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Question 1 Not yet answered Marked out of 100.00 P Flag question consolidation subsequent to date of acquisition Equity method with noncontrolling Interest, AAP, and upstream Intercompany Inventory sale Assume that, on January 1, 2007, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $550,000 over the book value of the subsidiary's Stockholders Equity on the acquisition date, the parent assigned the excess to the following (Al assets Initial Useful LA Asset Fair Value Life (years) Patent $300,000 Goodwill 250.000 indefinite $550.000 80% of the Goodwill is allocated to the parent. Assume that the subsidiary sells inventory to the parent (upstream) which includes that inventory in products that it ultimately sells to customers outside of the controlled group. You have compiled the following data as of 2012 and 2013: 2012 2013 Transfer price for inventory se 1671.000 73.000 Cost of goods sold 6150 653 000) Gross profit 56.000 50 000 inventory remaining 25% 35% Gross profit deferred $14,000 $2,000 EOV receivable payable 190.000 $100,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. The parent and the subsidiary report the following financial statements at December 31, 2013 Parent Subsidiary Parent Subsidiary Income statement: The inventory not remaining at the end of the year has been sold outside of the controlled group. The parent and the subsidiary report the following financial statements at December 31, 2013: Parent Subsidiary Income statement 56967 Sales Cost of goods sold Gross profit Equity income Operating expenses Parent Subsidiary Balance sheet: 56,770,000 $2,518.500 Assets 14.739.000) (1.511,100 Cash 2,031,000 1,007,400 Accounts receivable 246.872 Inventory (1.242.600) 654810) Equity investment 510 272 352590 Property ant and equipment 1,3131380 Netcome net 312 113 $11.12 S T uty Statement of retained earning BOY retained earnings $141. 2 51.301.23 Labs and stockholders' 101 272 2 590 Current liabilities Dividende (199210) 05. Long-termates EOY retained earnings 54.237,310 $1,618.556 common stock S29 139.500 4,000,000 1,106 895 822,555 Retained earnings $11.139.6090 0123 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. Do not enter any answers as negative numbers in part a. Unamortized Umamortized Umamortized United Un amortized Un mortised AAP 2007 AAP 2008 AAP 2000 AAP 2010 AAP 201 AAP 2012 1/1/2007 Amortization 1/1/2008 Amortization 1/2009 Amortization 1/2010 Amortization 11/2011 Amortization 11/2012 Amortization $11,139,609 $3,420,123 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP) the controlling interest AAP and the noncontrolling interest AAP. Do not enter any answers as negative numbers in part a. Unamortized Unamortized Unamortized Unamortized Unamortired Unamortized AAP 2007 2008 AAP 2009 AAP 2010 AAP 2011 AAP 1/1/2007 Amortization 1/1/2008 Amortization 1/1/2009 Amortization 1/1/2010 Amortization 1/1/2011 Amortization 1/1/2012 Patent 300,000 30,000 270,000 30,000 240,000 30.000 210.000 30,000 180,000 30,000 150.000 Goodwill 250.000 0 250, 000 0 250,000 0 250.000 0 250.000 0 250.000 550.000 30,000 520,000 30,000 490.000 30,000 460.000 30.000 430.000 30.000 400.000 Ama Patent 24000 v 192.000 24,000 24.000 24,000 0 24,000 120.000 215,000 200,000 416,000 24,000 0 0 168,000 200,000 68.000 200.000 144.000 200.000 344,000 200.000 24,000 392,000 24000 3 24,000 Controlling Interest: 240,000 Goodwill 200,000 440,000 Non controlling Interest: Patent 60,000 Goodwill 50.000 110.000 24,000 320.000 54,000 6.000 ,000 6,000 0 5.000 50.000 42.000 SO DOO 92.000 6.000 0 6000 36,000 50,000 86.000 0 30.000 50.000 80,000 104,000 6,000 6.000 6.000 b. Calculate and organize the profits and losses on intercompany transactions and balances Downstream Upstream Intercompany profit in inwentary on 1/1/13 0 11,600 X Intercompany profit in inventory on 12/31/13 ov 22.400 * Retum to course :: My Subscription: b. Calculate and organize the profits and losses on intercompany transactions and balances. Downstream Upstream Intercompany profit in inventory on 1/1/13 O 11,600 x Intercompany profit in inventory on 12/31/13 0 22.400 X c. