Read the problem description on page 132, using the information provided in the problem, complete the following: 1. Perform the preliminary calculations to determine is there is any excess of cost over book value. 12. Prepare an amortization schedule for the fair value book value differences. 3. Prepare your Income and Dividends calculations using the method explained in the power point. 4. Calculate the investment balance in Son at 12-31-2016, 5. Prepare all of the journal entries needed for the consolidated worksheet. 6. Complete the consolidated worksheet. 1. Preliminary Calculations We have a balance sheet at 12-31-2016, we need to determine the book value and Sun's value at acquisition Book value at December 31, 2016 Less: 2016 Net Income Add: 2016 Dividends 3 Book Value at January 1, 2016 check figure 736 Fair value of patents Sun's Fair Value at 12-31-2016 check figure 960 1 2 Purchase price of Pam's 75% interest 3 Noncontrolling Interest - 25% check figure 240 4 52. Amortization Schedule of Fair Value/Book Value Differences Unamortized Fair Value/Book Value Initial excess at year 6 Differences Amount amortization 7 Patents 10 years 1st year end Pam Corporation acquired a 75 percent interest in Sun Corporation on January 1, 2016. Financial state. ments of Pam and Sun Corporations for the year 2016 are as follows (in thousands): Pam Sun $400 1200) SL600 552 (1.000X (388) 126712 720 (2001 S7872 KLOA 136 (6) $168 Combined Income and Related Earnings Statements for the Year Ended December 31 Sales Income from Sun Cost of sales Other expenses Net income Add: Retained earnings January Deduct: Dividends Retained earings December 31 Balance Sheet at December 31 Cash Accounts receivable.net Dividends receivable from Sun Inventories Note receivable from Pam Land Buildings--net Equipment.net Investment in Sun Total assets $ SO 344 24 380 40 20 260 680 520 7272 $3.7472 38 ada 320 200 5840 S 40 5 340 20 Accounts payable Note payable to Sun Dividends payable Capital stock. $10 par Retained earnings Total equities 2.000 112872 32 6(K) 1:38 5840 SE472
