panerai acquired 6.5% of Stefanel's voting stock for $31,550 in cash on January 1, 2015, when Stefanel's book value was $5,000. The fair value of the noncontrolling interest at the date of acquisition was $11,450, and all of Stefanel's assets and liabilities were reported at fair value, except for the following items: Date of Acquisition Book Value Plant & equipment, net Identifiable intangible : leaseholds Date of Acquisition Fair Value $ 4,000 18,000 $ 20,000 0 Remaining Life at Date of Acquisition 16 yea rs 6 years The leaseholds meet GAAP requirement s for capita lization. All depreciation and amortization is straight-line. There is no impairment of pla nt & equipment or identifiable intangibles in 2015, 2016, or 2017. Total impairment of goodwill arising from this acquisition for the years 2015 and 2016 is $2,000. Goodwill impairment for 2017 is $2,500. You are preparing the consolidated financial statements f?r 2017 (third year since acquisition) . The trial balances of Panerai and Stefanel at December 31, 2017 appear in the consolidation working paper below. Panerai uses the complete equity method to report its investment on its own books. Current assets Plant & equipment, net Identifiable intangible as sets Panerai Dr (Cr) $ 26,000 140,000 - Investment in Stefanel Stefanel Dr (Cr) $ 7,000 90,000 - -- Total liabilities Capital stock Retained earnings, beginning Accumulated other comprehensive loss (income), beginning Noncontrolling interest (81,700) ( 2,000) (6,000) 500 - - Sales revenue AFS investments (gains)/losses ( OCI) (150,000) (275) (50,000) 200 (2,025) 130 120,000 15,000 - - 30,000 12,000 Noncontrolling interest in income -- - Noncontrolling interest in OCI Total - - $. 0 Consol. Dr (Cr) -- (148,690) (5,000) ( 25,260) (850) Equity in income of Stefa nel Equity in OCL of Stefan el Cost of goods sold Operating expenses Cr - 30,970 Goodw ill Dr $ 0 - Required: a. Calculate the total goodwill originally recognized for this acquisition, and its allocation to the controlling interest and the noncontrolling interest. b. Calculate 2017 equity in net income of Stefanel, reported on Panerai's books, and noncontrolling interest in consolidated net income, reported on the 2017 consolidated income statement. c. Using the CERON method,prepare the entries needed for the consolidation working paper. d. Prepare and complete the consolidation working paper needed to consolidate the trial balances of Panerai and Stefanel at December 31,2017. Be sure to label your adjusting/elimination entries with the appropriate letter (CERON). e. Present, in good form, the consolidated statement of income and comprehensive income for 2017. GENERAL INSTRUCTIONS: 1. Items a. through e. above must be prepared in Excel and cells that are the result of calculations must be defined by a formula. Do not simply use Excel as a typewriter. Failure to follow these instructions will result in the assignment not being graded. Please have a total for each column at the bottom of the column. 2. Submit the assignment in Canvas in the Excel format, not a pdf of your solution. 3. Attach the "Academic Dishonesty" statement to your solution. It may be submitted in a Word document or as a pdf of the document I sent youStep by Step Solution
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