Question
On January 1, 2021, Petunia Company purchased an 85% interest in the capital stock of Sunflower Company for $3,400 (Cash + Shares of Petunia Company).
On January 1, 2021, Petunia Company purchased an 85% interest in the capital stock of Sunflower Company for $3,400 (Cash + Shares of Petunia Company). Petunia Company uses the equity method to record its investment in Sunflower Company.
The plant is undervalued by 700 (7 year remaining life) and the equipment is overvalued by 200 (10 year remaining life) on January 1, 2021.
Balance sheet for the Petunia and Sunflower at acquisition are included on the December 31, 2021 Consolidation worksheets on the last pages.
What is the total fair value of Sunflower at acquisition?
Consideration transferred by Petunia Co fair value (85%) = $3400
Noncontrolling interest fair value (15%) = $600
Sunflower acquisition-date fair value (100%): =$4000
What is the goodwill of Sunflower at acquisition?
Total fair value Sunflower = $4000
Less Book Value:
Retained earnings (1/1/21) = $920
Excess fair value over book value = $3080
Allocation of excess fair value to:
Building (undervalued) $700
Equipment (overvalued) $200
Goodwill: (3080-700+200) $2580
What is the amount of non-controlling Interest reported at acquisition
on the January 1, 2021 balance sheet?
(3,400/85%) - $3400 = $600.00
Prepare the working paper entry to eliminate any income earned from Sunflower Corporation during 2021 (look to worksheet for amounts).
| Account Title | DR | CR |
| Equity in Sunflower Earnings | $498 | |
| Investment in Sunflower | 498 | |
Prepare the working paper entry to eliminate Petunias investment in Sunflower
at December 31, 2021.
| Accounts | ||
What is the common stock of the consolidated company at December 31, 2021?
What is the retained earnings of the consolidated company at December 31, 2021?
What is the dividend declared of the consolidated company for the year ended
December 31, 2021?
What is the net income attributable to the controlling interest for the year ended
December 31, 2021?
What is the net income attributable to the non-controlling interest for the year ended December 31, 2021?
What is the amount of non-controlling interest for the year ended December 31, 2021?
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Financial Accounting An Integrated Approach
Authors: Michael Gibbins
6th Edition
0176407251, 978-0176407254
