Jeter_AA_4e_SolutionsManual_Ch04
63 Pages

Jeter_AA_4e_SolutionsManual_Ch04

Course Number: AA AC 3200, Spring 2010

College/University: Brown Mackie College

Word Count: 8687

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CHAPTER 4 Note: The letter A or B indicated for a question, exercise, or problem means that the question, exercise, or problem relates to a chapter appendix. ANSWERS TO QUESTIONS 1 Nonconsolidated subsidiaries are expected to be relatively rare. In those situations where a subsidiary is not consolidated, the investment in the subsidiary should be reported in the consolidated statement of financial position at...

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4 Note: CHAPTER The letter A or B indicated for a question, exercise, or problem means that the question, exercise, or problem relates to a chapter appendix. ANSWERS TO QUESTIONS 1 Nonconsolidated subsidiaries are expected to be relatively rare. In those situations where a subsidiary is not consolidated, the investment in the subsidiary should be reported in the consolidated statement of financial position at cost, along with other long-term investments. A liquidating dividend is a return of investment rather than a return on investment. Consequently, the amount of a liquidating dividend should be credited to the investment account rather than to dividend income when the cost method is used, whereas regular dividends are recorded as dividend income under the cost method. If the equity method is used, all dividends are credited to the investment account. 2. 3. When the parent company uses the cost method, the workpaper elimination of intercompany dividends is made by a debit to Dividend Income and a credit to Dividends Declared. This elimination prevents the double counting of income since the subsidiary's individual revenue and expense items are combined with the parent company's in the determination of consolidated net income. When the parent company uses the equity method, the workpaper elimination for intercompany dividends is made by a debit to the investment account and a credit to Dividends Declared. 4. When the parent company uses the cost method, dividends received are recorded as dividend income. When the parent company uses the partial equity method, the parent company recognizes equity income on its books equal to its ownership percentage times the investee companys reported net income. When the parent company uses the complete equity method, the parent recognizes income similar to the partial equity method, but adjusts the equity income for additional charges or credits when the purchase price differs from the fair value of the investee companys net assets, and for intercompany profits (addressed in chapters 6 and 7). 5. Consolidated net income consists of the parent company's net income from independent operations plus (minus) any income (loss) earned (incurred) by its subsidiaries during the period, adjusted for any intercompany transactions during the period and for any excess depreciation or amortization implied by a purchase price in excess of book values. Consolidated retained earnings consist of the parent company's retained earnings from its independent operations plus (minus) the parent company's share of the increase (decrease) in its subsidiaries' retained earnings from the date of acquisition. 6. Investment in S Company 1/1 Retained Earnings, P Company 80% ($461,430 - $16,250)] 356,144 356,144 This adjustment recognizes that P Company's share of S Company's undistributed profits from the date of acquisition to the beginning of the current year is properly a part of beginning -of-year 4-1 consolidated retained earnings. It also enhances the elimination of the investment account. This entry is only needed if the parent company uses the cost method. If the equity method is used, the parents retained earnings already reflect the undistributed earnings of the subsidiary. 7. The noncontrolling interest column accumulates the noncontrolling stockholders' share of subsidiary income, less their share of excess depreciation or amortization implied by fair value adjustments (addressed in detail in chapter 5), dividends (as a reduction), and the beginning noncontrolling interest in equity carried forward from the previous period. 8. The method used to record the investment on the books of the parent company (cost method, partial equity method, or complete equity method) has no effect on the consolidated financial statements. Only the workpaper elimination procedures are affected. 9. The two methods for treating the preacquisition revenue and expense items of a subsidiary purchased during a fiscal year are (1) including the revenue and expense items of the subsidiary for the entire period with a deduction at the bottom of the consolidated income statement for the net income earned prior to acquisition (this is the preferred method), and (2) including in the consolidated income statement only the subsidiary's revenue earned and expenses incurred subsequent to the date of purchase. 10. (a) Readers of consolidated financial statements will be unable to evaluate the financial position and results of operations (neither of which is shown separately from the parent's) of the subsidiaries. (b) Because consolidated assets are not generally available to meet the claims of the creditors of a subsidiary, creditors will have to look to the financial statements of the debtor (subsidiary) corporation. Similarly, the creditors of the parent company are most interested in only the assets of the parent company, although large creditors are likely to gain control over or have indirect access to the assets of subsidiaries in the case of parent company default. (c) Because consolidated financial statements are a composite, it is impossible to distinguish a financially weak subsidiary from financially strong ones. (d) Ratio analyses based on consolidated data are not reliable guides, especially when the related group produces a conglomerate of unrelated product lines and services. (e) Consolidated financial statements often do not disclose data about subsidiaries that are not consolidated. (f) A reader of consolidated financial statements cannot assume that a certain amount of unrestricted consolidated retained earnings will be available for dividends. Data on the ability of the individual subsidiaries to pay dividends are frequently unavailable. 11. A consolidated statement of cash flows contains two adjustments that result from the existence of a noncontrolling interest: (1) an adjustment for the noncontrolling interest in net income or loss of the subsidiary in the determination of net cash flow from operating activities, and (2) subsidiary dividend payments to the noncontrolling stockholders must be included with parent company dividends paid in determining cash paid as dividends because the entire amount of the 4-2 noncontrolling interest in net income (loss) is added back (deducted) in determining net cash flows from operating activities. 12. Potential voting rights refer to the rights associated with potentially dilutive securities such as convertible bonds or stocks, or stock options, rights, or warrants that are currently exercisable. These are considered under international standards in determining the applicability of the equity method for investments where the investor may be considered to have significant influence. They are generally not considered under U.S. GAAP. International standards (IFRS) refer to investments that are accounted for under the equity method as investments in associates. 13B. No. The recognition and display of a deferred tax asset or deferred tax liability relating to the assignment of the difference between implied value and book value is necessary without regard to whether the affiliates file consolidated income tax returns or separate income tax returns. An assumption must be made as to whether the undistributed income will be realized in a future dividend distribution or as a result of the sale of the subsidiary. This is necessary because the calculation of the tax consequences differs depending on the assumption made. Dividend distributions are subject to a dividends received exclusion, whereas gains or losses on disposal are not. In addition, gains or losses on disposal may be taxed at different tax rates than dividend distributions. Although capital gains are currently taxed at the same rates as ordinary income, the rates have been different in the past and may be again in the future. The amounts calculated under these two approaches would be different (1) if the affiliates had different marginal tax rates, (2) if the affiliates were in different tax jurisdictions, or (3) when expected future tax rates differ from the tax rate used in determining the tax paid or accrued by the selling affiliate. When the affiliates file separate returns, two types of temporary differences may arise: 1. Deferred income tax consequences that arise in the consolidated financial statements because of undistributed subsidiary income, and 2. Deferred income tax consequences that arise in the consolidated financial statements because of the elimination of unrealized intercompany profit. 