Exercise 1 and 2

EXERCISES Cash flow, cash pa yment, year of acquisition. Born Company Exercise 1 (LO 1) acquires an 80% interest in Roland Company for $660,000 cash on January 1,2017.The NCI has a fair value of $165,000. Any excess of cost over book value is attributed to goodwill. To help pay for the acquisition, Born Company issues 5,000 shares of its common stock with a fair value of $70 per share. Roland's balance sheet on the date ofthe purchase is as follows: Liabilities and E $110,000 Cash 20,000 Currentliabilities 140,000 Bonds payable 100,000 Property, plant, and Common stock ($10 par) 200,000 550,000 Retained earnings equipment (netl 300,000 Total assets $710,000 Total liabilities ondequity $710,000 Controlling share of net income for 2017 is $150,000, net of the noncontrolling interest of S10,000. Born declares and pays dividends of $10,000, and Roland declares and pays dividends of $5,000. There are no purchases or sales of property, plant, or equipment during the year. Based on the following information prepare a statement of cash flows using the indirect method for Born Company and its subsidiary for the year ended December 31, 2017. Any sup- porting schedules should be good form. December 31 December 31 2016 2017 Cash $300,000 199,000 220.000 454,000 Property, plant, and equipment Inet) 1,230,000 800,000 Goodwill 325,000 Current liabilities n60,000) (284,000) Bonds payable 200,0000 1300,000) Noncontrolling interest (174,000) Controlling common stock($10 par) 200,000) 1250,000) Controlling paid-in capital in excess of par 300,000) (600,000) Retained earnings (460,000) Totals Exercise 2 (LO 1 Cash flow, issue stock, year of purchase. Duckworth Corporation purchases an 80% interest in Panda Corporation on January 1, 2017. in exchange for 5.000 Duck- worth shares (market value of $18) plus S155,000 cash. The fair value of the NCI is proportionate to the price paid by Duckworth for its interest. The appraisal shows that some of Pandas equip- ment, with a4-year estimated remaining life, isundervalued by S20,000.Theexcess is attributed goodwill Panda Corporation's balance sheeton December 31, 2016 is shown on page 358