Problem 3. Parent acquired some of Subsidiary on December 31, 20X0. Information relating to that acquisition is shown below. $ Number of shares of Subsidiary acquired by Parent Price per share Useful life of the equipment Interest rate on the note payable Term of the note payable 152,100 6.10 10 4.60% 5 Excess Subsidiary Company December 31, 20X0 Cash Other assets Equipment Accumulated depreciation Goodwill Total Book Value Fair Value $ 98,000 $ 98,000 $ 405,000 405,000 969,000 836,000 (300,000) 98,500 $ 1,172,000 $ 1,437,500 $ 167,000 98,500 265,500 Accounts payable Other liabilities Note payable Common stock Additional paid-in capital Retained earnings Total $ 138,000 $ 138,000 $ 169,000 169,000 106,000 99,600 169,000 1,030,900 513,000 77,000 $ 1,172,000 $ 1,437,500 $ (6,400) 271,900 265,500 Problem 3 (continued) Separate Company Financial Statements Subsidiary 20x2 $ 764,000 $ 802,000 $ 20x1 $ 20x3 842,000 Sales Dividend income Expenses Depreciation Interest Net Income Parent 20x1 20X2 20X3 955,000 $1,003,000 $ 1,053,000 9,900 10,800 10,800 774,000 813,000 818,000 121,000 127,100 137,300 18,000 17,000 16,000 51,900 $ 56,700$ 92,500 619,000 96,900 4,876 43,224 $ 650.000 682,000 101,700 109,800 3,986 3,056 46,314 $ 47,144 $ $ 20X3 $ Beginning retained earnings Net income Dividends declared Ending retained earnings 20x1 96,000 $ 51,900 (13,000) 134,900 $ 20x2 20x3 134,900 $ 177,600 56,700 92,500 (14,000) (23,000) 177,600 $ 247,100 20x1 20x2 $ 77,000 $ 109,224 $ 143,538 43,224 46,314 47,144 (11,000) (12,000) (12,000) $ 109,224 $ 143,538 $ 178,682 $ Cash $ 20x1 129,000 $ 531,000 1,271,000 (496,000) 20X2 20X3 135,000 $ 141,000 558,000 585,000 1,373,000 1,579,000 (623,100) (760,400) 20x1 20X2 20x3 $ 103,000 $ 108,000 $ 113,000 425,000 446,000 468,000 1,017,000 1,098,000 1,186,000 (396,900) (498,600) (608,400) Other assets Equipment Accumulated depreciation Goodwill Investment in Subsidiary Total 927,810 927,810 927,810 $ 2,362,810 $ 2,370,710 $ 2,472,410 $ 1,148,100 $ 1,153,400 $ 1,158,600 Accounts payable Other liabilities Note payable Common stock Additional paid in capital Retained earnings Total $ 263,910$ 177,110 $ 153,310 575,000 605,000 634,000 368,000 339,000 312,000 380,000 399,000 419,000 641,000 673,000 707,000 134,900 177,600 247,100 $ 2,362,810 $ 2,370,710 $ 2,472,410 $ 93,213 $ 75,426 $ 57,639 177,000 186,000 195,000 86,663 66,436 45,279 169,000 169,000 169,000 513,000 513,000 513,000 109,224 143,538 178,682 $ 1,148,100 $ 1,153,400 $ 1,158,600 Problem continued) 10% Equity Fair Valve Difference 90% Parent Minority Interest December 31, 20% 759.000 271.900 1,030,900 (11,000) 203.000 (11 000) 927 810 19.900 38 302 11,100) 43.224 43,224 (16,700) (16 700) 11.976) (150 (1.7781 11.670) 791 224 (1,976 1.044 448 (12,000) 253, 224 104 AS 940,003 (10.800 11.2001 (12.000 46,314 46.314 41,683 4,631 Subsidiary's dividends for 20X1 Subsidiary's income for 20X1 Amortization of excess for 20x1 Depreciation Interest expense December 31, 20x1 Subsidiary dividends for 20x2 Subsidiary's income for 2012 Amortization of excess