14B 15B 16B ANSWERS TO BUSINESS ETHICS CASE Surreptitiously installing spyware on computers can be an unethical practice (the word surreptitious implies that the customer is unaware of the activity). The programs run in the background and can significantly slow down the computers operating performance. Sometimes these programs are used to pass on the consumer browsing history and may leak personal information to the advertising firm. 4-3 ANSWERS TO FINANCIAL STATEMENT ANALYSIS EXERCISE A. GE uses the equity method to account for the investment in GECS. The investment account on GEs books has a balance of $50,815 and $54,292 for the years 2005 and 2004 respectively. Notice that the balance in the investment account equals the same ending balance for stockholders equity for GECS for the same years. Thus the investment account changes exactly by the same amount that the equity accounts change. Because GE owns 100% of GECS (and created this subsidiary), the equity method is the only method that would keep these two amounts equal. In essence, the parents investment account mirrors the activity in the subsidiarys equity. The 2005 consolidated balances for assets and liabilities are $673,342 and $555,934, which differ from the balances for GEs assets and liabilities of $189,759 and $74,599. On the other hand, the 2005 consolidated balance for equity equals the equity balance for GEs equity at $109,354. On GEs books, the assets and liabilities of GECS are recorded at net in the investment account (i.e. the investment account represents the net assets of GECS). When the firm prepares consolidated financial statements, the investment account is eliminated and the individual assets and liabilities of GECS are added. While some consolidated amounts are simply the sum of GEs and GECSs individual accounts (such as inventories), other accounts do not simple add across (such as short-term borrowings, receivables, and payables). One reason these accounts may not add across is due to the elimination of intercompany transactions. The equity accounts of GECS disappear altogether in the consolidated totals. None of this minority interest is related to GEs investment in GECS since GE owns 100%. Under the new exposure drafts, minority interest will also be recorded at fair value. In the past, the minority interest was maintained at historical cost. The new exposure draft does not require previously recorded minority interest to be adjusted to fair value. The current presentation that GE uses is very informative because you have financial statements for each segment (GE and GECS separated). This allows the user to see the nature of the types of accounts that GECS is involved in, as well as their magnitude (financing receivables and long-term borrowings, for example). In addition, it is crucial that the reader is able to see the accounts for the consolidated entity. For instance, if GE simply used the equity method to record GECS, it would appear that GE is only responsible for $74,599 of liabilities (see GEs unconsolidated columns), when in reality, GECS has debt of $487,542. This debt is reflected in the consolidated columns. GECS's debt is not recorded as a line item on GE's books if the equity method is used and consolidation does not occur. It would be considered 'off balance sheet' debt. If undisclosed, this might be viewed in some respects as similar to the type of off-balance sheet debt in some of the partnerships that got Enron into so much trouble. B. C. D. 4-4 Answers to Exercises Exercise 4-1 Part A Cost Method 2009 Investment in Song Company Cash Cash Dividend Income (.8 $25,000) 2010 Cash Dividend Income (.8 $50,000) 2011 Cash Investment in Song Company (.8 $35,000) (liquidating dividend) Part B Partial Equity Method 2009 Investment in Song Company Cash Investment in Song Company Equity Income (.8 $63,500) Cash Investment in Song Company 2010 Investment in Song Company Equity Income (.8 $52,500) Cash Investment in Song Company 2011 Equity Loss (.8 x $55,000) Investment in Song Company Cash Investment in Song Company (.8 $35,000) 387,000 387,000 20,000 20,000 40,000 40,000 28,000 28,000 387,000 387,000 50,800 50,800 20,000 20,000 42,000 42,000 40,000 40,000 44,000 44,000 28,000 28,000 4-5 Exercise 4-1 (continued) Part C Complete Equity Method Parent Share Cost of investment Book value acquired($475,000 x .80) Difference between Implied and Book value Allocated to undervalued depreciable assets Balance 387,000 380,000 7,000 (7,000) -0Noncontrolling Entire Share Value 96,750 95,000 1,750 (1,750) -0483,750 * 475,000 8,750 (8,750) -0- * $387,000/.80 Amortization per year Parent ($7,000/10) = $700 2009 Investment in Song Company Cash Investment in Song Company Equity Income (.8 $63,500) Equity Income ($7,000/10) Investment in Song Company Cash Investment in Song Company 2010 Investment in Song Company Equity Income (.8 $52,500) Equity Income ($7,000/10) Investment in Song Company Cash Investment in Song Company 2011 Equity Loss (.8 x $55,000) Investment in Song Company Equity Income ($7,000/10) Investment in Song Company Cash Investment in Song Company (.8 $35,000) 387,000 387,000 50,800 50,800 700 700 20,000 20,000 42,000 42,000 700 700 40,000 40,000 44,000 44,000 700 700 28,000 28,000 4-6 Exercise 4-2 Workpaper entries 12/31/13 Cost Method Investment in Salt Company Retained Earnings 1/1 - Park Company To establish reciprocity (.90 ($160,000 $50,000)) Dividend Income Dividends Declared - Salt Company 99,000 99,000 9,000 9,000 Common Stock - Salt Company 450,000 Retained Earnings 1/1/13 - Salt Company 160,000 Land 16,667 Investment in Salt Company ($465,000 + $99,000) Noncontrolling Interest ($51,667 + .10 x ($160,000 $50,000) 564,000 62,667 Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Allocated to undervalued land Balance *$465,000/.90 465,000 450,000 15,000 (15,000) -0NonControlling Share 51,667 50,000 1,667 (1,667) -0Entire Value 516,667 * 500,000 16,667 (16,667) -0- Exercise 4-3 Workpaper entries 12/31/17 Equity Method The balance in the investment account at the beginning of the year is $532,000, which is computed as: [$494,000 + (.95 x ($160,000 $120,000))] = $532,000 Common Stock - Succo Company Other Contributed Capital - Succo Company Retained Earnings 1/1/17 - Succo Company Investment in Succo Company Noncontrolling Interest* * $520,000 x .05 + (.05 x ($160,000 - $120,000)) = 28,000 Equity Income ($40,000)(.95) Dividends Declared ($19,000)(.95) Investment in Succo Company 38,000 18,050 19,950 300,000 100,000 160,000 532,000 28,000 In this instance, the partial and complete equity methods result in the same entries because the amount paid for the acquisition of Succo is exactly 95% of Succos book value. Thus, there are no asset adjustments and no excess amortization or depreciation to consider. The equity income under the complete equity method is the same as under the partial equity method (95% of reported income of Succo). 