Advanced-Accounting-Chapter-5

Apr 30th, 2015
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(1) Equity in Subsidiary Income 49,000 Dividends Declared 12,000 Investment in Sand Company 37,000 (To eliminate intercompany dividends and income) (2) Beginning retained Earnings – Sand 900,000 Common Stock – Sand 1,800,000 Difference between Implied and Book value 345,000 Investment in Sand Company 2,436,000 Noncontrolling Interest 609,000 (To eliminate investment account and create noncontrolling interest account) (3) Beginning Retained Earnings – Piper 46,000 Noncontrolling Interest 11,500 Depreciation Expense 6,250

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Exercise 5-3Part AInvestment in Saddler Corp. 525,000Cash 525,000Part BComputation and Allocation of Difference ScheduleParentNon-EntireShareControllingValueSharePurchase price and implied value $525,000131,250656,250Less: Book value of equity acquired480,000120,000600,000Difference between implied and book value45,00011,25056,250Inventory(16,000)(4,000)(20,000)Marketable Securities(20,000)(5,000)(25,000)Plant and Equipment(24,000)(6,000)(30,000)Balance(excess of FV over implied value)(15,000)(3,750)(18,750)Gain15,0003,75018,750Increase Noncontrolling interest to fair value of assetsTotal allocated bargain Balance-0--0--0-Exercise 5-11Part 1 - Cost MethodComputation and Allocation of Difference ScheduleParentNon-EntireShareControllingValueSharePurchase price and implied value2,276,000569,0002,845,000 Less: Book value of equity acquired(2,000,000)(500,000)(2,500,000)Difference between implied and book value276,00069,000345,000Inventory(36,000)(9,000)(45,000)Equipment(40,000)(10,000)(50,000)Balance200,00050,000250,000Goodwill(200,000)(50,000)(250,000)Balance-0--0--0-2010(1)Dividend Income 16,000Dividends Declared 16,000(To eliminate intercompany dividends)(2)Beginning retained Earnings - Sand700,000Capital Stock - Sand1,800,000Difference between Implied & Bo

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