On January 1, Year 1, Jacklin Corporation (JC) acquired 60 percent (60,000 shares of $2 par common stock) of Mantz Corporation (MC) for $2,500,000 in cash. The acquisition date fair value of the noncontrolling interests shares (40 percent) was $40 per share. JC uses the Initial Value Method for its internal accounting.

At the time of the acquisition MC has the following asset and liability accounts:

Book Value Fair Value Difference

Current Assets $ 500,000 $ 500,000 $ 0

PPE (25-year life) 800,000 1,000,000 200,000

Patents (10year life) 400,000 900,000 500,000

Land 500,000 800,000 300,000

Liabilities (200,000) (200,000) 0

Total Net Assets $2,000,000 $3,000,000 $1,000,000

Information about Mantz Corporations Retained earnings account for the years 1 to 6 are shown below.

Mantz Dividends Increase in Ending

Year Net Income Paid Book Value Retained Earnings

1 200,000 50,000 150,000 650,000

2 200,000 100,000 100,000 750,000

3 250,000 150,000 100,000 850,000

4 250,000 200,000 50,000 900,000

5 300,000 200,000 100,000 1,000,000

6 300,000 200,000 100,000 1,100,000

$1,500,000 900,000 600,000

Use the information on the previous page and the Jacklin Corporation-Mantz Corporation worksheet to provide consolidated financial statements for Jacklin Corporation for year 6. There are $40,000 of Mantzs liabilities included in the worksheet that is an accounts payable to Jacklin Corporation. No goodwill impairments have occurred since JC acquired MC.

Accounts	Jacklin	Mantz	Debit	Credit	NC Interest	Totals
Income Statement
Revenues	(2,000,000)	(500,000)
Expenses	1,770,000	200,000
Investee Income	(120,000)	0
Net Income	(350,000)	(300,000)
Split net income
Statement of RE
Retained Earnings 1/1	(2,000,000)	(1,000,000)
Net Income	(350,000)	(300,000)
Dividends	150,000	200,000
Retained earnings 12/31	(2,200,000)	(1,100,000)
Balance Sheet
Current Assets	650,000	600,000
Investment in Mantz	2,500,000	0
PPE (net)	4,350,000	1,500,000
Patents	0	200,000
Goodwill	0	0
Land	1,000,000	500,000
Total Assets	8,500,000	2,800,000
Liabilities	(3,500,000)	(200,000)
Noncontrolling int 1/1
Noncontrolling int 12/31
Common Stock and APIC	(2,800,000)	(1,500,000)
Retained earnings	(2,200,000)	(1,100,000)
Total liabilities and equity	(8,500,000)	(2,800,000)