Nama : Yohannes Sinaga

NIM : 023001801165

Mata Kuliah : Akuntans Keuangan Lanjutan 1 ( Chapter 4 )

Dosen Pengampu : Prof. Dr, Etty Murwaningsih ,Ak., M.M., CA

E4-2 Differential Assigned to Patents

Power Corporation purchased 100 percent of the common stock of Snow Corporation
on January 1. 20X2, by issuing 45,000 shares of its $6 par value common stock. The market
prince of Power’s shares at the date of issue was $24. Snow reported net assets with a book
value of $980,000 on that date. The amount paid in excess of the book vaue of Snow’s net
assets was attributed to the increased value of patents held by Snow with a remaining useful
life of eight years. Snow reported net income of $56,000 and paid dividends of $20,000 in 20X2
and reported net loss of $44,000 and paid dividends of $10,000 in 20X3.

Required

Assuming that Power Corporation uses the equity method in accounting for its investment in
Snow Corportion. Prepare all journal entries for Power for 20X2 and 20X3.

Jawab:

Journal entries recorded by Power Corporation :

20X2

Investment in Snow Corporation $ 1,080,000 *

Common Stock $ 270,000
Additional Paid-In Capital $ 810,000
Record purchase of Snow Corporation * ( 45,000 x $ 24 )

Cash $ 20,000
Investment in Snow Corporation $ 20,000
Record dividend from Snow Corporation

Investmet in Snow Corporation $ 56,000

Income from Snow Corporation $ 56,000
Record equity-method income

Income from Snow Corporation $ 12,500

Investment in Snow Corporation Stock $ 12,500
Amortize differential ( $ 1,080,000 - $ 980,000 ) / 8 years
20X3

Cash $ 10,000
Investment in Snow Corporation $ 10,000
Record dividend from Snow Corporation

Income from Snow Corporation $ 44,000

Investment in Snow Corporation Stock $ 44,000
Record equity – method loss

Income from Snow Corporation $ 12,500

Investment in Snow Corporation $ 12,500
Amortize differential ( $ 1,080,000 - $ 980,000 ) / 8 years

E4-5 Investment Income

Brindle Company purchased 100 percent of Monroe Company’s voting common stock for
$648,000 on January 1, 20X4. At that date, Monroe reported assets $690,000 and libilities of $230,000.
The book values and fair values of Monroe’s assets were equal axcept for land, which had a fair value
$108,000 more than book value, and equipment, which had a fair value $80,000 more than book value.
The remaining economic life of all depreciable assets at January,1 , 20X4. Was five years. Monroe
reported net income of $68,000 and paid dividens of $34,000 in 20X4.

Required

Compute the amount of investment income to be reported by Brindle for 20X4.

Jawab: Brindle Company reported compute as follows :

Proportionate share of reported income $68,000

Amortization of differential :
Land ( $ 108,000 / Not amortized ) $ -0-
Equipment ( $ 80,000 / 5 years ) 16,000
Goodwill ( 0 / not amortized ) 0 -16,000
Investment Income $52,000
 Assignment of differential
Purchase price $648,000
Proportionate share of book value of net assets
( $ 690,000 - $ 230,000 ) -460,000
Differential $188,000
Differential assigned to land -108,000
Differential assigned to equipment -80,000
Differential assigned to goodwill $0

E4-9 Equity Entries with Goodwill

Turner Corporation reported the following balances at January 1, 20X9.

Item Book Value Fair Value

Cash $45,000 $45,000
Accouts Receivable 60,000 60,000
Inventory 120,000 130,000
Buildings & Equipment 300,000 240,000

Less : Accumulated Depreciation -150,000

Total Assets $375,000 $475,000

Accounts Payable $75,000 $75,000

Common Stock ( $10 par value ) 100,000
Additional Paid-In Capital 30,000
Retaained Earnings 170,000
Total Liabilities & Equity $375,000

On January 1, 20X9. Gross Corporation purchased 100 percent of Turner’s stock. All tangible
assets had a remaining economic life of 10 years at January 1, 20X9. Both companies use the FIFO
inventory method. Tuner reported reported net income of $16,000 in 20X9 and paid dividends of
$3,200. Gross uses the equity method in accounting for its investment in Turner.

Required

Give all journal entries that Gross recorded during 20X9 with respect to its investment assuming Gross
paid $437,500 for the ownership of Turner On January 1, 20X9. The amount of the differential assigned
to goodwill is not impaired.

Jawab : Journal entries following purchased :

 1. Record Purchased of Turner Stock

Investment in Turner Corporation Stock $ 437,500

Cash $ 437,500

2. Record dividend from Turner

Cash $ 3,200
Investment in Turner Corporation Stock $ 3,200

3. Record equity-method income

Investment in Turner Corporation Stock $ 16,000

Income from Turner Corporation $ 16,000

4. Write off differential assigned to Inventory carried on FIFO basis

Income from Turner Corporation Stock $ 10,000

Investment in Turner Corporation $ 10,000

5. Amortize differential assigned to buildings and equipment:

[ $ 240,000 – ( $ 300,000 - $ 150,000 )] / 10 years

Income from Turner Corporation Stock $ 9,000

Investment in Turner Corporation $ 9,000

E4-14 Acquisition with Differential

Road Corporation acquired all of Conger Corporation’s voting shares January 1, 20X2 , for
$470,000. At that time Conger reported common stock outstanding of $80,000 and retained earnings of
$130,000. The book value of $80,000 and fair value of $100,000, and buildings, which had a book value
of $220,000 and fair value of $400,000. Land and buildings are the only noncurrent assets that Conger
holds.

Required

a. Compute the amount of goodwill at the date of acquisition

b. Give the elimination entry of entries required immediately following the acquisition to prepare a
consolidated balance sheet.

Jawab :
a. Compute the amount of goodwill at the date of acquisition

Book Value of Conger's net assets:

Common stock outstanding $80,000
Retained Earnings 130,000 $210,000
Fair Value Increment :
Land ( $ 100,000 - $ 80,000 ) $20,000
Buildings ( $ 400,000 - $ 220,000 ) $180,000 200,000
Fair Value of net assets $410,000
Fair Value of consideration given -470,000
Goodwill $60,000

b. Give the elimination entry of entries required immediately following the acquisition to prepare a
consolidated balance sheet.

Investment in Conger Corporation $ 470,000

Cash $ 470,000
Record the initial investment in Conger Corporation.

Book Value Calculations

Total Book Value = Common Stock + Retained Earnings

BOOK VALUE $ 210,000 = $ 80,000 + $ 130,000

1/1/20X2

Goodwill
= $ 60,000
Identifiable Excess
=$ 200,000
100%
Book Value
= $ 210,000

Basic Elimination Entry

Common Stock $ 30,000

 Retained Earnings $ 180,000
Investment in Conger Corportion $ 210,000

Excees Value ( Differential ) Calculations :

Total = Land + Buildings + Goodwill

Balance $ 260,000 = 20,000 + 180,000 60,000

Excees Value ( Differential ) Reclassification entry:

Land $ 20,000
Buildings $ 180,000
Goodwill $ 60,000
Investment in Road Corporation $ 260,000