Pat Inc., a calendar-year reporting company, acquired 100% of Sat Inc.'s outstanding common

stock at a cost of $400,000 on December 31, 2016. At the time of purchase, Sat had the following

equity balances:

Common Stock

$50,000

Additional Paid-in Capital

200,000

Retained Earnings

250,000

Upon investigation, it was determined that the following accounts had fair market values that

differed from book value by the amounts noted:

Account

Amount

Under/over stated

Remaining Life

Inventory

$70,000

overstated

1

Land

30,000

understated

Buildings

100,000

overstated

20

Long-term debt

40,000

overstated

4

The trial balances for both Pat and Sat at December 31, 2017 are given in the template on the

following worksheet.

Required:

a.

Prepare a value analysis and determination and distribution of excess schedule for

Pat's purchase of Sat at December 31, 2016.

b.

Prepare the entries needed to complete the consolidation in general journal form.

c.

Complete the consolidation worksheet at Decebmer 31, 2017.

Consolidated Worksheet
	Trial Balance
	Pat	Sat
Cash	295,000	20,000
Accounts receivable	400,000	80,000
Inventory	700,000	130,000
Land	500,000	100,000
Investment in Sat	405,000
Buildings	3,100,000	555,000
Accumulated depreciation	(600,000)	(85,000)
Current liabilities	(495,000)	(60,000)
Long-term Debt	(2,000,000)	(300,000)
Discount (Premium)
Common stock - Sat		(50,000)
Paid-in excess - Sat		(200,000)
Retained earnings - Sat		(250,000)
Common stock - Pat	(20,000)
Paid-in excess - Pat	(480,000)
Retained earnings- Pat	(1,100,000)
Sales	(7,000,000)	(850,000)
Cost of goods sold	3,800,000	600,000
Other expenses	1,700,000	310,000
Subsidiary (dividend) income	(5,000)
Dividends declared - Pat	800,000
Totals	0	0
Consolidated net income
NCI share
Controlling share
NCI
Controlling retained earnings
Totals