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1. Davis acquires 100 % of Ramos on January 1, 2009. Ramos will be operated as a separate subsidiary. Davis will use the equity method to account for its investment in Ramos. In 2013, Davis has net income of $400,000 and pays dividends of $100,000. Ramos has net income of $200,000 and pays dividends of $75,000. At acquisition date, Davis has a building with a book value of $3,000,000 and a fair value of $4,000,000. At that date, Ramos had a building with a book value of $800,000 and fair value of $900,000. Both buildings have a remaining useful life of 5 years (assume straight line depreciation). At Dec.31, 2013 Davis had BrBjdS o 500a a. Prepare consolidation worksheet "D" to reflect the necessary adjustment for dividends af 1, 00o*, Ranos had BY Bld t 2,009 b. How much are consolidated dividends for 2013 Prepare worksheet entry "A" at December 31, 2013 (assume there is no goodwill). d. How much is consolidated buildings at December 31, 201 At Dec.31 2013 Davis had BV Bldg. of 5,000,000+ FV of 6,000,000. Ramos had BV Bldg of 2,000,000 + FV of 1,500,000 2. Harry acquires 100% of David on January 1, 2010 by issuing 10,000 shares with par value $1 and fair value $70. In addition, Harry agrees to pay an additional $100,000 if David earns $50,000 net income in 4 years. David will be operated as a separate subsidiary of Harry. At acquisition date, there is a 80% probability of this occurring. On January 1, 2010, Harry had net assets with book value of $400,000 and fair value of $500,000. At that date, David had net assets with book value of $200,000 and fair value of $150,000. At December 31, 2012, Harry has net assets with book value of $600,000 and fair value of $800,000. At that date, David has net assets with book value of $300,000 and fair value of $400,000. Assume that all differences between book value and fair value relate to Land. Ho w much is goodwill at January 1, 2010 (show calculation). a. How much is goodwill at December 31, 2012 (assume no impairment) b. 3. Wang acquires 100% of Chen on January 1, 2010 and will operate Chen as a separate subsidiary In the first year of operation, Chen has net income of $70,000 and pays dividends of $50,000 and that there is $3000 of excess annual amortization associated with Chen's equipment. Assume Wang uses the equity method to account for its investment. What entries will a. Wang record on its books on December 31, 2010 for Chen's income, dividends and excess amortization. b. Same as a. ...what consolidation worksheet entries will Wang record for Chen's income, dividends and excess amortization. AsSume Wang uses the partial equity method to account for its investment. What entries will Wang record on its books on December 31, 2010 for Chen's income, dividends and excess amortization. Same as c.....what consolidation worksheet entries will Wang record for Chen's income, d. dividends and excess amortization. Assume Wang uses the cost method to account for its investment. What entries will Wang record on its books on December 31, 2010 for Chen's income, dividends and excess e. amortization. fSame as e........what consolidation worksheet entries will Wang record for Chen's income, dividends and excess amortization. Shoe owns 100% of Foot in an acquisition completed 3 years ago. It is now December 31, 2012. 4 Foot has borrowed $500,000 from Shoe, without interest Prepare the necessary consolidation worksheet entry on December 31, 2012. b.Assume instead that Shoe had borrowed $500,000 from Foot. Prepare the necessary a. consolidation worksheet entry on December 21, 2012. In both parts a.and b., how much is consolidated Loans Receivable and Payable at C. December 31, 2012. In both parts a. and b. how much will show up on the individual books of Shoe and Foot as to Loans Receivable and Payable. Answer by identifying whose books, the name of the account (specify part a. or b.) and the amount. 5. Haskins acquires 100% of Sells on January 1, 2011. Haskins uses the equity method. It is now December 31, 2014. The following are the stockholders equity accounts of Sells on various dates. 1/1/11 1/1/14 12/31/14 120,000 140,000 Common Stock 160,000 Additional Paid in Capital 2,000,000 2,300,000 2,500,000 Retained Earnings 100,000 130,000 150,000 Prepare consolidation worksheet S at December 31, 2014 a. Assume total Stockholders Equity of Haskins at December 31, 2015 is $6,000,000. How b. much is consolidated Stockholders equity. How would this answer differ if Haskins were using the partial equity method and if there c. was $10,000 of excess amortization. 