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. Round answers to the nearest whole number. Use a negative sign with your answer to indicate a reduction to net income. Equity investment at 1/1/13: Common stock APIC Retained earnings Unamortized AAP Less: 80 of upstream deferred intercompany profits 134,320 167.900 1,040,980 296.000 (19,600) 1,627,600 x Equity investment at 12/31/13 Common stock APIC Retained earnings Unamortized AAP Less 20% of upstream deferred intercompany profits 134,320 167,900 1.296.445 x 272.000 122.400) 1,848.265 x X d. Reconstruct the activity in the parent's pre-consolidation Equity Investment Taccount for the year of consolidation Round answers to the nearest whole number. Birsiness Course Return to course :: My Subscriptions Christian dopo d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation Round answers to the nearest whole number Equity Investment Balance at 1/1/13 627,600 X Net income 283,692 x 28,207 Dividends BOY upstream inventor 19,600 W 24,000 AP amortization 22.400 FOY upstream invent Balance at 12/31/13 1,848,265 0 O e. Independently compute the owners' equity attributable to the noncontrolling Interest beginning and ending balances starting with the owners' equity of the subsidiary Round your answers to the nearest whole number - Use a negative sign with your answer to indicate a reduction to net income. Noncontrolling interest at 1/1/13 Common stock 350 APIC 41,975 2.500 450 X Retained earnings Unamortired AAP Less: 80% of upstream deferred intercompany profits X 74.000 900) 40600X Non controlling interest at 12/31/13 Common stock APIC Retained earnings Unamortired AAP Less 20% of upstream deferred intercompany profits 33 580 41.975 34,111 X GR000 (5.600) HUIS INNUL A G de cours Busines Course Return to course !! My Subscriptions f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Round your answers to the nearest whole number. Use a negative sign with your answer to indicate a reduction to net income. Consolidated: Parent's stand-alone net income Subsidiary's stand-alone net income Plus 1,037,272 x 354,890 X 14.500 X (28.000) 30,000) 311,090 1,348, 362 x 100% AAP amortization Subsidiary's adjusted stand-alone net income Consolidated net income Parent: Parent's stand-alone net income 80% Subsidiary's stand-alone net income Plus: 80% realized upstream deferred profits Less: 20% AAP amortization BON AAP amortization B0% of subsidiary's stand-alone net income Consolidated net income attributable to the parent Subsidiary: 20% of subsidiary's stand alone net income 10,372720 X 2,836,720 x . 11,600 x (22.400) (24.000) 248,872 x 1.286.144 X plus 2.900 X 70,918 (5,600) (6,000) 62218 X 20% AAP amortization D U J I TSU... WALUSHI UI S... MMVI Cong Grille de o * Business Course Return to course !! My Subsc Credit x 277,079 69,270 x g. Complete the consolidating entries according to the C-E-A-D-l sequence. Round answers to the nearest whole number. Consolidation Worksheet Description Debit [C] Equity income 2,488,720 x 62.218 x Dividends 35.259 x Equity investment 0 Noncontrolling interest Common stock 167,900 APIC 2,098,750 Retained earnings 1,301,225 Equity investment Noncontrolling interest 0 A Patent 120,000 Goodwill 250.000 Equity investment Noncontrolling interest 24,000 X [D] Operating expenses Patent 0 11,600 X [lcogs) Equity investment Noncontrolling interest 2,900 X 1,343,200 335,800 0 296,000 74,000 24,000 X [lsales) Sales ficogs) Cost of goods sold Cost of goods sold Dpayl Inventory OX 733.000 x 0 x 28.000 0 14.500 x 0 OX 733,000 Ox 28,000 X Don Wujul ... MMU College- Return to course 1,343,200 335,800 ** Business Course www APIC Retained earnings Equity investment Noncontrolling interest [] Patent Goodwill Equity investment Noncontrolling interest [D] Operating expenses Patent [lcogs] Equity investment Noncontrolling interest 0 0 2,098,750 X 1,301,225 0 0 120,000 250,000 0 0 24,000 x 0 11,600 x 2,900 0 296,000 74,000 0 24,000 x 0 07 14,500 x 0 OX 733,000 X OX 28,000 x 6 [lsales] Sales [lcogs] Cost of goods sold Cost of goods sold [lpay Inventory Accounts receivable 733,000 X 0 X 28,000 X 0 x x 100,000 x Question 1 Not yet answered Marked out of 100.00 P Flag question consolidation subsequent to date of acquisition Equity method with noncontrolling Interest, AAP, and