LO 2 LO 2 P5.8 Consolidation Working Paper After Several Years Consolidated Bottling Company acquired an 80 percent interest in Regional Bottling Partnership on January 1, 2011. Assume the following infor- mation related to this acquisition: Acquisition price, paid by Consolidating Bottling Company, in cash Fair value of the 20 percent noncontrolling interest. . Book value of Regional Bottling Partnership at date of acquisition. $79,000,000 16,000,000 25,000,000 Chapter 5 Consolidated Financial Statements: Outside Interests The excess of fair value over book value at the acquisition date is attributed to previously unreported franchise rights valued at $10,000,000, and to goodwill. The franchise rights have indefinite lives, and total impairment losses for 2011 through 2019 are $2,000,000. There are no goodwill impairment losses for this period. Regional Bottling's business pros- pects declined during 2020, resulting in franchise rights impairment of $3,000,000 and goodwill impair- ment of $5,000,000. Consolidated Bottling uses the complete equity method to report its investment in Regional Bottling on its own books. The trial balances of Consolidated Bottling and Regional Bottling at December 31, 2020, appear below: Dr (Cr) (in thousands) Consolidated Bottling Regional Bottling $ 30,000 233,780 Current assets Property, plant and equipment, net. Franchise rights, net. Investment in Regional Bottling Current liabilities. Long-term debt Common stock. Additional paid-in capital Retained earnings, January 1.. Accumulated other comprehensive loss, January 1 Treasury stock Dividends Net sales. Equity in net income of Regional Bottling .. Equity in other comprehensive loss of Regional Bottling. Cost of sales. .... Selling, delivery and administrative expenses Impairment losses Interest expense... Other comprehensive (income) loss. Totals $ 160,000 248,000 466,400 82,574 (120,000) (700,000) (12,000) (100,000) (56,940) 13,000 30,000 2,000 (1,200,000) (550) 16 760,000 400,000 500 28,000 (1,000) 0 (20,000) (204,000) (1,000) (12,000) (18,100) 100 200 (300,000) 175,000 108,000 8,000 20 $ 0 a. Required Calculate goodwill for this acquisition, and its allocation to controlling and noncontrolling interests. b. Prepare a schedule calculating the 2020 equity in net income of Regional Bottling on Consolidated Bottling's books ($550,000) and the noncontrolling interest in the 2020 net income to be reported on the consolidated income statement. Prepare a schedule showing how the December 31, 2020 investment balance on Consolidated Bot- tling's books ($82,574,000) was calculated. d. Prepare a consolidation working paper for December 31, 2020. e. Present the consolidated financial statements, in good form, for 2020. C. LO 2 LO 2 P5.8 Consolidation Working Paper After Several Years Consolidated Bottling Company acquired an 80 percent interest in Regional Bottling Partnership on January 1, 2011. Assume the following infor- mation related to this acquisition: Acquisition price, paid by Consolidating Bottling Company, in cash Fair value of the 20 percent noncontrolling interest. . Book value of Regional Bottling Partnership at date of acquisition. $79,000,000 16,000,000 25,000,000 Chapter 5 Consolidated Financial Statements: Outside Interests The excess of fair value over book value at the acquisition date is attributed to previously unreported franchise rights valued at $10,000,000, and to goodwill. The franchise rights have indefinite lives, and total impairment losses for 2011 through 2019 are $2,000,000. There are no goodwill impairment losses for this period. Regional Bottling's business pros- pects declined during 2020, resulting in franchise rights impairment of $3,000,000 and goodwill impair- ment of $5,000,000. Consolidated Bottling uses the complete equity method to report its investment in Regional Bottling on its own books. The trial balances of Consolidated Bottling and Regional Bottling at December 31, 2020, appear below: Dr (Cr) (in thousands) Consolidated Bottling Regional Bottling $ 30,000 233,780 Current assets Property, plant and equipment, net. Franchise rights, net. Investment in Regional Bottling Current liabilities. Long-term debt Common stock. Additional paid-in capital Retained earnings, January 1.. Accumulated other comprehensive loss, January 1 Treasury stock Dividends Net sales. Equity in net income of Regional Bottling .. Equity in other comprehensive loss of Regional Bottling. Cost of sales. .... Selling, delivery and administrative expenses Impairment losses Interest expense... Other comprehensive (income) loss. Totals $ 160,000 248,000 466,400 82,574 (120,000) (700,000) (12,000) (100,000) (56,940) 13,000 30,000 2,000 (1,200,000) (550) 16 760,000 400,000 500 28,000 (1,000) 0 (20,000) (204,000) (1,000) (12,000) (18,100) 100 200 (300,000) 175,000 108,000 8,000 20 $ 0 a. Required Calculate goodwill for this acquisition, and its allocation to controlling and noncontrolling interests. b. Prepare a schedule calculating the 2020 equity in net income of Regional Bottling on Consolidated Bottling's books ($550,000) and the noncontrolling interest in the 2020 net income to be reported on the consolidated income statement. Prepare a schedule showing how the December 31, 2020 investment balance on Consolidated Bot- tling's books ($82,574,000) was calculated. d. Prepare a consolidation working paper for December 31, 2020. e. Present the consolidated financial statements, in good form, for 2020. C
