Shelby Corporation purchases 90 of the outstanding stock of Borner Company on January 1, 2012 , for $603,000 cash At that time, Borner has the following stockholders equity balances Common Stock $200,000 Paid In Capital in Excess of Par $80,000 Retained Earnings $300,000 All book values approximate fair values except for the plant assets (undervalued by $50,000 and with an estimated remaining life of 10 years) Any remaining excess is goodwill DeNoma Company acquires a 60 interest in Shelby on January 1, 2014 , for $750,000 At this time, Shelby has consolidated shareholders equity of Common Stock $500,000 Paid In Capital in Excess of Par $150,000 Controlling Retained Earnings $500,000 ( not including amortization of excess price applicable to investment in Borner) At that time, it is also determined that Shelbys plant assets are undervalued by $50,000 and have a 10 year remaining useful life Any remaining excess is goodwill Intercompany merchandise sales from Borner to Shelby for 2014 are Borners goods in Shelbys beginning inventory $7,500 Sales during 2014 $125,000 Borners goods in Shelbys ending inventory $10,000 Gross profit on intercompany sales 80 On January 1, 2014 , Shelby sells plant assets with a cost of $80,000 and accumulated depreciation of $45,000 to DeNoma for $50,000 Remaining useful life on the date of sale is estimated to be 5 years Shelby DeNoma use the partial equity method to account for their investments The trial balances on December 31, 2015 are as follows DeNoma Company Shelby Corporation Borner Company Inventory 75,000 60,000 40,000 Other Current Assets 900,000 2,000 390,000 Plant Assets 1,200,000 800,000 600,000 Accumulated Depreciation (450,000) (300,000) (200,000) Investment in Shelby Corp 894,000 Investment in Borner Comp 828,000 Common Stock (1,500,000) (500,000) (200,000) Paid In Capital in Excess of Par (150,000) (80,000) Retained Earnings (922,000) (620,000) (500,000) Sales (900,000) (700,000) (600,000) Cost of Goods Sold 570,000 425,000 400,000 Expenses 205,000 200,000 150,000 Subsidiary Income (72,000) (45,000) Totals 0 0 0 SHELBY CORPORATION BORNER COMPANY Purchase Price Allocation Annual Amortization January 1, 2012 Useful Annual Excess Allocation Life Amortizations Consideration Paid By Shelby 603,000 NCI Fair Value 63,000 Acquisition Date Subsidiary Fair Value 630,000 Book Value of Subsidiary 580,000 FV in excess of BV 50,000 Adjustments to Plant Assets 50,000 10 5,000 Goodwill 36,000 Indefinite 3,600 Annual excess amortizations 8,600 DENOMA SHELBY COMPANY Purchase Price Allocation Annual Amortization January 1, 2014 Useful Annual Excess Allocation Life Amortizations Consideration Paid By DeNoma 750,000 NCI Fair Value 280,000 Acquisition Date Subsidiary Fair Value 700,000 Book Value of Subsidiary 650,000 FV in excess of BV 50,000 Adjustments to Plant Assets 50,000 10 5,000 Goodwill 59,000 Indefinite 33,000 Annual excess amortizations REQUIRED Determine income calculations for Borner, Shelby, DeNoma, and the noncontrolling interests share of net income for 2015 BORNER COMPANY'S ACCRUAL BASED INCOME NCI Internally Calculated Operating Income (see consolidated worksheet) Excess Fair Value Amortization of Plant Assets Recognition of Previously Deferred Gross Profits Deferral of Intra Entity Gross Profits as of 12 31 15 Borner's Accrual Based Net Income Outside Ownership 10 Noncontrolling Interest in Borner's Net Income 0 SHELBY COMPANY'S ACCRUAL BASED INCOME NCI Internally Calculated Operating Income (see consolidated worksheet) Excess Fair Value Amortization of Plant Assets Gain on Sale of Plant Assets to DeNoma Realized Through Plant Asset Use By DeNoma 3000 Share of Borner's Accrual Based Net Income Shelby's Accrual Based Net Income Outside Ownership 40 Noncontrolling Interest in Shelby's Net Income 0 DENOMA COMPANY'S SHARE OF CONSOLIDATED NET INCOME Internally Calculated Operating Income (see consolidated worksheet) Share of Shelby's Accrual Based Net Income Controlling Interest in Consolidated Net Income

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Shelby Corporation purchases 90% of the outstanding stock of Borner Company on January 1, 2012 , for $603,000 cash. At that time, Borner has the

Shelby Corporation purchases 90% of the outstanding stock of Borner Company on January 1, 2012, for $603,000 cash. At that time, Borner has the following stockholders equity balances:

Common Stock = $200,000

Paid-In Capital in Excess of Par = $80,000

Retained Earnings = $300,000

All book values approximate fair values except for the plant assets (undervalued by $50,000 and with an estimated remaining life of 10 years). Any remaining excess is goodwill.