4-7 Exercise 4-4 Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Goodwill Balance * $310,000/.85 Part A Workpaper entries 12/31/12 - Equity Method Investment in Serena Company Dividends Declared - Serena Company (.85)($12,000) Equity Loss (.85)($10,000 loss) Common Stock - Serena Company Other Contributed Capital - Serena Company Retained Earnings 1/1/12 - Serena Company Difference between Implied and Book Value (Goodwill) Investment in Serena Company ($310,000 $6,375*) Noncontrolling Interest a 310,000 293,250 16,750 (16,750) -0- NonControlling Share 54,706 51,750 2,956 (2,956) -0- Entire Value 364,706 * 345,000 19,706 (19,706) -0- 18,700 10,200 8,500 240,000 55,000 42,500 19,706 a 303,625 53,581 * [($50,000 - $42,500) x .85] = 6,375; ** $54,706 - [($50,000 - $42,500) x .15] = $53,581 $42,500 = $20,500 at year-end plus 2012 loss of $10,000 plus 2012 dividends of $12,000 Goodwill Difference between Implied and Book Value 19,706 19,706 The partial equity and the complete equity methods result in the same entries because the excess of the cost over fair value of net assets is allocated to goodwill, a non-amortizable asset. If any of this excess is allocated to depreciable assets or intangible assets with limited lives (subject to amortization), additional expenses will be recorded under the complete equity method. Part B Workpaper entries 12/31/12 - Cost Method Retained Earnings 1/1 - Poco Company Investment in Serena Company To establish reciprocity (.85 ($50,000 $42,500)) Investment in Serena Company Dividends Declared - Serena Company Common Stock - Serena Company Other Contributed Capital - Serena Company Retained Earnings 1/1/12 - Serena Company Difference between Implied and Book Value Investment in Serena Company ($310,000 $6,375) Noncontrolling Interest 4-8 6,375 6,375 10,200 10,200 240,000 55,000 42,500 19,706 303,625 53,581 Exercise 4-4 (continued) Goodwill Difference between Implied and Book Value Exercise 4-5 Workpaper Entries and Noncontrolling Interest Cost of investment Less: excess cost allocated to land Book value acquired (90%) Total stockholders equity - Set Company ($630,000/.90) Less: Retained earnings, 1/1/09 Common stock, Set Company, 1/1/09 Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Goodwill Balance * $650,000/.90 Part A Eliminating entries cost method Dividend Income (.90)($50,000) Dividends Declared - Set Company Common Stock - Set Company ($700,000 $190,000) Retained Earnings 1/1/09 - Set Company Difference between Implied and Book Value Investment in Salt Company Noncontrolling Interest Land Difference between Implied and Book Value Part B Eliminating entries equity method Equity Income (.90)($132,000) 118,800 Dividends Declared - Set Company (.90)($50,000) Investment in Set Company Common Stock - Set Company Retained Earnings 1/1/09 - Set Company Difference between Implied and Book Value Investment in Salt Company Noncontrolling Interest 4-9 510,000 190,000 22,222 650,000 72,222 45,000 45,000 510,000 190,000 22,222 650,000 72,222 22,222 22,222 $650,000 630,000 20,000 (20,000) -019,706 19,706 $ 650,000 20,000 $ 630,000 700,000 190,000 $ 510,000 NonControlling Share 72,222 70,000 2,222 (2,222) -0Entire Value 722,222 * 700,000 22,222 (22,222) -0- Computation and Allocation of Difference between Implied and Book Value Acquired 45,000 73,800 Exercise 4-5 (continued) Land Difference between Implied and Book Value Part C Noncontrolling Interest $72,222 + (.1 $132,000) - (.1 $50,000) = $80,422 The noncontrolling interest will be the same regardless of the method used to account for the investment on Plate Companys books. Exercise 4-6 Journal and Workpaper Entries - Equity Method Part A Journal Entries Investment in Sales Cash Investment in Sales ($148,000)(.85) Equity in Subsidiary Income Cash ($50,000)(.85) Investment in Sales Part B Workpaper Entries Equity in Subsidiary Income Dividends Declared - Sales Investment in Sales 22,222 22,222 350,000 350,000 125,800 125,800 42,500 42,500 125,800 42,500 83,300 Common Stock - Sales 100,000 Other Contributed Capital Sales 40,000 Retained Earnings 1/1 Sales 140,000 Difference between Implied and Book Value 131,765 Investment in Sales Noncontrolling Interest Goodwill 131,765 Difference between Implied and Book Value 350,000 61,765 131,765 Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Goodwill Balance * $350,000/.85 4 - 10 350,000 238,000 112,000 (112,000) -0NonEntire Controlling Value Share 61,765 411,765 * 42,000 280,000 19,765 131,765 (19,765) (131,765) -0-0- Exercise 4-7 Journal and Workpaper Entries - Equity Method Part A Journal Entries Investment in Sales (.85)($190,000) Equity in Subsidiary Income Cash Investment in Sales (.85)($50,000) Part B Workpaper Entries Equity in Subsidiary Income Dividends Declared - Sales Investment in Sales Common Stock - Sales Other Contributed Capital Sales Retained Earnings 1/1 Sales* Difference between Implied and Book Value Investment in Sales ($350,000 + $83,300**) Noncontrolling interest ($61,765 + $14,700***) Goodwill Difference between Implied and Book Value * $140,000 + ($148,000 - $50,000) ** ($148,000 - $50,000) x .85 *** ($148,000 - $50,000) x .15 161,500 161,500 42,500 42,500 161,500 42,500 119,000 100,000 40,000 238,000 131,765 433,300 76,465 131,765 131,765 4 - 11 Exercise 4-8 Workpaper Entries and Consolidate Net Income - Cost Method Part A Workpaper Entries 2010 Dividend Income (.80 $2,000) Dividends Declared - Smith Company Common Stock Smith Other Contributed Capital Smith Retained Earnings 1/1/10 - Smith Difference between Implied and Book Value Subsidiary Income Purchased * Investment in Smith Company Noncontrolling Interest Land Difference between Implied and Book Value 1,600 1,600 25,000 10,000 10,000 2,500 15,000 50,000 12,500 2,500 2,500 Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Equity Subsidiary Income purchased** Total book value Difference between implied and book value Goodwill Balance * $50,000/.80 4 $45,000) = 15,000 12 Estimated Retained Earnings of Smith on date of acquisition** Retained earnings, 1/1 $ 10,000 Smith earnings to 5/1 = (4/12)($45,000) 15,000 Retained earnings, 5/1 $ 25,000 ** Subsidiary Income Purchased ( 2011 Investment in Smith Retained Earnings 1/1 Peters To establish reciprocity (.80 ($53,000 $25,000**) Common Stock - Smith Other Contributed Capital - Smith Retained Earnings 1/1/11 - Smith Land 4 - 12 50,000 36,000 12,000 48,000 2,000 (2,000) -0NonControlling Share 12,500 9,000 3,000 12,000 500 (500) -0Entire Value 62,500 * 45,000 15,000 60,000 2,500 (2,500) -0- 22,400 22,400 25,000 10,000 53,000 2,500 Investment in Smith Company ($50,000 + $22,400) Noncontrolling Interest ($12,500+ .20 x ($53,000 $25,000) Exercise 4-8 (continued) Part B Consolidated Net Income Peters Company's reported net income Less: dividend income from Smith Peters' income from independent operations Plus: Peter's share of Smith's net income in 2010 since acquisition (.80)(8/12)($45,000) Less: Peter's share of Smith's net loss in 2010 (.80 $5,000) Consolidated net income Consolidated Retained Earnings Peter's 12/31 retained earnings ($80,000 + $64,000 - $15,000) Plus: Peter's share of the increase in Smith's retained earnings from the date of acquisition to the current date: (.80 ($53,000 $25,000)) (.80 ($48,000 $25,000)) Exercise 4-9 Workpaper Entries - Cost Method 2010 Dividend Income (.80)($2,000) Dividends Declared - Smith Company Common Stock Smith Other Contributed Capital Smith Retained Earnings 5/1/10 Smith * Difference between Implied and Book Value Investment in Smith Company Noncontrolling Interest [($50,000/.80) x .20] Land Difference between Implied and Book Value * See previous problem to compute the balance of retained earnings on 5/1/10. 72,400 18,100 2010 64,000 (1,600) 62,400 24,000 86,400 (4,000) 33,500 2011 37,500 0 37,500 129,000 22,400 $151,400 161,500 18,400 $179,900 1,600 1,600 25,000 10,000 25,000 2,500 50,000 12,500 2,500 2,500 Exercise 4-10 Journal and Workpaper Entries - Equity Method Part A Journal Entries Investment in Star Cash Investment in Star (0.90 (3/12) $60,000) Equity in Subsidiary Income To account for prorated stake in equity 210,000 210,000 13,500 13,500 4 - 13 Cash (0.90 $10,000) 9,000 Investment in Star To account for reduction in equity due to dividends 9,000 4 - 14 Exercise 4-10 (continued) Part B Workpaper Entries Equity in Subsidiary Income (0.90)(3/12)($60,000) Dividends Declared Star (.90)($10,000) Investment in Star 13,500 9,000 4,500 Common Stock - Star 70,000 Other Contributed Capital Star 30,000 Retained Earnings Star * 115,000 Difference between Implied and Book Value ** 18,333 Investment in Star Noncontrolling Interest Goodwill 18,333 Difference between Implied and Book Value * Retained earnings on 10/1/10 Retained earnings on 1/1/10 Income purchased to 10/1/10 (9/12 x $60,000) Retained earnings on 10/1/10 210,000 23,333 18,333 $ 70,000 45,000 $ 115,000 **Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Equity Subsidiary Income purchased Total book value Difference between implied and book value Goodwill Balance * $210,000/.90 ** $60,000 x 9/12 210,000 153,000 40,500 193,500 16,500 (16,500) -0NonControlling Share 23,333 17,000 4,500 21,500 1,833 (1,833) -0Entire Value 233,333 * 170,000 45,000 ** 215,000 18,333 (18,333) -0- 4 - 15 Exercise 4-10 (continued) Part C Workpaper Entries- Full year reporting alternative Equity in Subsidiary Income (0.90)(3/12)($60,000) Dividends Declared Star (.90)($10,000) Investment in Star Common Stock - Star Other Contributed Capital Star Retained Earnings Star Purchased Income Difference between Implied and Book Value Investment in Star Noncontrolling Interest 13,500 9,000 4,500 70,000 30,000 70,000 45,000 18,333 210,000 $23,333 18,333 Goodwill 18,333 Difference between Implied and Book Value 4 - 16 Exercise 4-11 Consolidated Statement of Cash Flows Part A Cash flows from operating activities - Direct Method Cash received from customers* Less cash paid for: Merchandise purchases** Selling expenses*** Administrative expenses**** Net cash flow from operating activities * Beginning accounts receivable Plus: Sales Less: ending accounts receivable Cash received from customers ** Cost of Sales Less: beginning inventory Plus: ending inventory Accrual basis purchases Plus: beginning accounts payable Less: ending accounts payable Cash paid for merchandise purchased ***Accrual selling expenses Less: beginning prepaid selling expenses Plus: ending prepaid selling expenses Plus: beginning accrued selling expenses Less: ending accrued selling expenses Cash paid for administrative expenses **** Accrual administrative expenses Plus beginning accrued administrative expenses Less ending accrued administrative expenses Cash paid for administrative expenses Part B Cash flows from operating activities - Indirect Method Consolidated net income Adjustments to convert net income to net cash flows from operating activities: Depreciation expense Increase in accounts receivable Increase in inventory Increase in prepaid selling expenses Decrease in accounts payable Decrease in accrued selling expenses Decrease in accrued administrative expenses Net cash flow from operating activities $ 612,000 $323,000 138,000 102,000 $229,000 701,000 (318,000) $612,000 $263,000 (194,000) 234,000 303,000 99,000 (79,000) $323,000 $122,000 (26,000) 30,000 96,000 (84,000) $138,000 $85,000 56,000 (39,000) $102,000 $ 155,000 76,000 (89,000) (40,000) (4,000) (20,000) (12,000) (17,000) $49,000 563,000 $ 49,000 4 - 17 Exercise 4-12 Part A **Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Land Balance Goodwill Balance Part B Investment in Sulfurst Cash Part C (1) Cost Method 2012 Cash Dividend Income (.8 $24,000) 2013 Cash Dividend Income (.8 $21,600) (2) Partial Equity Method 2012 Investment in Song Company Equity in Subsidiary Income (.8 $40,000) Cash (.8 $24,000) Investment in Song Company 2013 Investment in Song Company Equity in Subsidiary Income (.8 $45,000) Cash Investment in Song Company (.8 $21,600) 32,000 32,000 19,200 19,200 36,000 36,000 17,280 17,280 268,000 268,000 $268,000 192,000 76,000 (16,000) 60,000 (60,000) -0NonControlling Share 67,000 48,000 19,000 (4,000) 15,000 (15,900) -0Entire Value 335,000 240,000 95,000 (20,000) 75,000 (75,000) -0- 19,200 19,200 17,280 17,280 4 - 18 Exercise 4-12 (continued) (3) Complete Equity Method 2012 Investment in Song Company Equity in Subsidiary Income (.8 $40,000) Cash (.8 $24,000) Investment in Song Company 2013 Investment in Song Company Equity in Subsidiary Income (.8 $45,000) Cash Investment in Song Company (.8 $21,600) 32,000 32,000 19,200 19,200 36,000 36,000* 17,280 17,280 *NOTE: There is no difference between the partial and complete equity methods in this exercise because the difference between implied value and book value was attributable to land and goodwill, and no impairment occurred. Had there been differences attributable to depreciable or amortizable assets, then the entries would have been adjusted under the complete equity method to reflect the impact of excess depreciation and/or amortization. Exercise 4-13 1. Since the income statement includes the account equity in net loss of subsidiary, we know that the equity method is being used. 2. Therefore, the controlling interest in consolidated income is the solution to the retained earnings T account, or $195,000. Retained Earnings - Pressing 1/1 380,000 Dividends 75,000 Controlling interest in consolidated income ? 12/31 500,000 Controlling interest in consolidated income = ($500,000 - $380,000 + $75,000) = $195,000. 3. From part 2, income from its independent operations is equal to consolidated income plus the equity loss, or ($195,000 + $55,000) = $250,000. 4 - 19 Exercise 4-13 (continued) 4. Since there is no difference between implied and book value, Pressing Inc.s retained earnings will equal consolidated retained earnings under both the partial and complete equity methods. Therefore, the ending balance in consolidated retained earnings is $500,000. 5. Consolidated dividends equal Pressing Inc.s dividends of $75,000. Because the subsidiary is wholly owned, all its dividends are eliminated. 6. The beginning balance in Stressings retained earnings is the solution to the following T-account. Retained Earnings - Stressing 1/1 Begin. Bal. -?Dividends 24,000 Loss 55,000 12/31 260,000 Therefore, the beginning balance is ($260,000 + $24,000 + $55,000) = $339,000 7. There is no difference between the implied and book value at acquisition. Workpaper entries Investment in Stressing Dividends Declared Stressing Equity in Subsidiary Income (Loss) Common Stock Stressing Other Contributed Capital Stressing Retained Earnings Stressing Difference between Implied and Book Value Investment in Stressing 79,000 24,000 55,000 20,000 380,000 339,000 0 739,000 8. Retained earnings would reflect only the income from its independent operations plus the dividend income from Stressing each year (instead of Stressings earnings). 9. A. The first entry from part 7 would be replaced by the following: Dividend Income Dividends Declared - Stressing Company 24,000 24,000 B. In addition, an entry would be needed to convert to equity/establish reciprocity in the amount of the change in Stressings retained earnings from acquisition to the beginning of the current year. C. After the reciprocity entry, the entry to eliminate the investment account is the same as shown in part 7. 4 - 20 Exercise 4-14 Cash flows from operating activities: Consolidated net income Adjustments to convert consolidated net income to net cash flow from operating activities Depreciation expense (($540,000 + $750,000 + $166,666*) $1,385,555) Increase in inventories ($454,000 $190,000 $140,000) Decrease in accrued payables ($111,000 $150,000 $90,000) Net cash flow from operating activities Cash flows from investing activities: Acquired Lazytoo company (net of cash acquired) Cash flows from financing activities: Proceeds from the issuance of bonds Cash dividends paid ($10,000 + (.10)($5,000)) Net cash flow from financing activities Decrease in cash 300,000 (10,500) 289,500 ($326,500) $155,889 71,111 (124,000) (129,000) (181,889) (26,000) (590,000) * $600,000/0.9 [($200,000 + $300,000)] = $166,667; this is equivalent to doing a CAD Schedule, in which the purchase price is used to derive Implied Value of $666,667. Implied Value minus Book Value of Equity yields the Difference between IV and BV, which is allocated to mark up PPE of the sub. Exercise 4-15B Part A Cost Method (1) Undistributed income is expected to be received as future dividend. Set Company net income $132,000 Set Company dividends 50,000 Undistributed income 82,000 Percent owned 70% Plenty Companys share of undistributed income 57,400 Percent of dividends taxed 20% Future dividends that are taxed 11,480 Income tax rate 40% Deferred tax liability $ 4,592 Workpaper Entry Tax Expense Deferred Tax Liability 4,592 4,592 4 - 21 Exercise 4-15B (continued) (2) Undistributed income is expected to be received as future capital gain. Set Company net income Set Company dividends Undistributed income Percent owned Plenty Companys share of undistributed income Capital gains tax rate Deferred tax liability Workpaper Entry Tax Expense Deferred Tax Liability Part B Partial Equity Method $132,000 50,000 82,000 70% 57,400 20% $11,480 11,480 11,480 (1) Undistributed income is expected to be received as future dividend. Set Company net income $132,000 Set Company dividends 50,000 Undistributed income 82,000 Percent owned 70% Plenty Companys share of undistributed 57,400 Percent of dividends taxed 20% Future dividends that are taxed 11,480 Income tax rate 40% Deferred tax liability $4,592 Plenty Companys Journal Entry Tax Expense Deferred Tax Liability 4,592 4,592 (2) Undistributed income is expected to be received as future capital gain. Set Company net income $132,000 Set Company dividends 50,000 Undistributed income 82,000 Percent owned 70% Plenty Companys share of undistributed 57,400 Capital gains tax rate 