for 20x2 Depreciation Interest expense December 31, 2012 Subsidiary dividends for 20x3 Subsidiary income for 2013 Amortisation of excess for 20% Depreciation (16,700) (15.000 (16.2001 1.671) 1060, 191 1.670 (167 (1.504 11,671) 214,853 3255 106019 10.000 1.2001 (12.000 47144 (12,000) 47144 - 42,430 4,714 116.700 116 2001 (15,030) (1.670 Interest expense December 31, 2003 (1,325) 216,828 860,682 1,077,510 969,759 107,251 20x2 20X1 Amortization (16,7001 20K1 Balance 150,300 98,500 200 Balance 167,000 98,500 6.400 271,900 20X2 Amortization (15,700) 20x3 Amortization (16,700) Equipment Goodwill Note payable 133,600 98,500 2.753 234,853 2013 Balance 116,900 99,500 1,428 216,828 (1976) (1,6711 (1,325) 253,224 Problem 3 Parent Consolidated balances for 20x2 Depreciation 127,100 17,000 Subsidiary Consolidated 101,700 3,986 Interest Minority interest Net Income 46,314 Equipment Accumulated depreciation Note payable 56,700 1,373,000 (623,100) 339,000 1,098,000 (498,600) 66,436 Problem 3. Parent acquired some of Subsidiary on December 31, 2oxo. Information relating to that acquisition is shown below. $ Number of shares of Subsidiary acquired by Parent Price per share Useful life of the equipment Interest rate on the note payable Term of the note payable 152,100 6.10 10 4.60% 5 Excess Subsidiary Company December 31, 20X0 Cash Other assets Equipment Accumulated depreciation Goodwill Total Book Value Fair Value $ 98,000S 98,000 $ 405,000 405,000 969,000 836,000 (300,000) 98,500 $ 1,172,000 $ 1,437,500 $ 167,000 98,500 265,500 $ Accounts payable Other liabilities Note payable Common stock Additional paid-in capital Retained earnings Total 138,000 $ 138,000 $ 169,000 169,000 106,000 99,600 169,000 1,030,900 513,000 77,000 1,172,000$ 1,437,500S (6,400) 271,900 $ 265,500 Problem 3 (continued) Separate Company Financial Statements Subsidiary 20x1 20X2 20x3 $ 764,000$ 802,000$ 842,000 $ Sales Dividend income Expenses Depreciation Interest Net Income Parent 20x1 20X2 20x3 955,000 $1,003,000 5 1,053,000 9,900 10,800 10,800 774,000 813,000 818,000 121,000 127,100 137,300 18,000 17,000 16,000 51,900 $ 56,700$ 92,500 619,000 96,900 4,876 43,2245 650,000 101,700 3,986 46,314 $ 682,000 109.800 3,056 S S 47,144 S S Beginning retained earnings Net Income Dividends declared Ending retained earnings 20x1 96,000 $ 51,900 (13,000) 134,9005 20x2 20x3 134,900S 177,600 56.700 92,500 (14,000) (23,000) 177,600 S 247,100 20X1 20X2 20x3 77,000 $ 109,224 S 143,538 43,224 46,314 47,144 (11,000) (12,000) (12,000) 109,224 S 143,538 $ 178,682 $ S $ Cash Other assets Equipment Accumulated depreciation Goodwill Investment in Subsidiary Total 20x1 129,000S 531,000 1.271.000 (496,000) 20x2 20x3 135,000 $ 141,000 558,000 585,000 1,373,000 1,579,000 (623,100) 760.400) 20X1 20X2 $ 103,000 $ 108,000 $ 425,000 446,000 1,017,000 1,098,000 (396,900) (498,600) 20X3 113,000 468,000 1,186,000 (608,400) 927,810 927,810 927,810 $ 2,362,810 2,370,710 2.472.410 $ 1,148,100 $ 1.153.400 $ 1.158.600 Accounts payable Other liabilities Note payable Common stock Additional paid-in capital