1. Davis acquires 100 % of Ramos on January 1, 2009. Ramos will be operated as a separate subsidiary. Davis will use the equity method to account for its investment in Ramos. In 2013, Davis has net income of $400,000 and pays dividends of $100,000. Ramos has net income of $200,000 and pays dividends of $75,000. At acquisition date, Davis has a building with a book value of $3,000,000 and a fair value of $4,000,000. At that date, Ramos had a building with a book value of $800,000 and fair value of $900,000. Both buildings have a remaining useful life of 5 years (assume straight line depreciation). At Dec.31, 2013 Davis had BrBjdS o 500a a. Prepare consolidation worksheet "D" to reflect the necessary adjustment for dividends af 1, 00o*, Ranos had BY Bld t 2,009 b. How much are consolidated dividends for 2013 Prepare worksheet entry "A" at December 31, 2013 (assume there is no goodwill). d. How much is consolidated buildings at December 31, 201 At Dec.31 2013 Davis had BV Bldg. of 5,000,000+ FV of 6,000,000. Ramos had BV Bldg of 2,000,000 + FV of 1,500,000 2. Harry acquires 100% of David on January 1, 2010 by issuing 10,000 shares with par value $1 and fair value $70. In addition, Harry agrees to pay an additional $100,000 if David earns $50,000 net income in 4 years. David will be operated as a separate subsidiary of Harry. At acquisition date, there is a 80% probability of this occurring. On January 1, 2010, Harry had net assets with book value of $400,000 and fair value of $500,000. At that date, David had net assets with book value of $200,000 and fair value of $150,000. At December 31, 2012, Harry has net assets with book value of $600,000 and fair value of $800,000. At that date, David has net assets with book value of $300,000 and fair value of $400,000. Assume that all differences between book value and fair value relate to Land. Ho w much is goodwill at January 1, 2010 (show calculation). a. How much is goodwill at December 31, 2012 (assume no impairment) b. 3. Wang acquires 100% of Chen on January 1, 2010 and will operate Chen as a separate subsidiary In the first year of operation, Chen has net income of $70,000 and pays dividends of $50,000 and that there is $3000 of excess annual amortization associated with Chen's equipment. Assume Wang uses the equity method to account for its investment. What entries will a. Wang record on its books on December 31, 2010 for Chen's income, dividends and excess amortization. b. Same as a. ...what consolidation worksheet entries will Wang record for Chen's income, dividends and excess amortization. AsSume Wang uses the partial equity method to account for its investment. What entries will Wang record on its books on December 31, 2010 for Chen's income, dividends and excess amortization. Same as c.....what consolidation worksheet entries will Wang record for Chen's income, d. dividends and excess amortization. Assume Wang uses the cost method to account for its investment. What entries will Wang record on its books on December 31, 2010 for Chen's income, dividends and excess e. amortization. fSame as e........what consolidation worksheet entries will Wang record for Chen's income, dividends and excess amortization. Shoe owns 100% of Foot in an acquisition completed 3 years ago. It is now December 31, 2012. 4 Foot has borrowed $500,000 from Shoe, without interest Prepare the necessary consolidation worksheet entry on December 31, 2012. b.Assume instead that Shoe had borrowed $500,000 from Foot. Prepare the necessary a. consolidation worksheet entry on December 21, 2012. In both parts a.and b., how much is consolidated Loans Receivable and Payable at C. December 31, 2012. In both parts a. and b. how much will show up on the individual books of Shoe and Foot as to Loans Receivable and Payable. Answer by identifying whose books, the name of the account (specify part a. or b.) and the amount. 5. Haskins acquires 100% of Sells on January 1, 2011. Haskins uses the equity method. It is now December 31, 2014. The following are the stockholders equity accounts of Sells on various dates. 1/1/11 1/1/14 12/31/14 120,000 140,000 Common Stock 160,000 Additional Paid in Capital 2,000,000 2,300,000 2,500,000 Retained Earnings 100,000 130,000 150,000 Prepare consolidation worksheet S at December 31, 2014 a. Assume total Stockholders Equity of Haskins at December 31, 2015 is $6,000,000. How b. much is consolidated Stockholders equity. How would this answer differ if Haskins were using the partial equity method and if there c. was $10,000 of excess amortization