20% Deferred tax liability $11,480 Plenty Companys Journal Entry Tax Expense Deferred Tax Liability 11,480 11,480 Part C Complete Equity Method The answer is the same as the partial equity method since the difference between implied and book value relates to land. 4 - 22 Answers to Problems Problem 4-1 Journal Entries - Cost Method Net Income Cumulative Net Cumulative Year (Loss) Income Dividends 2009 1,997,800 1,997,800 500,000 2010 476,000 2,473,800 1,000,000 2011 (179,600) 2,294,200 1,500,000 2012 (323,800) 1,970,400 2,000,000 Part A Cost Method 2009 Investment in Singer Co. Cash Cash (.90)($500,000) Dividend Income 2010 Cash (.90)($500,000) Dividend Income 2011 Cash (.90)($500,000) Dividend Income 2012 Cash (.90)($500,000) 450,000 Dividend Income Investment in Singer Co. (.90 $29,600) To account for liquidating dividend Part B Partial Equity Method 2009 Investment in Singer Co. Cash Cash (.90)($500,000) Investment in Singer Co. Investment in Singer Co. Equity in Subsidiary Income (.90)($1,997,800) 2010 Cash (.90)($500,000) Investment in Singer Co. Investment in Singer Co. Equity in Subsidiary Income (.90)($476,000) 450,000 450,000 428,400 428,400 423,360 26,640 450,000 450,000 450,000 450,000 Undistributed Income 1,497,800 1,473,800 794,200 (29,600) 4,972,000 4,972,000 450,000 450,000 4,972,000 4,972,000 450,000 450,000 1,798,020 1,798,020 4 - 23 Problem 4-1 (continued) 2011 Cash (.90)($500,000) Investment in Singer Co. 450,000 450,000 161,640 450,000 291,420 Equity in Subsidiary Income (.90)($179,600) 161,640 Investment in Singer Co. 2012 Cash (.90)($500,000) Investment in Singer Co. 450,000 Equity in Subsidiary Income (.90)($323,800) 291,420 Investment in Singer Co. Part C Complete Equity Method Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Undervalued depreciable assets (15 year life) Balance * $4,972,000/.90 2009 Investment in Singer Co. Cash Cash (.90)($500,000) Investment in Singer Co. Investment in Singer Co. Equity Income (.90)($1,997,800) 4,972,000 4,972,000 450,000 450,000 1,798,020 1,798,020 723 723 450,000 428,400 428,400 723 723 4,972,000 4,961,160 10,840 (10,840) -0NonEntire Controlling Value Share 552,444 5,524,444 * 551,240 5,512,400 1,204 12,044 (1,204) (12,044) -0-0- Equity in Subsidiary Income ($10,840/15 years) Investment in Singer Co. 2010 Cash (.90)($500,000) Investment in Singer Co. Investment in Singer Co. Equity Income (.90)($476,000) 450,000 Equity in Subsidiary Income ($10,840/15 years) Investment in Singer Co. 4 - 24 2011 Cash (.90)($500,000) Investment in Singer Co. 450,000 450,000 161,640 723 Equity in Subsidiary Income (.90)($179,600) 161,640 Investment in Singer Co. Equity in Subsidiary Income ($10,840/15 years) Investment in Singer Co. 2012 Cash (.90)($500,000) Investment in Singer Co. 450,000 723 450,000 291,420 723 Equity in Subsidiary Income (.90)($323,800) 291,420 Investment in Singer Co. Equity in Subsidiary Income ($10,840/15 years) Investment in Singer Co. 723 4 - 25 Problem 4-2 Part A Parry Corporation uses the cost method. If the cost method is used, Parry Corporation recognizes dividends received as income. Part B Workpaper - Cost Method Parry Corporation and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2009 Parry Sent Eliminating Entries Consolidated Corp. Company Balances Dr. Cr. 476,000 3,500 479,500 285,600 45,500 331,100 148,400 Parry Corp. 154,500 (1) 154,500 121,000 29,500 150,500 4,000 Sent Company 3,500 630,500 406,600 75,000 481,600 3,500 148,900 Eliminating Entries Consolidated Dr. Cr. Balances 630,500 Income Statement Sales Dividend Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Parry Corporation Sent Company Net Income from above Dividend Declared Parry Corporation Sent Company Retained Earnings 12/31 Balance Sheet Cash Accounts Receivable Inventory 12/31 Investment in Sent Company Difference between Implied and Book Value Land Total Assets Accounts Payable Common Stock: Parry Corporation Sent Company Retained Earnings from above Total Liabilities and Equity Problem 4-2 (continued) 76,000 148,400 (17,500) 206,900 84,400 76,000 49,500 140,000 (3,500) 20,000 29,000 56,500 36,500 (1) 23,000 3,500 3,500 19,500 (2) 19,500 4,000 3,500 76,000 148,900 (17,500) 0 207,400 113,400 132,500 86,000 (2) 140,000 (2) 20,500 (3) 20,500 4,000 12,000 (3) 20,500 353,900 134,000 27,000 14,000 120,000 100,000 (2) 100,000 206,900 20,000 23,000 353,900 134,000 164,000 3,500 164,000 36,500 368,400 41,000 120,000 207,400 368,400 4 - 26 (1) To eliminate intercompany dividends (2) To eliminate investment in Sent Company (3) To eliminate difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Undervalued land Balance 140,000 119,500 20,500 (20,500) -0NonControlling Share 0 0 0 (0) -0Entire Value 140,000 119,500 20,500 (20,500) -0- 4 - 27 Problem 4-3 Part A Perkins Company uses the equity method. If the equity method is used, Perkins Company recognizes investment income from the investment based on the percentage owned times the investee net income. Part B Perkins Company and Subsidiary Consolidated Statements Workpaper Workpaper - Equity Method For the Year Ended December 31, 2010 Perkins Schultz Company Company Income Statement Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Perkins Company Schultz Company Net Income from Above Dividends Declared Perkins Company Schultz Company Retained Earnings 12/31 Balance Sheet Cash Inventory 12/31 Investment in Schultz 380,000 70,500 450,500 225,000 40,000 265,000 185,500 170,000 (1) 70,500 170,000 59,500 40,000 99,500 70,500 550,000 284,500 80,000 364,500 185,500 Eliminating Entries Dr. Cr. Consolidated Balances 550,000 70,500 25,000 185,500 (15,000) 195,500 25,000 105,000 222,000 (10,000) 114,500 30,000 97,500 (2) 10,000 (1) 70,500 (3) 161,500 (3) 15,000 (4) 15,000 25,000 54,000 (3) 54,000 70,500 70,500 185,500 (15,000) 124,500 (2) 10,000 10,000 195,500 55,000 202,500 Difference between Implied & Book Value Land 111,000 Goodwill Total 463,000 Accounts Payable Common Stock Perkins Company Schultz Company Other Contributed Capital Perkins Company Schultz Company Retained Earnings from above 72,500 160,000 97,000 (4) 15,000 224,500 17,500 208,000 15,000 480,500 90,000 160,000 75,000 (3) 75,000 35,000 195,500 4 - 28 17,500 (3) 17,500 114,500 124,500 10,000 35,000 195,500 Total Problem 4-3 (continued) 463,000 224,500 257,000 257,000 480,500 (1) To eliminate intercompany dividends (2) To eliminate investment in Schultz Company (3) To eliminate difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Undervalued land Balance 161,500 146,500 15,000 (15,000) -0NonControlling Share 0 0 0 (0) -0Entire Value 161,500 146,500 15,000 (15,000) -0- 4 - 29 Problem 4-4 Workpaper - Cost Method Income Statement Sales Dividend Income ($22,000 .92) Total Revenue Cost of Goods Sold: Inventory, 1/1 Purchases Available for Sale Inventory, 12/31 Cost of Goods Sold Selling Expenses Other Expenses Total Cost and Expense Net/Consolidated Income Noncontrolling Interest in Consol. Inc. Net Income to Retained Earnings Retained Earnings Statement 1/1 Retained Earnings: Place Company Shaw Inc. Net Income from Above Dividends Declared Place Company Shaw Inc. 12/31/ Retained Earnings to Balance Sheet Place Company Shaw Inc. Eliminations Noncontrolling Consolidated Debit Credit Interest Balances 830,000 830,000 120,000 390,000 510,000 40,000 470,000 48,000 28,000 546,000 284,000 (4,960) 279,040 550,000 280,000 20,240 (1) 20,240 570,240 280,000 70,000 240,000 310,000 25,000 285,000 28,000 15,000 328,000 242,240 242,240 50,000 150,000 200,000 15,000 185,000 20,000 13,000 218,000 62,000 62,000 20,240 4,960 * 4,960 225,000 170,000 (2) 170,000 242,240 62,000 20,240 (35,000) (22,000) 432,240 210,000 (1) 20,240 190,240 20,240 (1,760) 3,200 4,960 225,000 279,040 (35,000) 469,040 167,350 395,000 40,000 515,783 1,118,133 122,110 60,000 150,000 100,000 (2) 100,000 279,000 3,200 34,783 37,983 469,040 37,983 1,118,133 Balance Cash Sheet 80,350 87,000 Accounts and Notes Receivable 200,000 210,000 (4) 15,000 Inventory 25,000 15,000 Investment in Shaw Inc.. 400,000 (2) 400,000 Difference b/w Implied & Book Value (2) 15,783 (3) 15,783 Plant Assets 300,000 200,000 (3) 15,783 Total 1,005,350 512,000 Accounts and Notes Payable Other Liabilities Common Stock: Place Company Shaw Inc. Other Contributed Capital Place Company Shaw Inc. Retained Earnings from above 1/1 Noncontrolling Interest 12/31 Noncontrolling Interest Total *(.08 $62,000) = $4,960 99,110 45,000 150,000 279,000 149,000 (2) 149,000 432,240 210,000 190,240 20,240 (2) 34,783 1,005,350 512,000 485,806 485,806 38,000 (4) 15,000 15,000 Problem 4-4 (continued) (1) To eliminate intercompany dividends. (2) To eliminate Investment in Shaw and establish noncontrolling interest account. (3) To allocate the difference between implied and book value. (4) To eliminate intercompany receivables and payables. Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Undervalued land Balance * $400,000/.92 400,000 385,480 14,520 (14,520) -0 NonControlling Share 34,783 33,520 1,263 (1,263) -0Entire Value 434,783 * 419,000 15,783 (15,783) -0- Problem 4-5 Part A Perez Company uses the cost method. If the cost method is used, Perez Company recognizes dividends received as income. Part B Workpaper Cost Method Perez Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2014 Perez Sanchez Company Company Income Statement Sales 110,000 Dividend Income 10,800 Total Revenue 120,800 Cost of Goods Sold Inventory 1/1 14,000 Purchases 84,000 Available for Sale 98,000 Inventory 12/31 40,000 Cost of Goods Sold 58,000 Other Expenses 10,000 Total Cost and Expense 68,000 Net Income 52,800 Noncontrolling Interest Net Income to Retained Earnings 52,800 Retained Earnings Statement Retained Earnings 1/1 Perez Company Sanchez Company Net Income from above Dividends Declared Perez Company Sanchez Company Retained Earnings 12/31 * ($13,000 .10) = $1,300 42,000 (3) 10,800 42,000 8,000 20,000 28,000 15,000 13,000 16,000 29,000 13,000 13,000 10,800 1,300 * 1,300 152,000 22,000 104,000 126,000 55,000 71,000 26,000 97,000 55,000 (1,300) 53,700 Eliminating Entries Dr. Cr. Noncontrolling Consolidated Interest Balance 152,000 50,000 52,800 (10,000) 92,800 (12,000) 31,000 30,000 (4) 30,000 13,000 10,800 (1) 16,200 1,300 66,200 53,700 (10,000) (3) 10,800 40,800 27,000 (1,200) 100 109,900 Problem 4-5 (continued) Perez Sanchez Company Company Balance Sheet Cash Accounts Receivable Inventory 12/31 Advance to Sanchez Investment in Sanchez Difference b/w Implied & Book Value Plant and Equipment Land Goodwill Total Accounts Payable Other Liabilities Advances from Perez Common Stock: Perez Company Sanchez Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 13,000 22,000 40,000 8,000 85,000 50,000 17,800 14,000 36,000 15,000 (1) (4) 44,000 6,000 (5) 235,800 115,000 6,000 37,000 6,000 8,000 (2) 100,000 92,800 70,000 (4) 31,000 70,000 40,800 (4) 159,888 27,000 11,244 ** 159,888 100 11,244 11,344 8,000 100,000 109,900 11,344 270,244 12,444 (2) 8,000 16,200 (4) 101,200 12,444 (5) 12,444 94,000 23,800 12,444 270,244 12,000 37,000 Eliminating Entries Dr. Cr. Noncontrol. Consolidated Interest Balance 27,000 58,000 55,000 235,800 115,000 ** $9,444 + [($30,000 $12,000) x .10] = $11,244 (1) To establish reciprocity/convert to the equity method (2) To eliminate intercompany advances (3) To eliminate intercompany dividends (4) To eliminate investment in Sanchez Company and establish noncontrolling interest account (5) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Goodwill Balance *85,000/.90 85,000 73,800 11,200 (11,200) -0NonControlling Share 9,444 8,200 1,244 (1,244) -0Entire Value 94,444 * 82,000 12,444 (12,444) -0- Problem 4-6 Part A Plank Company uses the equity method. If the equity method is used, Plank Company recognizes investment income from the investment based on the percentage owned times the investee net income. Part B Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Undervalued Land Balance * $53,000/.80 Journal entries for the worksheet on the following page (1) To eliminate intercompany receivables and payables (2) To eliminate intercompany dividends and equity in subsidiary income (3) To eliminate investment in Scoba Company and establish noncontrolling interest account (4) To allocate the difference between implied and book value * $13,250 + [($15,000 $4,000) x .20) = $15,450 53,000 51,200 1,800 (1,800) -0- NonControlling Share 13,250 12,800 450 (450) -0- Entire Value 66,250 * 64,000 2,250 (2,250) -0- Problem 4-6 (continued) Plank Company and Subsidiary Consolidated Statements Workpaper Workpaper - Equity Method For the Year Ended December 31, 2013 Plank Scoba Company Company Income Statement Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Noncontrolling Interest ($18,000 . 2) Eliminating Entries Dr. Cr. Noncontrolling Consolidated Interest Balance 155,000 105,000 14,400 119,400 85,400 10,000 95,400 24,000 24,000 50,000 (2) 14,400 50,000 20,000 12,000 32,000 18,000 3,600 18,000 14,400 3,600 155,000 105,400 22,000 127,400 27,600 (3,600) 24,000 Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Plank Company Scoba Company Net Income from above Dividends Declared Plank Company Scoba Company Retained Earnings 12/31 48,800 24,000 (10,000) 62,800 (8,000) 25,000 22,000 17,000 8,000 (2) 29,400 6,400 6,400 (1,600) 2,000 15,000 18,000 (3) 15,000 14,400 3,600 48,800 24,000 (10,000) 62,800 64,000 35,000 23,000 Balance Sheet Cash 42,000 Accounts Receivable 21,000 Inventory 12/31 15,000 Investment in Scoba 69,800 ($61,000 +$14,000 - $6,400) Difference b/w Implied & Bk Value Land 52,000 Total assets 199,800 Accounts Payable Other Liabilities Common Stock Plank Company Scoba Company Other Contributed Capital Plank Company Scoba Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 Total liabilities and equity 12,000 5,000 100,000 (1) 3,000 48,000 95,000 6,000 4,000 (3) (4) (1) (2) 8,000 (3) 61,800 2,250 (4) 2,250 2,250 3,000 102,250 224,250 15,000 9,000 100,000 55,000 20,000 62,800 5,000 25,000 (3) 55,000 20,000 (3) 5,000 29,400 (3) 6,400 15,450* 96,900 2,000 15,450 17,450 62,800 17,450 224,250 199,800 95,000 96,900 Problem 4-7 Workpaper - Cost Method Price Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2013 Price Score Company Company Income Statement Sales Dividend and Interest Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Price Company Score Company Net Income from above Dividends Declared Price Company Score Company Retained Earnings 12/31 Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 1,920,000 1,420,000 500,000 52,500 (3) 45,000 (4) 7,500 1,472,500 500,000 822,000 242,000 250,500 124,000 (4) 1,072,500 366,000 400,000 134,000 400,000 134,000 52,500 7,500 7,500 13,400 * 13,400 1,920,000 1,064,000 367,000 1,431,000 489,000 (13,400) 475,600 687,000 400,000 (70,000 ) (50,000 ) 1,017,000 294,000 210,000 (5) 210,000 134,000 52,500 (1) 108,000 7,500 13,400 795,000 475,600 (70,000) (3) 262,500 45,000 160,500 (5,000) 8,400 1,200,600 * $134,000 .10 = $13,400. Problem 4-7 (continued) Price Score Company Company Balance Sheet Cash Accounts Receivable Note Receivable Inventory 12/31 Investment in Score Company Difference b/w Implied & Book Value Plant and Equipment Land Goodwill Total Accounts Payable Notes Payable Common Stock: Price Company Score Company Other Contributed Capital Price Company Score Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 109,000 166,000 75,000 309,000 450,000 940,000 160,000 78,000 94,000 Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 187,000 260,000 (2) 75,000 467,000 (1) 108,000 (5) 558,000 (5) 50,000 (6) 50,000 158,000 420,000 70,000 (6) 50,000 2,209,000 820,000 132,000 300,000 500,000 200,000 (5) 200,000 260,000 160,000 (5) 160,000 1,017,000 294,000 262,500 160,500 8,400 (5) 62,000 ** 62,000 70,400 905,500 905,500 46,000 120,000 (2) 75,000 1,360,000 230,000 50,000 2,554,000 178,000 345,000 500,000 260,000 1,200,600 70,400 2,554,000 2,209,000 820,000 ** $50,000 + [($210,000 $90,000) x .10] = $62,000 (1) To establish reciprocity/convert to the equity method ($210,000 - $90,000) .90 (2) To eliminate intercompany receivables and payables (3) To eliminate intercompany dividends (4) To eliminate intercompany interest expense and income (5) To eliminate investment in Score Company and create noncontrolling interest account (6) To allocate the difference between implied and book value Problem 4-7 (continued) Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Goodwill Balance *$450,000/.90 450,000 405,000 45,000 (45,000) -0NonControlling Share 50,000 45,000 5,000 (5,000) -0Entire Value 500,000 * 450,000 50,000 (50,000) -0- Problem 4-8 Workpaper - Cost Method Part A 2010 Income Statement Sales Dividend Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Parker Company Sid Company Net Income from above Dividends Declared Parker Company Sid Company Retained Earnings 12/31 Parker Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2010 Parker Sid Company Company 260,000 19,000 279,000 130,000 20,000 150,000 129,000 129,000 80,000 (1) 19,000 80,000 40,000 14,000 54,000 26,000 26,000 19,000 1,300 1,300 340,000 170,000 34,000 204,000 