Retained earnings Total $ 263,910$ 177.110 $ 153,310 575,000 605,000 634,000 368,000 339,000 312,000 380,000 399,000 419,000 641,000 673,000 707000 134.900 177,600 247.100 $ 2,362,810S 2,370,710 $ 2,472,410 S 93.213 75,426 $ 57,639 177,000 186,000 195.000 86.663 66,436 45,279 169,000 169,000 169.000 $13,000 513,000 513,000 109,224 143,538 178,682 $ 1.148,100 $ 1,153.400 $ 1.158.600 Probleme NOG 10N Minority interest Fair value Part Difference 271,900 0126 103,00 750 000 00662 (11001 11000 December 31, Subsidiary hidede for 201 Subdiacone for 2011 Amortifexcess for 201 11.00 43,224 COOR 4322 1167001 (15. (1. Depreciation 1901 1976 1.976 1990 781,224 251234 CODON 104,445 1044.440 (12.2001 . [10.800 F2.000 48,314 46,114 - Amortation 2 115,0301 11.6701 156700 1.6713 23153 (1.01) 10, (167 SSCE December 11, 2012 954,152 105.09 (Lao 112.000 47,344 12.000 47,144 4714 Dearca de vi 091) lotest lacet) (135i SET) (1.1931 IEET) December 31, 2013 1.927 510 CEYIZ 16259 ISZ ZOT EXDE ENDE Amortation (14,7001 150,300 10.000 9.500 6400 24.00 133,500 9.500 (167001 (1,970 (4.6713 11.12) 1,300 1.500 1428 216 828 25.1234 Problem 1 What is the total operating cash flows? What is total financing cash flows? Problem 2 What is consolidated income assuming the cost method? Problem 3 Consolidated Consolidated balances for 20x2 Depreciation Parent 127,100 Subsidiary 101,700 3,986 17,000 Interest Minority interest Net Income Equipment Accumulated depreciation Note payable 56,700 1,373,000 (623,100) 339,000 46,314 1,098,000 (498,600) 66,436 Problem 3. Parent acquired some of Subsidiary on December 31, 20X0. Information relating to that acquisition is shown below. $ Number of shares of Subsidiary acquired by Parent Price per share Useful life of the equipment Interest rate on the note payable Term of the note payable 152,100 6.10 10 4.60% 5 Excess Subsidiary Company December 31, 20X0 Cash Other assets Equipment Accumulated depreciation Goodwill Total Book Value Fair Value $ 98,000 $ 98,000 $ 405,000 405,000 969,000 836,000 (300,000) 98,500 $ 1,172,000 $ 1,437,500 $ 167,000 98,500 265,500 Accounts payable Other liabilities Note payable Common stock Additional paid-in capital Retained earnings Total $ 138,000 $ 138,000 $ 169,000 169,000 106,000 99,600 169,000 1,030,900 513,000 77,000 $ 1,172,000 $ 1,437,500 $ (6,400) 271,900 265,500 Problem 3 (continued) Separate Company Financial Statements Subsidiary 20x2 $ 764,000 $ 802,000 $ 20x1 $ 20x3 842,000 Sales Dividend income Expenses Depreciation Interest Net Income Parent 20x1 20X2 20X3 955,000 $1,003,000 $ 1,053,000 9,900 10,800 10,800 774,000 813,000 818,000 121,000 127,100 137,300 18,000 17,000 16,000 51,900 $ 56,700$ 92,500 619,000 96,900 4,876 43,224 $ 650.000 682,000 101,700 109,800 3,986 3,056 46,314 $ 47,144 $ $ 20X3 $ Beginning retained earnings Net income Dividends declared Ending retained earnings 20x1 96,000 $ 51,900 (13,000) 134,900 $ 20x2 20x3 134,900 $ 177,600 56,700 92,500 (14,000) (23,000) 177,600 $ 247,100 20x1 20x2 $ 77,000 $ 109,224 $ 143,538 43,224 46,314 47,144 (11,000) (12,000) (12,000) $ 