Problem 1

On January 1, 2011, Carlisle, Inc. acquired 100% of Tid-Bit, Inc. At the time of the acquisition, land and equipment were undervalued by $57,300 and $78,000, respectively. It was determined the equipment had a 10-year useful life. In addition, goodwill of $48,000 was identified.

The financial statements information for both Carlisle and Tid-Bit as of December 31, 2015, are provided in the Assessment 2 Template. An intra-company receivable/payable reported on the financial statements documentation indicates that Tid-Bit owes Carlisle $12,500.

Use the Assessment 2 Template to prepare a consolidation worksheet for Carlisle and Tid-Bit for the year ending December 31, 2015.

Problem 2

Shark Company purchased 70% interest in Fish Company on July 1, 2014. Consideration for the transaction was $791,875 cash. At the time of the purchase, the remaining shares of Fish (30% percent) were owned by various parties worth $339,375.

At the time of the acquisition, the excess of $124,500 was allocated to the patent not recorded on Fish's financial records. The patent is expected to a have remaining life of 5 years. All other excess was allocated to goodwill.

Use the Assessment 2 Template to prepare a consolidation worksheet for Shark and Fish for the year ending December 31, 2014.

Notes for the completion of the worksheet:

• Fish's income was earned evenly throughout the year.
• Fish pays dividends on a quarterly basis.
• There is no significant change in the trading price in Fish's stock.

Carlisle and Tid-Bit Consolidation Worksheet For the year ending December 31, 2015 Consolidation Entries Accounts Revenues Cost of goods sold Depreciation expense Equity income of Tid-Bit Net income Carlisle (1,252,400) 575,000 170,500 (295,900) (802,800) Tid-Bit (684,000) 210,300 170,000 (303,700) Retained Earnings 1/1 Net income (above) Dividends paid Retained Earnings 12/31 (1,820,000) (802,800) 250,000 (2,372,800) (714,000) (303,700) 30,000 (987,700) Current assets Investment in Tid-Bit 662,600 1,262,000 346,700 - Land Buildings (net) Equipment (net) Goodwill Total assets 500,000 337,300 625,000 3,386,900 265,000 476,000 325,000 1,412,700 (514,100) (500,000) (2,372,800) (2,372,800) (295,000) (130,000) (987,700) (1,412,700) Liabilities Common stock Retained Earnings Total liabilities and equity - Debit Credit Consolidated Totals Shark and Fish Consolidation Worksheet For the year ending December 31, 2014 Consolidation Entries Accounts Revenues Operating Expenses Equity income of Fish Net income Shark (780,165) 468,000 (58,835) (371,000) Fish (491,000) 298,000 (193,000) (871,000) (371,000) 150,000 (1,092,000) (534,000) (193,000) 50,000 (677,000) 465,790 833,210 448,000 - 458,000 748,000 2,505,000 237,000 674,000 1,359,000 (913,000) (95,000) (405,000) (1,092,000) (362,000) (300,000) (20,000) (677,000) (2,505,000) (1,359,000) Consolidated net income NCI in Fish's net income Controlling interest Retained Earnings 1/1 Net income (above) Dividends paid Retained Earnings 12/31 Current assets Investment in Fish Land Buildings (net) Patent Goodwill Total assets Liabilities Common stock Additional paid-in capital Retained Earnings NCI 7/1 NCI 12/31 Total liabilities and equity - - Debit Credit Noncontrolling Interest Consolidated Totals Carlisle and Tid-Bit Consolidation Worksheet For the year ending December 31, 2015 Consolidation Entries Accounts Revenues Cost of goods sold Depreciation expense Equity income of Tid-Bit Net income Carlisle (1,252,400) 575,000 170,500 (295,900) (802,800) Tid-Bit (684,000) 210,300 170,000 4 - 1 (303,700) Retained Earnings 1/1 Net income (above) Dividends paid Retained Earnings 12/31 (1,820,000) (802,800) 250,000 (2,372,800) (714,000) 2 (303,700) 30,000 (987,700) Debit Credit 7,800 295,900 714,000 1 5 1 2 3 Current assets Investment in Tid-Bit 662,600 1,262,000 346,700 - Land Buildings (net) Equipment (net) Goodwill Total assets 500,000 337,300 625,000 3,386,900 4 265,000 3 476,000 3 325,000 - 3 1,412,700 (295,000) 5 (130,000) 2 (987,700) (1,412,700) 12,500 130,000 (12,500) (265,900) (844,000) (183,300) 31,200 57,300 78,000 (514,100) (500,000) (2,372,800) (2,372,800) (30,000) Liabilities Common stock Retained Earnings Total liabilities and equity Consolidation Entries - 295,900 1 Equity income of Tid-Bit Investment in Tid-Bit Dividends paid To eliminate equity income and dividends paid 265,900 30,000 130,000 2 Common stock Retained Earnings 1/1 714,000 Investment in Tid-Bit 844,000 To eliminate the investment account against shareholders' equity 3 Land Equipment Goodwill Investment in Tid-Bit To recognize fair value adjustments 57,300 78,000 48,000 183,300 31,200 4 Investment in Tid-Bit Depreciation Expense 7,800 Equipment 39,000 To recognize accumulated excess depreciation from 2011 to 2014 $78,000/10 4 yrs (excluding 2015) = $31,200 12,500 6 Liabilities Current assets To eliminate intra-company receivable/payable 12,500 4 48,000 (39,000) Consolidated Totals (1,936,400) 785,300 348,300 (802,800) (1,820,000) (802,800) 250,000 (2,372,800) 996,800 - 822,300 891,300 911,000 48,000 3,669,400 (796,600) (500,000) (2,372,800) (3,669,400) Shark and Fish Consolidation Worksheet For the year ending December 31, 2014 Consolidation Entries Accounts Revenues Operating Expenses Equity income of Fish Net income Shark (780,165) 468,000 (58,835) (371,000) Fish (491,000) 298,000 (193,000) (871,000) (371,000) 150,000 (1,092,000) (534,000) (193,000) 50,000 (677,000) Consolidated net income NCI in Fish's net income Controlling interest Retained Earnings 1/1 Net income (above) Dividends paid Retained Earnings 12/31 Current assets Investment in Fish Land Buildings (net) Patent Goodwill Total assets Liabilities Common stock Additional paid-in capital Retained Earnings NCI 7/1 NCI 12/31 Total liabilities and equi 465,790 833,210 448,000 - 458,000 748,000 2,505,000 237,000 674,000 1,359,000 (913,000) (95,000) (405,000) (1,092,000) (362,000) (300,000) (20,000) (677,000) (2,505,000) (1,359,000) - - Debit Credit Noncontrollin Consolidated g Interest Totals