136,000 (1,300) 134,700 Eliminating Entries Dr. Cr. Noncontrolling Consolidated Interest Balance 340,000 40,000 129,000 (20,000) 149,000 62,000 32,000 30,000 160,000 105,000 29,000 (20,000) 29,000 30,000 29,000 16,000 (2) 160,000 (2) 15,421 (3) 15,421 82,000 34,000 (3) 15,421 418,000 191,000 19,000 10,000 180,000 120,000 (2) 120,000 60,000 149,000 10,000 (2) 10,000 29,000 42,000 19,000 (2) 8,421 202,842 300 8,421 8,721 12,000 20,000 42,000 (1) 19,000 19,000 (1,000) 300 23,000 (2) 23,000 26,000 19,000 1,300 40,000 134,700 (20,000) 154,700 92,000 61,000 46,000 Balance Sheet Cash Accounts Receivable Inventory 12/31 Investment in Sid Company Difference b/w Implied & Book Value Plant and Equipment Land Goodwill Total Accounts Payable Other Liabilities Common Stock Parker Company Sid Company Other Contributed Capital Parker Company Sid Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 187,000 63,000 15,421 464,421 31,000 30,000 180,000 60,000 154,700 8,721 464,421 418,000 191,000 202,842 Problem 4-8 (continued) (1) To eliminate intercompany dividends (2) To eliminate investment in Sid Company and create noncontrolling interest account (3) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Goodwill Balance *$160,000/.95 Part B 2011 Workpaper Cost Method Parker Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2011 Parker Sid Eliminating Entries Company Company Dr. Cr. Income Statement Sales Dividend Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Parker Company Sid Company Net Income from above Dividends Declared Parker Company Sid Company Retained Earnings 12/31 * ($50,000 .05) = $2,500. 240,000 19,000 259,000 155,000 30,000 185,000 74,000 74,000 120,000 (2) 19,000 120,000 52,000 18,000 70,000 50,000 50,000 19,000 2,500 * 2,500 360,000 207,000 48,000 255,000 105,000 (2,500) 102,500 Noncontrolling Consolidated Interest Balance 360,000 160,000 145,350 14,650 (14,650) -0- NonControlling Share 8,421 7,650 771 (771) -0- Entire Value 168,421 * 153,000 15,421 (15,421) -0- 149,000 74,000 (20,000) 203,000 (20,000) 59,000 29,000 (3) 29,000 50,000 19,000 (1) 5,700 2,500 154,700 102,500 (20,000) (2) 19,000 48,000 24,700 (1,000) 1,500 237,200 Problem 4-8 (continued) Parker Sid Company Company Balance Sheet Cash Accounts Receivable Inventory 12/31 Investment in Sid Difference b/w Implied & Book Value Plant and Equipment Land Goodwill Total Accounts Payable Other Liabilities Common Stock: Parker Company Sid Company Other Contributed Capital Parker Company Sid Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 67,000 56,000 38,000 160,000 124,000 29,000 474,000 16,000 15,000 180,000 120,000 (3) 120,000 60,000 203,000 10,000 (3) 10,000 59,000 48,000 (3) 474,000 210,500 214,542 24,700 8,721 ** 214,542 1,500 8,721 10,221 60,000 237,200 10,221 539,921 16,000 32,000 48,500 (1) 5,700 (3) 165,700 (3) 15,421 (4) 15,421 80,000 34,000 (4) 15,421 210,500 7,000 14,500 204,000 63,000 15,421 539,921 23,000 29,500 180,000 Eliminating Entries Dr. Cr. Noncontroll- Consolidated ing Balance Interest 83,000 88,000 86,500 ** $8,421 + [($29,000 $23,000) x .05) = $8,721 (1) To establish reciprocity/convert to the equity method ($29,000 $23,000 ) .95 = $5,700 (2) To eliminate intercompany dividends (3) To eliminate investment in Sid Company and create noncontrolling interest account (4) To allocate the difference between implied and book value Problem 4-9 Workpaper - Cost Method Pledge Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2012 Pledge Stom Company Company Eliminating Entries Dr. Cr. Noncontrolling Consolidated Interest Balance 1,220,000 3,000 1,223,000 645,000 283,400 928,400 294,600 (18,600) 276,000 Income Statement Sales Dividend and Interest Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Pledge Company Stom Company Net Income from above Dividends Declared Pledge Company Stom Company Retained Earnings 12/31 Balance Sheet Cash and Marketable Securities Accounts Receivable 880,000 30,600 910,600 460,000 225,000 685,000 225,600 225,600 340,000 3,000 (3) 24,000 (4) 6,600 343,000 185,000 65,000 (4) 250,000 93,000 93,000 30,600 6,600 18,600 * 18,600 6,600 422,000 225,600 (50,000) 597,600 184,600 182,000 (30,000) 383,000 72,000 180,000 212,000 320,000 (6) 320,000 93,000 30,600 (1) 128,000 6,600 (3) 350,600 24,000 158,600 18,600 (6,000) 12,600 550,000 276,000 (50,000) 776,000 256,600 (2) (5) 55,000 6,600 Inventory 12/31 214,000 Investment in Stom 300,000 Difference b/w Implied & Bk Value Plant and Equipment 309,000 Land 85,000 Total 1,274,600 Accounts Payable Accrued Expenses Notes Payable Common Stock: Pledge Company Stom Company Other Contributed Capital Pledge Company Stom Company Treasury Stock Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 Total 96,000 31,000 100,000 300,000 300,400 426,000 610,000 215,000 1,808,000 175,000 42,400 245,000 300,000 (1) 128,000 (6) 428,000 (6) 55,000 (7) 55,000 301,000 75,000 (7) 55,000 840,000 79,000 18,000 (5) 6,600 200,000 (2) 55,000 100,000 (6) 100,000 150,000 597,600 80,000 (6) 80,000 (20,000) (6) 383,000 350,600 (6) 840,000 830,200 20,000 158,600 12,600 107,000** 107,000 119,600 830,200 150,000 776,000 119,600 1808,000 1,274,600 Problem 4-9 (continued) * ($93,000 .20) = $18,600. ** $75,000 + [($320,000 $160,000) x .20) = $107,000 (1) To establish reciprocity/convert to the equity method ($320,000 - $160,000) .80 (2) To eliminate intercompany note receivables and payables (3) To eliminate intercompany dividends (4) To eliminate intercompany interest expense and income (5) To eliminate intercompany interest receivables and payables (6) To eliminate investment in Stom Company and create noncontrolling interest account (7) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Undervalued land Balance *$300,000/.80 300,000 256,000 44,000 (44,000) -0NonControlling Share 75,000 64,000 11,000 (11,000) -0Entire Value 375,000 * 320,000 55,000 (55,000) -0- Problem 4-10 Workpaper - Partial Equity Method Poco Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2010 Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 1,170,000 (1) 164,000 410,000 125,000 80,000 205,000 205,000 205,000 164,000 41,000 * 41,000 1,170,000 535,000 180,000 715,000 455,000 (41,000) 414,000 Poco Solo Company Company Income Statement Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Poco Company Solo Company Net Income from above Dividends Declared Poco Company Solo Company Retained Earnings 12/31 Balance Sheet Cash Inventory Investment in Solo Difference b/w Implied & Book Value Land Goodwill Total Accounts Payable Common Stock: Poco Company Solo Company Other Contributed Capital Poco Company Solo Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 * $205,000 .20 = $41,000 760,000 164,000 924,000 410,000 100,000 510,000 414,000 414,000 410,000 50,000 414,000 (30,000) 434,000 161,500 210,000 402,000 (15,000) 250,000 125,000 195,000 (1) 152,000 (2) 250,000 (2) 67,500 (3) 67,500 150,000 (3) 67,500 848,500 154,500 200,000 150,000 60,000 434,000 35,000 250,000 (2) 35,000 224,000 12,000 (2) 62,500 544,000 544,000 38,000 62,500 100,500 (2) 150,000 470,000 35,000 (1) 12,000 224,000 12,000 (3,000) 38,000 60,000 205,000 (2) 60,000 164,000 41,000 50,000 414,000 (30,000) 434,000 286,500 405,000 75,000 225,000 67,500 984,000 189,500 200,000 60,000 434,000 100,500 984,000 848,500 470,000 Problem 4-10 (continued) (1) To eliminate intercompany income and dividends (2) To eliminate investment in Solo Company and create noncontrolling interest account (3) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Goodwill Balance *$250,000/.80 Problem 4-11 Workpaper - Equity Method Price Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2013 Price Score Company Company Income Statement Sales Equity in Subsidiary Income Interest Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Price Company Score Company Net Income from above Dividends Declared Price Company Score Company Retained Earnings 12/31 * $134,000 .10 = $13,400. 