DeNoma Company acquires a 60% interest in Shelby on January 1, 2014, for $750,000. At this time, Shelby has consolidated shareholders equity of:

Common Stock = $500,000

Paid-In Capital in Excess of Par = $150,000

Controlling Retained Earnings = $500,000 (not including amortization of excess price applicable to investment in Borner).

At that time, it is also determined that Shelbys plant assets are undervalued by $50,000 and have a 10-year remaining useful life. Any remaining excess is goodwill.

Intercompany merchandise sales from Borner to Shelby for 2014 are:

Borners goods in Shelbys beginning inventory = $7,500

Sales during 2014 = $125,000

Borners goods in Shelbys ending inventory = $10,000

Gross profit on intercompany sales = 80%

On January 1, 2014, Shelby sells plant assets with a cost of $80,000 and accumulated depreciation of $45,000 to DeNoma for $50,000. Remaining useful life on the date of sale is estimated to be 5 years.

Shelby & DeNoma use the partial equity method to account for their investments. The trial balances on December 31, 2015 are as follows:

DeNoma Company	Shelby Corporation	Borner Company
Inventory	75,000	60,000	40,000
Other Current Assets	900,000	2,000	390,000
Plant Assets	1,200,000	800,000	600,000
Accumulated Depreciation	(450,000)	(300,000)	(200,000)
Investment in Shelby Corp	894,000
Investment in Borner Comp	828,000
Common Stock	(1,500,000)	(500,000)	(200,000)
Paid-In Capital in Excess of Par	(150,000)	(80,000)
Retained Earnings	(922,000)	(620,000)	(500,000)
Sales	(900,000)	(700,000)	(600,000)
Cost of Goods Sold	570,000	425,000	400,000
Expenses	205,000	200,000	150,000
Subsidiary Income	(72,000)	(45,000)
Totals	0	0	0

SHELBY CORPORATION & BORNER COMPANY

Purchase Price Allocation & Annual Amortization

January 1, 2012

Useful

Annual Excess

Allocation

Life

Amortizations

Consideration Paid By Shelby

603,000

NCI Fair Value

63,000

Acquisition-Date Subsidiary Fair Value

630,000

Book Value of Subsidiary

580,000

FV in excess of BV

50,000

Adjustments to:

Plant Assets

50,000

5,000

Goodwill

36,000

Indefinite

3,600

Annual excess amortizations

8,600

DENOMA & SHELBY COMPANY

Purchase Price Allocation & Annual Amortization

January 1, 2014

Useful

Annual Excess

Allocation

Life

Amortizations

Consideration Paid By DeNoma

750,000

NCI Fair Value

280,000

Acquisition-Date Subsidiary Fair Value

700,000

Book Value of Subsidiary

650,000

FV in excess of BV

50,000

Adjustments to:

Plant Assets

50,000

5,000

Goodwill

59,000

Indefinite

33,000

Annual excess amortizations

REQUIRED:

Determine income calculations for Borner, Shelby, DeNoma, and the noncontrolling interests share of net income for 2015.

BORNER COMPANY'S ACCRUAL BASED INCOME & NCI
Internally Calculated Operating Income (see consolidated worksheet)
Excess Fair Value Amortization of Plant Assets
Recognition of Previously Deferred Gross Profits
Deferral of Intra-Entity Gross Profits as of 12/31/15
Borner's Accrual Based Net Income
Outside Ownership %	10%
Noncontrolling Interest in Borner's Net Income	0
SHELBY COMPANY'S ACCRUAL BASED INCOME & NCI
Internally Calculated Operating Income (see consolidated worksheet)
Excess Fair Value Amortization of Plant Assets
Gain on Sale of Plant Assets to DeNoma: Realized Through Plant Asset Use By DeNoma	3000
Share of Borner's Accrual Based Net Income
Shelby's Accrual Based Net Income
Outside Ownership %	40%
Noncontrolling Interest in Shelby's Net Income	0
DENOMA COMPANY'S SHARE OF CONSOLIDATED NET INCOME
Internally Calculated Operating Income (see consolidated worksheet)
Share of Shelby's Accrual Based Net Income
Controlling Interest in Consolidated Net Income