SECTION ONE-OVERVIEW (34 Total Points): Section One has Four Parts. Background and data common for all Four Parts in SECTION ONE are provided immediately below (unless indicated/suggested/assumed otherwise). P Corporation acquired 70% of S Company's common stock for $24,000 on 1/1/203. The reported equity of S on 1/1/203 was $9,000. S 's assets and liabilities were reported at fair value at the date of acquisition except for previously unrecorded identifiable intangibles of $6,000; this amount was amortized at the rate of $600 per year. Unless indicated/suggested/assumed otherwise, there were no impairments of Goodwill. Also, unless indicated/suggested/assumed otherwise, the total fair market value of S's net assets was $8,000 while the fair value of the " 30% non-controlling interest" was $6,000. P has employed the Complete Equity Method "properly" since the acquisition of S. Other information follows: 1. On 1/2/203,P sold S land for a price of $2,000. The land had a book value of $800 at the time of sale. 2. S sells merchandise to P on a continuing basis. P's 20X4 beginning inventory contains $45 in intercompany profits while P's 20X4 ending inventory contains $30 in intercompany profits. 3. S's total dividends for both 20X3 and 20X4 were $500 while S's net income for both 20X3 and 20X4 was $4,000. SECTION ONE-PART ONE: Calculate the total Goodwill amount at 1/1/20X3 (using the information provided on page one, as appropriate). Allocation of Goodwill is not required in PART ONE. SECTION ONE-PART TWO: Please assume that the Goodwill amount calculated in PART ONE was $25,000-otherwise, use the information provided on page one, as appropriate. Calculate the 1/1/203 Goodwill amount attributed to the Non-Controlling Interests (under GAAP). SECTION ONE-PART THREE: Calculate P's Equity in the Net Income of S (i.e.. Income from S) for 204 (using the information provided on page one, as appropriate). SECTION ONE-PART FOUR: Calculate the Non-Controlling Interest (NCi) balance at 12/31/204 under the following assumptions: 1. S 's identifiable and unidentifiable intangibles were $0 and $4,000 respectively, at 12/31/203. 2. S's equity at 12/31/203 was $19,400. 3. Powns 80% of S. 4. The difference between the Non-Controlling Interest Income (NCii) and " 20% of S's Dividends" was $1,600 for 204. 5. There were no intercompany sales/transfers since acquisition. 6. NCi Balance at 12/31/04 includes 20% of the reported balances of S's intangibles (that is. $4,000 times 20% equals $800 ). 7. None of the above data (on this page) is consistent with the data provided on page one or any other page on this exam. Thus, there is no need to use any data provided on any page other than this page (that is, page 5) to calculate the NCi Balance at 12/31/04. This was done to minimize (mitigate) carry-forward errors