upstream Intercompany Inventory sale Assume that, on January 1, 2007, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $550,000 over the book value of the subsidiary's Stockholders Equity on the acquisition date, the parent assigned the excess to the following (Al assets Initial Useful LA Asset Fair Value Life (years) Patent $300,000 Goodwill 250.000 indefinite $550.000 80% of the Goodwill is allocated to the parent. Assume that the subsidiary sells inventory to the parent (upstream) which includes that inventory in products that it ultimately sells to customers outside of the controlled group. You have compiled the following data as of 2012 and 2013: 2012 2013 Transfer price for inventory se 1671.000 73.000 Cost of goods sold 6150 653 000) Gross profit 56.000 50 000 inventory remaining 25% 35% Gross profit deferred $14,000 $2,000 EOV receivable payable 190.000 $100,000 The inventory not remaining at the end of the year has been sold outside of the controlled group. The parent and the subsidiary report the following financial statements at December 31, 2013 Parent Subsidiary Parent Subsidiary Income statement: The inventory not remaining at the end of the year has been sold outside of the controlled group. The parent and the subsidiary report the following financial statements at December 31, 2013: Parent Subsidiary Income statement 56967 Sales Cost of goods sold Gross profit Equity income Operating expenses Parent Subsidiary Balance sheet: 56,770,000 $2,518.500 Assets 14.739.000) (1.511,100 Cash 2,031,000 1,007,400 Accounts receivable 246.872 Inventory (1.242.600) 654810) Equity investment 510 272 352590 Property ant and equipment 1,3131380 Netcome net 312 113 $11.12 S T uty Statement of retained earning BOY retained earnings $141. 2 51.301.23 Labs and stockholders' 101 272 2 590 Current liabilities Dividende (199210) 05. Long-termates EOY retained earnings 54.237,310 $1,618.556 common stock S29 139.500 4,000,000 1,106 895 822,555 Retained earnings $11.139.6090 0123 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP), the controlling interest AAP and the noncontrolling interest AAP. Do not enter any answers as negative numbers in part a. Unamortized Umamortized Umamortized United Un amortized Un mortised AAP 2007 AAP 2008 AAP 2000 AAP 2010 AAP 201 AAP 2012 1/1/2007 Amortization 1/1/2008 Amortization 1/2009 Amortization 1/2010 Amortization 11/2011 Amortization 11/2012 Amortization $11,139,609 $3,420,123 a. Disaggregate and document the activity for the 100% Acquisition Accounting Premium (AAP) the controlling interest AAP and the noncontrolling interest AAP. Do not enter any answers as negative numbers in part a. Unamortized Unamortized Unamortized Unamortized Unamortired Unamortized AAP 2007 2008 AAP 2009 AAP 2010 AAP 2011 AAP 1/1/2007 Amortization 1/1/2008 Amortization 1/1/2009 Amortization 1/1/2010 Amortization 1/1/2011 Amortization 1/1/2012 Patent 300,000 30,000 270,000 30,000 240,000 30.000 210.000 30,000 180,000 30,000 150.000 Goodwill 250.000 0 250, 000 0 250,000 0 250.000 0 250.000 0 250.000 550.000 30,000 520,000 30,000 490.000 30,000 460.000 30.000 430.000 30.000 400.000 Ama Patent 24000 v 192.000 24,000 24.000 24,000 0 24,000 120.000 215,000 200,000 416,000 24,000 0 0 168,000 200,000 68.000 200.000 144.000 200.000 344,000 200.000 24,000 392,000 24000 3 24,000 Controlling Interest: 240,000 Goodwill 200,000 440,000 Non controlling Interest: Patent 60,000 Goodwill 50.000 110.000 24,000 320.000 54,000 6.000 ,000 6,000 0 5.000 50.000 42.000 SO DOO 92.000 6.000 0 6000 36,000 50,000 86.000 0 30.000 50.000 80,000 104,000 6,000 6.000 6.000 b. Calculate and organize the profits and losses on intercompany transactions and balances Downstream Upstream Intercompany profit in inwentary on 1/1/13 0 11,600 X Intercompany profit in inventory on 12/31/13 ov 22.400 * Retum to course :: My Subscription: b. Calculate and organize the profits and losses on intercompany transactions and balances. Downstream Upstream Intercompany profit in inventory on 1/1/13 O 11,600 x Intercompany profit in inventory on 12/31/13 0 22.400 X c. Compute the pre-consolidation Equity Investment account beginning and ending balances starting with the stockholders' equity