Comprehensive Problem Topp Manufacturing Company acquired 90 percent of Bussman Corporation?s outstanding common stock on December 31, 2005, for $1,332,000. At that date, the fair value of the noncontrolling interest was $143,000, and Bussman reported common stock outstanding of $600,000, premium on common stock of $270,000, and retained earnings of $346,000. The book values and fair values of Bussman?s assets and liabilities were equal, except for land, which was worth $64,000 more than its book value. On April 1, 2006, Topp issued at par $400,000 of 10 percent bonds directly to Bussman; interest on the bonds is payable March 31 and September 30. On January 2, 2007, Topp purchased all of Bussman?s outstanding 10-year 12 percent bonds from an unrelated institutional investor at 98. The bonds originally had been issued on January 2, 2001, for 101. Interest on the bonds is payable December 31, and June 30. Since the date it was acquired by Topp Manufacturing, Bussman has sold inventory on account to Topp on a regular basis. The amount of such intercompany sales totaled $96,000 in 2006 and $117,000 in 2007, including a 40 percent gross profit. All inventory transferred in 2006 had been sold by December 31, 2006, except inventory which Topp paid $22,500 and did not resell until January 2007. All 2006 inventory transactions on account had been satisfied prior the end of the year. Inventory transferred in 2007 had been resold at December 31, 2007, except merchandise for which Topp had paid $27,000. An account balance of $43,500 remained unpaid on 2007 inventory transactions. On January 1, 2006, Bussman sold equipment to Topp for $72,000. Bussman had purchased the equipment for $135,000 on January 1, 2003, and was depreciating it on a straight-line basis with a 10-year expected life and no anticipated salvage value. The equipment?s total expected life is unchanged as a result of the intercompany sale. As of December 31, 2007, Bussman had declared but not yet paid its fourth-quarter dividend of $15,000. Both Topp and Bussman use straight-line depreciation and amortization, including the amortization of bond discount and premium. On December 31, 2007, Topp uses the basic equity method to account for its investment in Bussman 1. Prepare all eliminating entries required as of December 31, 2007 2. Prepare and complete a three-part workpaper for the preparation of consolidated financial statements for 2007 in good form. At December 31, 2007, trial balances for Topp and Bussman appeared as follows: Topp Manufacturing Bussman Corporation Item Debit Credit Debit Credit Cash 59,250 43,500 Current Receivables 168,750 127,600 Inventory 451,500 523,300 Investment in Bussman Stock 1,731,600 Investment in Bussman Bonds 1,477,500 Investment in Topp Bonds 400,000 Land 2,022,400 544,500 Building and Equipment 4,194,000 2,577,600 Cost of Goods Sold 3,013,500 645,000 Depreciation and Amortization 292,500 127,500 Other Expenses 964,500 309,000 Dividends Declared 75,000 60,000 Accumulated Depreciation 1,815,000 928,500 Current Payables 147,000 118,500 Bonds Payable 400,000 1,500,000 Premium on Bonds Payable 4,500 Common Stock 1,500,000 600,000 Premium on Common Stock 1,050,000 270,000 Retained Earnings, January 1 4,549,500 705,000 Sales 4,651,500 1,185,000 Other Income 202,500 46,500 Income from Subsidiary 135,000 Total 14,450,500 14,450,500 5,358,000 5,358,000

Advanced Financial Accounting Comprehensive Consolidation Problem You are to complete the problem below (all requirements) in good form, showing all of your work! Deliverables: 1. Upload an Excel or Word file to D2L by 7pm this Sunday. There will be a dropbox created for uploading. Points will be determined for this deliverable after grading. . 2. Spreadsheet calculation, in good form, showing your work for each requirement. 3. All of the work handed in should embody the spirit of professionalism; in other words, pretend that this really is your job and therefore, you will want to make sure that your deliverables are free from immaterial as well as material errors. You may collaborate with one another on this problem in fact, I encourage it. You are limited to collaboration with only individuals who are currently enrolled in ACC 324 for the Fall 2013 semester, collaboration outside of those individuals is not allowed. However, each individual must submit own work. 1 Comprehensive Problem Topp Manufacturing Company acquired 90 percent of Bussman Corporation's outstanding common stock on December 31, 2005, for $1,332,000. At that date, the fair value of the noncontrolling interest was $143,000, and Bussman reported common stock outstanding of $600,000, premium on common stock of $270,000, and retained earnings of $346,000. The book values and fair values of Bussman's assets and liabilities were equal, except for land, which was worth $64,000 more than its book value. On April 1, 2006, Topp issued at par $400,000 of 10 percent bonds directly to Bussman; interest on the bonds is payable March 31 and September 30. On January 2, 2007, Topp purchased all of Bussman's outstanding 10-year 12 percent bonds from an unrelated institutional investor at 98. The bonds originally had been issued on January 2, 2001, for 101. Interest on the bonds is payable December 31, and June 30. Since the date it was acquired by Topp Manufacturing, Bussman has sold inventory on account to Topp on a regular basis. The amount of such intercompany sales totaled $96,000 in 2006 and $117,000 in 2007, including a 40 percent gross profit. All inventory transferred in 2006 had been sold by December 31, 2006, except inventory which Topp paid $22,500 and did not resell until January 2007. All 2006 inventory transactions on account had been satisfied prior the end of the year. Inventory transferred in 2007 had been resold at December 31, 2007, except merchandise for which Topp had paid $27,000. An account balance of $43,500 remained unpaid on 2007 inventory transactions. On January 1, 2006, Bussman sold equipment to Topp for $72,000. Bussman had purchased the equipment for $135,000 on January 1, 2003, and was depreciating it on a straight-line basis with a 10-year expected life and no anticipated salvage value. The equipment's total expected life is unchanged as a result of the intercompany sale. As of December 31, 2007, Bussman had declared but not yet paid its fourth-quarter dividend of $15,000. Both Topp and Bussman use straight-line depreciation and amortization, including the amortization of bond discount and premium. On December 31, 2007, Topp uses the basic equity method to account for its investment in Bussman 1. Prepare all eliminating entries required as of December 31, 2007 2. Prepare and complete a three-part workpaper for the preparation of consolidated financial statements for 2007 in good form. 2 At December 31, 2007, trial balances for Topp and Bussman appeared as follows: Item Cash Current Receivables Inventory Investment in Bussman Stock Investment in Bussman Bonds Investment in Topp Bonds Land Building and Equipment Cost of Goods Sold Depreciation and Amortization Other Expenses Dividends Declared 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 Subsidiary Total Topp Manufacturing Debit Credit 59,250 168,750 451,500 1,731,600 1,477,500 Bussman Corporation Debit Credit 43,500 127,600 523,300 400,000 544,500 2,577,600 645,000 127,500 309,000 60,000 2,022,400 4,194,000 3,013,500 292,500 964,500 75,000 1,815,000 147,000 400,000 928,500 118,500 1,500,000 4,500 600,000 270,000 705,000 1,185,000 46,500 1,500,000 1,050,000 4,549,500 4,651,500 202,500 135,000 14,450,500 14,450,500 5,358,000 5,358,000 3