LOR 52. Consolidation subsequent to date of acquisition Equity method with noncontrolling interest and AAP Assume, on January 1, 2016, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $780,000 over the book value of the sub- sidiary Stockholders' Equity on the acquisition date. The parent assigned the excess fair value to the following Il assets: X Initial Fale Value Useful Life ***** IAJA Property, plant and equipment Patent Customer list Goodwill $312.000 130.000 78.000 200,000 $780,000 10 years 10 years Indefinite 80% of the Goodwill is allocated to the parent 372 Chapter 51 Consolidated Financial Statements with less than 100 Ownershi Cambridge Business Publishers The parent and the subsidiary repon the following pre-consolidation financial statements Decem ber 31, 2019: Parent Parent Subsidiary Subsidiary Balance sheet: $1,560,000 Cash (780,000) Accounts receivable 780,000 Inventory Equity investment Property, plant and equ (455,000) $325.000 Income statement: Sales $10,790,000 Cost of goods sold 18,190.000 Gross profit 2.600.000 Income foss) from subsidiary 230.880 Operating expenses 12.080.000) Not income $ 750.880 Statement of retained earnings: Beginning retained earings. $ 713,440 Net income 75 Dividends 023 Ending retained earning 1.230,320 $ 370,500 325,000 429,000 $ 520,000 780,000 1.170.000 1.490,320 2.800,000 $8.560,320 1.170,000 $2.294,500 $ 760.500 Current liabilities... 325.000 Long-term Babies (65.000) Common sock Additional paid-in capital $1.020.500 Retained earnings $1,170,000 2,600,000 520.000 1.040,000 1.230,320 $6.500,320 $325.000 741,000 91.000 117.000 1.020.500 $2.294,500 Disaggregate and document the activity for the 10 Acquisition Accounting Premium (AAP). the controlling interest AAP and the noncontrolling interest AAP 1. Calculate and organise the profits and losses on intercompany transactions and balances Compute the pre-consolidation Equity Investment account beginning and ending balances Marting with the stockholders' equity of the subsidiary d. Reconstruct the activity in the p's pre-consolidation Equity Investment account for the year of consolidation Independently compute the owner'equity attributable to the encontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary. Independently calculate solidated net income controlling interest net income and non controlling interest net income * Complete the consolidating entries according to the CE-A.D. sequence and complete the consolidation worksheet LOR 52. Consolidation subsequent to date of acquisition Equity method with noncontrolling interest and AAP Assume, on January 1, 2016, a parent company acquired an 80% interest in its subsidiary. The total fair value of the controlling and noncontrolling interests was $780,000 over the book value of the sub- sidiary Stockholders' Equity on the acquisition date. The parent assigned the excess fair value to the following Il assets: X Initial Fale Value Useful Life ***** IAJA Property, plant and equipment Patent Customer list Goodwill $312.000 130.000 78.000 200,000 $780,000 10 years 10 years Indefinite 80% of the Goodwill is allocated to the parent 372 Chapter 51 Consolidated Financial Statements with less than 100 Ownershi Cambridge Business Publishers The parent and the subsidiary repon the following pre-consolidation financial statements Decem ber 31, 2019: Parent Parent Subsidiary Subsidiary Balance sheet: $1,560,000 Cash (780,000) Accounts receivable 780,000 Inventory Equity investment Property, plant and equ (455,000) $325.000 Income statement: Sales $10,790,000 Cost of goods sold 18,190.000 Gross profit 2.600.000 Income foss) from subsidiary 230.880 Operating expenses 12.080.000) Not income $ 750.880 Statement of retained earnings: Beginning retained earings. $ 713,440 Net income 75 Dividends 023 Ending retained earning 1.230,320 $ 370,500 325,000 429,000 $ 520,000 780,000 1.170.000 1.490,320 2.800,000 $8.560,320 1.170,000 $2.294,500 $ 760.500 Current liabilities... 325.000 Long-term Babies (65.000) Common sock Additional paid-in capital $1.020.500 Retained earnings $1,170,000 2,600,000 520.000 1.040,000 1.230,320 $6.500,320 $325.000 741,000 91.000 117.000 1.020.500 $2.294,500 Disaggregate and document the activity for the 10 Acquisition Accounting Premium (AAP). the controlling interest AAP and the noncontrolling interest AAP 1. Calculate and organise the profits and losses on intercompany transactions and balances Compute the pre-consolidation Equity Investment account beginning and ending balances Marting with the stockholders' equity of the subsidiary d. Reconstruct the activity in the p's pre-consolidation Equity Investment account for the year of consolidation Independently compute the owner'equity attributable to the encontrolling interest beginning and ending balances starting with the owners' equity of the subsidiary. Independently calculate solidated net income controlling interest net income and non controlling interest net income * Complete the consolidating entries according to the CE-A.D. sequence and complete the consolidation worksheet