of the subsidiary. Round answers to the nearest whole number. Use a negative sign with your answer to indicate a reduction to net income. Equity investment at 1/1/13: Common stock APIC Retained earnings Unamortized AAP Less: 80 of upstream deferred intercompany profits 134,320 167.900 1,040,980 296.000 (19,600) 1,627,600 x Equity investment at 12/31/13 Common stock APIC Retained earnings Unamortized AAP Less 20% of upstream deferred intercompany profits 134,320 167,900 1.296.445 x 272.000 122.400) 1,848.265 x X d. Reconstruct the activity in the parent's pre-consolidation Equity Investment Taccount for the year of consolidation Round answers to the nearest whole number. Birsiness Course Return to course :: My Subscriptions Christian dopo d. Reconstruct the activity in the parent's pre-consolidation Equity Investment T-account for the year of consolidation Round answers to the nearest whole number Equity Investment Balance at 1/1/13 627,600 X Net income 283,692 x 28,207 Dividends BOY upstream inventor 19,600 W 24,000 AP amortization 22.400 FOY upstream invent Balance at 12/31/13 1,848,265 0 O e. Independently compute the owners' equity attributable to the noncontrolling Interest beginning and ending balances starting with the owners' equity of the subsidiary Round your answers to the nearest whole number - Use a negative sign with your answer to indicate a reduction to net income. Noncontrolling interest at 1/1/13 Common stock 350 APIC 41,975 2.500 450 X Retained earnings Unamortired AAP Less: 80% of upstream deferred intercompany profits X 74.000 900) 40600X Non controlling interest at 12/31/13 Common stock APIC Retained earnings Unamortired AAP Less 20% of upstream deferred intercompany profits 33 580 41.975 34,111 X GR000 (5.600) HUIS INNUL A G de cours Busines Course Return to course !! My Subscriptions f. Independently calculate consolidated net income, controlling interest net income and noncontrolling interest net income. Round your answers to the nearest whole number. Use a negative sign with your answer to indicate a reduction to net income. Consolidated: Parent's stand-alone net income Subsidiary's stand-alone net income Plus 1,037,272 x 354,890 X 14.500 X (28.000) 30,000) 311,090 1,348, 362 x 100% AAP amortization Subsidiary's adjusted stand-alone net income Consolidated net income Parent: Parent's stand-alone net income 80% Subsidiary's stand-alone net income Plus: 80% realized upstream deferred profits Less: 20% AAP amortization BON AAP amortization B0% of subsidiary's stand-alone net income Consolidated net income attributable to the parent Subsidiary: 20% of subsidiary's stand alone net income 10,372720 X 2,836,720 x . 11,600 x (22.400) (24.000) 248,872 x 1.286.144 X plus 2.900 X 70,918 (5,600) (6,000) 62218 X 20% AAP amortization D U J I TSU... WALUSHI UI S... MMVI Cong Grille de o * Business Course Return to course !! My Subsc Credit x 277,079 69,270 x g. Complete the consolidating entries according to the C-E-A-D-l sequence. Round answers to the nearest whole number. Consolidation Worksheet Description Debit [C] Equity income 2,488,720 x 62.218 x Dividends 35.259 x Equity investment 0 Noncontrolling interest Common stock 167,900 APIC 2,098,750 Retained earnings 1,301,225 Equity investment Noncontrolling interest 0 A Patent 120,000 Goodwill 250.000 Equity investment Noncontrolling interest 24,000 X [D] Operating expenses Patent 0 11,600 X [lcogs) Equity investment Noncontrolling interest 2,900 X 1,343,200 335,800 0 296,000 74,000 24,000 X [lsales) Sales ficogs) Cost of goods sold Cost of goods sold Dpayl Inventory OX 733.000 x 0 x 28.000 0 14.500 x 0 OX 733,000 Ox 28,000 X Don Wujul ... MMU College- Return to course 1,343,200 335,800 ** Business Course www APIC Retained earnings Equity investment Noncontrolling interest [] Patent Goodwill Equity investment Noncontrolling interest [D] Operating expenses Patent [lcogs] Equity investment Noncontrolling interest 0 0 2,098,750 X 1,301,225 0 0 120,000 250,000 0 0 24,000 x 0 11,600 x 2,900 0 296,000 74,000 0 24,000 x 0 07 14,500 x 0 OX 733,000 X OX 28,000 x 6 [lsales] Sales [lcogs] Cost of goods sold Cost of goods sold [lpay Inventory Accounts receivable 733,000 X 0 X 28,000 X 0 x x 100,000 x