109,224 $ 143,538 $ 178,682 $ Cash $ 20x1 129,000 $ 531,000 1,271,000 (496,000) 20X2 20X3 135,000 $ 141,000 558,000 585,000 1,373,000 1,579,000 (623,100) (760,400) 20x1 20X2 20x3 $ 103,000 $ 108,000 $ 113,000 425,000 446,000 468,000 1,017,000 1,098,000 1,186,000 (396,900) (498,600) (608,400) Other assets Equipment Accumulated depreciation Goodwill Investment in Subsidiary Total 927,810 927,810 927,810 $ 2,362,810 $ 2,370,710 $ 2,472,410 $ 1,148,100 $ 1,153,400 $ 1,158,600 Accounts payable Other liabilities Note payable Common stock Additional paid in capital Retained earnings Total $ 263,910$ 177,110 $ 153,310 575,000 605,000 634,000 368,000 339,000 312,000 380,000 399,000 419,000 641,000 673,000 707,000 134,900 177,600 247,100 $ 2,362,810 $ 2,370,710 $ 2,472,410 $ 93,213 $ 75,426 $ 57,639 177,000 186,000 195,000 86,663 66,436 45,279 169,000 169,000 169,000 513,000 513,000 513,000 109,224 143,538 178,682 $ 1,148,100 $ 1,153,400 $ 1,158,600 Problem continued) 10% Equity Fair Valve Difference 90% Parent Minority Interest December 31, 20% 759.000 271.900 1,030,900 (11,000) 203.000 (11 000) 927 810 19.900 38 302 11,100) 43.224 43,224 (16,700) (16 700) 11.976) (150 (1.7781 11.670) 791 224 (1,976 1.044 448 (12,000) 253, 224 104 AS 940,003 (10.800 11.2001 (12.000 46,314 46.314 41,683 4,631 Subsidiary's dividends for 20X1 Subsidiary's income for 20X1 Amortization of excess for 20x1 Depreciation Interest expense December 31, 20x1 Subsidiary dividends for 20x2 Subsidiary's income for 2012 Amortization of excess for 20x2 Depreciation Interest expense December 31, 2012 Subsidiary dividends for 20x3 Subsidiary income for 2013 Amortisation of excess for 20% Depreciation (16,700) (15.000 (16.2001 1.671) 1060, 191 1.670 (167 (1.504 11,671) 214,853 3255 106019 10.000 1.2001 (12.000 47144 (12,000) 47144 - 42,430 4,714 116.700 116 2001 (15,030) (1.670 Interest expense December 31, 2003 (1,325) 216,828 860,682 1,077,510 969,759 107,251 20x2 20X1 Amortization (16,7001 20K1 Balance 150,300 98,500 200 Balance 167,000 98,500 6.400 271,900 20X2 Amortization (15,700) 20x3 Amortization (16,700) Equipment Goodwill Note payable 133,600 98,500 2.753 234,853 2013 Balance 116,900 99,500 1,428 216,828 (1976) (1,6711 (1,325) 253,224 Problem 3 Parent Consolidated balances for 20x2 Depreciation 127,100 17,000 Subsidiary Consolidated 101,700 3,986 Interest Minority interest Net Income 46,314 Equipment Accumulated depreciation Note payable 56,700 1,373,000 (623,100) 339,000 1,098,000 (498,600) 66,436 Problem 3. Parent acquired some of Subsidiary on December 31, 2oxo. Information relating to that acquisition is shown below. $ Number of shares of Subsidiary acquired by Parent Price per share Useful life of the equipment Interest rate on the note payable Term of the note payable 152,100 6.10 10 4.60% 5 Excess Subsidiary Company December 31, 20X0 Cash Other assets Equipment Accumulated depreciation Goodwill Total Book Value Fair Value $ 98,000S 98,000 $ 405,000 405,000 969,000 836,000 (300,000) 98,500 $ 1,172,000 $ 1,437,500 $ 167,000 98,500 265,500 $ Accounts payable Other liabilities Note payable Common stock Additional paid-in capital Retained earnings Total 138,000 $ 138,000 $ 169,000 169,000 106,000 99,600 169,000 1,030,900 513,000 77,000 1,172,000$ 1,437,500S (6,400) 271,900 $ 265,500 Problem 3 (continued) Separate Company Financial Statements Subsidiary 20x1 20X2 20x3 $ 764,000$ 802,000$ 842,000 $ Sales Dividend income Expenses Depreciation Interest Net Income Parent 20x1 20X2 20x3 955,000 $1,003,000 5 1,053,000 9,900 10,800 10,800 774,000 813,000 818,000 121,000 127,100 137,300 18,000 17,000 16,000 51,900 $ 56,700$ 92,500 619,000 96,900 4,876 43,2245 650,000 101,700 3,986 46,314 $ 682,000 109.800 3,056 S S 47,144 S S Beginning retained earnings Net Income Dividends declared Ending retained earnings 20x1 96,000 $ 51,900 (13,000) 134,9005 20x2 20x3 134,900S 177,600 56.700 92,500 (14,000) (23,000) 177,600 S 247,100 20X1 20X2 20x3 77,000 $ 109,224 S 143,538 43,224 46,314 47,144 (11,000) (12,000) (12,000) 109,224 S 143,538 $ 178,682 $ S $ Cash Other assets Equipment Accumulated depreciation Goodwill Investment in Subsidiary Total 20x1 129,000S 531,000 1.271.000 (496,000) 20x2 20x3 135,000 $ 141,000 558,000 585,000 1,373,000 1,579,000 (623,100) 760.400) 20X1 20X2 $ 103,000 $ 108,000 $ 425,000 446,000 1,017,000 1,098,000 (396,900) (498,600) 20X3 113,000 468,000 1,186,000 (608,400) 927,810 927,810 927,810 $ 2,362,810 2,370,710 2.472.410 $ 1,148,100 $ 1.153.400 $ 1.158.600 Accounts payable Other liabilities Note payable Common stock Additional paid-in capital Retained earnings Total $ 263,910$ 177.110 $ 153,310 575,000 605,000 634,000 368,000 339,000 312,000 380,000 399,000 419,000 641,000 673,000 707000 134.900 177,600 247.100 $ 2,362,810S 2,370,710 $ 2,472,410 S 93.213 75,426 $ 57,639 177,000 186,000 195.000 86.663 66,436 45,279 169,000 169,000 169.000 $13,000 513,000 513,000 109,224 143,538 178,682 $ 1.148,100 $ 1,153.400 $ 1.158.600 Probleme NOG 10N Minority interest Fair value Part Difference 271,900 0126 103,00 750 000 00662 (11001 11000 December 31, Subsidiary hidede for 201 Subdiacone for 2011 Amortifexcess for 201 11.00 43,224 COOR 4322 1167001 (15. (1. Depreciation 1901 1976 1.976 1990 781,224 251234 CODON 104,445 1044.440 (12.2001 . [10.800 F2.000 48,314 46,114 - Amortation 2 115,0301 11.6701 156700 1.6713 23153 (1.01) 10, (167 SSCE December 11, 2012 954,152 105.09 (Lao 112.000 47,344 12.000 47,144 4714 Dearca de vi 091) lotest lacet) (135i SET) (1.1931 IEET) December 31, 2013 1.927 510 CEYIZ 16259 ISZ ZOT EXDE ENDE Amortation (14,7001 150,300 10.000 9.500 6400 24.00 133,500 9.500 (167001 (1,970 (4.6713 11.12) 1,300 1.500 1428 216 828 25.1234 Problem 1 What is the total operating cash flows? What is total financing cash flows? Problem 2 What is consolidated income assuming the cost method? Problem 3 Consolidated Consolidated balances for 20x2 Depreciation Parent 127,100 Subsidiary 101,700 3,986 17,000 Interest Minority interest Net Income Equipment Accumulated depreciation Note payable 56,700 1,373,000 (623,100) 339,000 46,314 1,098,000 (498,600) 66,436
