Name: Fe C.

Leyros BSA 2 ACCTG TTh 3:00-4:30 PM

Solutions:

PROBLEM 1:

Price Paid 1,530,000

*NCI 170,000

Total Fair Value 1,700,000

Less: Fair value of net acquired:

Cash 100,000

Accounts receivable 200,000

Inventories 450,000

Property and equipment 1,000,000

Current liabilities (300,000)

Long-term Liabilities (500,000) 950,000

Goodwill (1) 750,000

(2) NCI = 1,530,000/ 90% = 1,700,000 x 10% = 170,000

PROBLEM 2:

(1)

Papa Corp (BV) 3,800,000

Goodwill 50,000

Mama Corp. 850,000

Total Assets 4,700,000

(2)

Consideration Given (400x130) 520,000

Add: NCI (520,000/80%) x20% 130,000

Less: FVNA (850,000-250,000) 600,000

Goodwill 50,000

PROBLEM 3:

80% 20%

Fair value of subsidiary 630,000 500,000 130,000

Less: Book value of interest acquired

Ordinary shares 100,000

Additional paid in capital 200,000

Retained earnings 230,000

Total equity 530,000 530,000 530,000

Interest acquired 80% 20%

Book value 424,000 106,000

Excess 100,000 76,000 24,000

Adjustment of identifiable accounts

Inventory (20,000)

Land (10,000)

Building 50,000

Equipment 60,000

Notes payable (50,000)

Goodwill 130,000
2. Prepare the working paper elimination entries. (6 pts.)

Write your entries here:

Ordinary shares- Jing co. 100,000

Additional paid in capital- Jing co. 200,000

Retained earnings- Jing co. 230,000

Investment in Jing co. 424,000

Non-controlling interest 106,000

Inventory 20,000

Land 10,000

Notes payable 50,000

Goodwill 130,000

Investment in Jing co. 76,000

Non-controlling interest 24,000

Building 50,000

Equipment 60,000

(3)

Dranreb Co. Jing co. Debit Credit Total

Assets

Cash 300,000 50,000 350,000

Accounts receivable 200,000 100,000 300,000

Inventory 200,000 80,000 20,000 300,000

Total current asset 950,000

Land 100,000 50,000 10,000 160,000

Equipment 800,000 200,000 60,000 940,000

Investment in Jing co. 500,000 424,000

76,000 -

Goodwill 130,000 130,000

Total NCA 2,180,000

Total assets 2,700,000 880,000 3,130,000

Liabilities & shareholder’s equity

Accounts payable 150,000 60,000 210,000

Notes payable 290,000 50,000 240,000

Total liabilities 450,000

Ordinary shares -

Dranreb corp 1,500,000 1,500,000

Jing Co. 100,000 100,000 -

Additional Paid in capital -

Dranreb Corp -

Jing Co. 200,000 200,000 -

Retained earnings -

Dranreb Corp 1,050,000 1,050,000

Jing Co. 230,000 230,000 -

Shareholder’s equity excluding non-controlling interest 2,550,000

Non-controlling interest 106,000

24,000 130,000

Total liabilities 2,700,000 880,000 740,000 740,000 3,130,000

& shareholder’s equity

PROBLEM 4:

(1) Current assets 106,000

Property & Equipment (net) (380,000-270,000) 110,000

Current liabilities (78,000-65,000) (13,000)

Total 157,000

PROBLEM 5:

Cash Consideration 1,240,000

Cash 120,000

Inventory 300,000

Property & equipment 760,000

1,180,000

Liabilities 240,000

Net assets of FV (1) 940,000

Good will (2) 300,000

PROBLEM 6:

(1)

APIC, Mother Corporation 6,500,000

Add: APIC (100,000x80) 8,000,000

Total APIC, Consolidated 14,500,000

(2)

Ordinary Share (100,000x100) 10,000,000

APIC (100,000x80) 8,000,000

Increase in equity 18,000,000

Peter Sandy Eliminations Consolidated

Corporation Company

Assets

CA

Current Assets (-720k) 1,800,000 650,000 -11,000 1,719,000

NCA

Land 1,200,000 600,000 1,800,000

Building & equipment (net) 2,500,000 400,000 2,900,000

Long-term investment

in marketable securities 500,000 320,000 820,000

Goodwill 250,000 + 240,000 490,000

Total Non-Current Assets 6,010,000

CL

Current liabilities 1,300,000 400,000 1,700,000

Other liabilities 800,000 610,000 1,410,000

Total Current Liabilities 3,110,000

SHE

Ordinary share 1,000,000 1,000,000

Additional paid-in capital 1,700,000 -6,000 1,694,000

Retained earnings 1,450,000 - 5,000 1,445,000

Total 4,139,000

NCI 480,000

Price Paid 720,000

NCI 480,000
Total 1,200,000

FVNA: 960,000

Goodwill 240,000

FVNA:

650,000

600,000

400,000

320,000

1,970,000

(400,000)

(610,000)

960,000