Noncontrolling Consolidated Interest Totals Credit Jarel Suarez (300,000) (200,000) 140,000 80,000 20,000 (70,000) 10,000 Net Income (210,000) (110,000) 4. Prepare the consolidation journal entries Problem 1 Hoyle, Schaefer and Doupnik - Chapter 5 Modified Problems 11-16- I use Equity method instead of Initial Value method On January 1, Jarel acquired 80% of the outstanding voting stocks of Suarez for $260,000 cash consideration. The remaining 20% of Suarez had an acquisition-date fair value of $65,000. On January 1, Suarez possessed equipment (5-year life) that was undervalued on its book by $25,000. Suarez also had developed several secret formulas that Jarel assessed at $50,000. These formulas, although not recorded in Suarez's financial records, were estimated to have a 20-year future life. As of December 31, the financial statements appeared as follows: Revenues Cost of Goods Sold Expenses Equity in Investee Income 3. What is the consolidated total of non-controlling interest appearing on the balance sheet? Revenues Cost of Goods Sold Expenses Equity in Investee Income Separated company net income Consolidated Net Income Non-controlling Interest in sub's Income Net Income to Controlling Interest 20,000 10,000 (70,000) (210,000) (110,000) Accounts Jarel Suarez Debit (300,000) (200,000) 140,000 80,000 Consolidation Entries Retained Earnings, 1/1 Retained Earnings, 1/1 (300,000) (150,000) Jarel Suarez (300,000) Net Income Dividend Paid (210,000) (110,000) 0 0 Retained Earnings, 12/31 (510,000) (260,000) Net Income Dividend Paid (150,000) (210,000) (110,000) Cash and receivables 210,000 90,000 Retained Earnings, 12/31 (510,000) (260,000) Inventory 150,000 110,000 Investment in Suarez 330,000 Equipment (net) 440,000 300,000 Cash and Receivables 210,000 90,000 Total Assets 1,130,000 500,000 Liabilities (420,000) (140,000) Inventory Investment in Suarez 150,000 110,000 330,000 (200,000) (100,000) (510,000) (260,000) Common Stock Retained Earnings 12/31 Total Liabilities and Equity (1,130,000) (500,000) During the year, Jarel bought inventory for $80,000 and sold it to Suarez for $100,000. Of these goods, Suarez still owns 60% on December 31. 1. What is the goodwill at the acquisition date? 2. What is the ECOBV amortization? Equipment (net) 440,000 300,000 Total Assets 1,130,000 500,000 Liabilities Common Stock (420,000) (140,000) (200,000) (100,000) Non-controlling Interest in Subsidiary 1/1 5. Complete the consolidation worksheet and then answer the following questions: a. What is the total consolidated revenue? b. What is the total consolidated cost of goods sold? c. What is the consolidated total for equipment (net) at December 31? d. What is the consolidated total for inventory at December 31? Non-controlling Interest in Subsidiary 12/31 Retained Earnings 12/31 (510,000) (260,000) Total Liabilities and Equities (1.130,000) (500,000)