1,420,000 120,600 7,500 1,548,100 822,000 250,500 1,072,500 475,600 500,000 (1) 120,600 (3) 7,500 500,000 242,000 124,000 366,000 134,000 128,100 (3) 7,500 13,400 * 13,400 1,920,000 1,064,000 367,000 1,431,000 489,000 (13,400) 475,600 Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 1,920,000 250,000 196,000 54,000 (54,000) -0- NonControlling Share 62,500 49,000 13,500 (13,500) -0- Entire Value 312,500 * 245,000 67,500 (67,500) -0- 475,600 134,000 7,500 795,000 210,000 (4) 210,000 475,600 134,000 128,100 (70,000) (50,000) 1,200,600 294,000 338,100 (1) 45,000 52,500 (5,000) 8,400 7,500 13,400 795,000 475,600 (70,000) 1,200,600 Problem 4-11 (continued) Balance Sheet Cash Accounts Receivable Note Receivable Inventory 12/31 Investment in Score Difference b/w Implied & Book Value Plant and Equipment Land Goodwill Total Accounts Payable Notes Payable Common Stock: Price Company Score Company Other Contributed Capital Price Company Score Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 Total Price Score Company Company 109,000 166,000 75,000 309,000 633,600 78,000 94,000 Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 187,000 260,000 (2) 75,000 467,000 (4) 558,000 (1) 75,600 (4) 50,000 (5) 50,000 158,000 940,000 160,000 2,392,600 132,000 300,000 500,000 420,000 70,000 (5) 50,000 820,000 46,000 120,000 (2) 75,000 200,000 (4) 200,000 1,360,000 230,000 50,000 2,554,000 178,000 345,000 500,000 260,000 260,000 1,200,600 2,392,600 160,000 (4) 160,000 294,000 338,100 (4) 820,000 873,100 52,500 8,400 62,000 ** 62,000 70,400 873,100 1,200,600 70,400 2,554,000 ** $50,000 + [($210,000 $90,000) x .10] = $62,000 (1) To eliminate intercompany income and dividends (2) To eliminate intercompany receivables and payables (3) To eliminate intercompany interest expense and income (4) To eliminate investment in Score company and create noncontrolling interest account (5) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Goodwill Balance *$450,000/.90 450,000 405,000 45,000 (45,000) -0NonControlling Share 50,000 45,000 5,000 (5,000) -0Entire Value 500,000 * 450,000 50,000 (50,000) -0- Problem 4-12 Part A - 2010 Parker Company and Subsidiary Consolidated Statements Workpaper Workpaper - Equity Method For the Year Ended December 31, 2010 Parker Sid Company Company Income Statement Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Operating Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Parker Company Sid Company Net Income from above Dividends Declared Parker Company Sid Company Retained Earnings 12/31 Balance Sheet Cash Accounts Receivable Inventory 12/31 Investment in Sid Company Difference b/w Implied & Book Value Plant and Equipment Land Total Accounts Payable Other Liabilities Common Stock Parker Company Sid Company Other Contributed Capital Parker Company Sid Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 *($20,000 .10) = $2,000 300,000 18,000 318,000 150,000 35,000 185,000 133,000 133,000 95,000 (1) 18,000 95,000 60,000 15,000 75,000 20,000 20,000 18,000 2,000 * 2,000 395,000 210,000 50,000 260,000 135,000 (2,000) 133,000 Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 395,000 55,000 133,000 (20,000) 168,000 65,000 40,000 25,000 184,500 (15,000) 30,000 35,000 30,000 15,000 (1) 4,500 (2) 180,000 (2) 35,000 (3) 35,000 85,000 45,000 (3) 35,000 210,000 15,000 25,000 120,000 (2) 120,000 70,000 168,000 20,000 (2) 20,000 30,000 43,000 13,500 (2) 20,000 253,000 500 20,000 20,500 (1) 13,500 43,000 13,500 (1,500) 500 25,000 (2) 25,000 20,000 18,000 2,000 55,000 133,000 (20,000) 168,000 100,000 70,000 40,000 110,000 48,500 473,000 20,000 15,000 200,000 195,000 128,500 533,500 35,000 40,000 200,000 70,000 168,000 20,500 533,500 473,000 210,000 253,000 Problem 4-12 (continued) (1) To eliminate intercompany dividends and income (2) To eliminate investment in Sid Company and create noncontrolling interest account (3) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Undervalued land Balance *$180,000/.90 180,000 148,500 31,500 (31,500) -0NonControlling Share 20,000 16,500 3,500 (3,500) -0Entire Value 200,000 * 165,000 35,000 (35,000) -0- Problem 4-12 (continued) Part B - 2011 Parker Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2011 Parker Sid Company Company Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 370,000 (1) 22,500 110,000 65,000 20,000 85,000 25,000 25,000 22,500 2,500 * 2,500 370,000 225,000 55,000 280,000 90,000 (2,500) 87,500 Income Statement Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Operating Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Parker Company Sid Company Net Income from above Dividends Declared Parker Company Sid Company Retained Earnings 12/31 Balance Sheet Cash Accounts Receivable Inventory 12/31 Investment in Sid Company Difference b/w Implied & Book Value Plant and Equipment Land Total Accounts Payable Other Liabilities Common Stock: Parker Company Sid Company Other Contributed Capital Parker Company Sid Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 260,000 22,500 282,500 160,000 35,000 195,000 87,500 87,500 110,000 168,000 87,500 (20,000) 235,500 70,000 60,000 40,000 193,500 125,000 48,500 537,000 16,500 15,000 200,000 120,000 (2) 120,000 70,000 235,500 20,000 (2) 20,000 40,000 52,500 (2) 13,500 20,500** 1,000 20,500 21,500 (15,000) 40,000 20,000 35,000 30,000 (1) 9,000 (2) 184,500 (2) 35,000 (3) 35,000 90,000 45,000 (3) 35,000 220,000 16,000 24,000 (1) 52,500 13,500 13,500 (1,500) 1,000 30,000 (2) 30,000 25,000 22,500 2,500 168,000 87,500 (20,000) 235,500 90,000 95,000 70,000 215,000 128,500 598,500 32,500 39,000 200,000 70,000 235,500 21,500 598,500 537,000 220,000 262,500 262,500 * ($25,000 .10) = $2,500; ** $20,000 + [($30,000 $25,000) x .10] = $20,500 (1) To eliminate intercompany dividends and income (2) To eliminate investment in Sid company and create noncontrolling interest account (3) To allocate the difference between implied and book value Problem 4-13 Workpaper - Equity Method Income Statement Sales Equity in Subsidiary Income Interest Income Total Revenue Cost of Goods Sold Operating Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Pledge Company Stom Company Net Income from above Dividends Declared Pledge Company Stom Company Retained Earnings 12/31 Balance Sheet Cash and Marketable Securities Accounts Receivable Inventory 12/31 Investment in Stom Pledge Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2012 Pledge Company 880,000 74,400 6,600 961,000 460,000 225,000 685,000 276,000 276,000 Stom Company 340,000 Eliminating Entries Dr. Cr. Noncontroll- Consolidated ing Interest Balance 1,220,000 3,000 1,223,000 645,000 283,400 928,400 294,600 (18,600) 276,000 (1) 74,400 3,000 (3) 6,600 343,000 185,000 65,000 (3) 250,000 93,000 93,000 81,000 6,600 18,600 * 18,600 6,600 550,000 276,000 (50,000) 776,000 184,600 182,000 214,000 478,400 (30,000) 383,000 72,000 180,000 212,000 (1) (5) (5) 55,000 (6) 301,000 75,000 (6) 55,000 840,000 79,000 18,000 (4) 6,600 200,000 (2) 55,000 100,000 (5) 100,000 150,000 776,000 1,453,000 80,000 (5) 80,000 (20,000) (5) 383,000 401,000 (5) 840,000 752,600 20,000 30,600 12,600 107,000** 107,000 119,600 752,600 50,400 428,000 55,000 (1) 401,000 24,000 30,600 (6,000) 12,600 320,000 (5) 320,000 93,000 81,000 6,600 18,600 550,000 276,000 (50,000) 776,000 256,600 (2) (4) 55,000 6,600 300,400 426,000 Difference b/w Implied & Book Value Plant and Equipment 309,000 Land 85,000 Total 1,453,000 Accounts Payable Accrued Expenses Notes Payable Common Stock: Pledge Company Stom Company Other Contributed Capital Pledge Company Stom Company Treasury Stock Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 Total 96,000 31,000 100,000 300,000 610,000 215,000 1,808,000 175,000 42,400 245,000 300,000 150,000 776,000 119,600 1,808,000 Problem 4-13 (continued) * $93,000 .20 = $18,600. ** $75,000 + [($320,000 $160,000) x .20) = $107,000 (1) To eliminate intercompany dividends and income (2) To eliminate intercompany note receivables and payables (3) To eliminate intercompany interest expense and income (4) To eliminate intercompany interest receivables and payables (5) To eliminate investment in Stom company and create noncontrolling interest account (6) To allocate the difference between Implied and Book Value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Undervalued land Balance *$300,000/.80 300,000 256,000 44,000 (44,000) -0NonControlling Share 75,000 64,000 11,000 (11,000) -0Entire Value 375,000 * 320,000 55,000 (55,000) -0- Problem 4-14 Punca Company and Subsidiary Consolidated Statements Workpaper Workpaper - Interim basis, Cost Method For the Year Ended December 31, 2010 Punca Surrano Company Company Income Statement Sales Dividend Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Net Income Purchased Noncontrolling Interest* Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Punca Company Surrano Company Net Income from above Dividends Declared Punca Company Surrano Company Retained Earnings 12/31 Balance Sheet Current Assets Investment in Surrano Difference b/w Implied & Book Value Plant and Equipment Total Accounts and Notes Payable Dividends Payable Common Stock: Punca Company Surrano Company Other Contributed Capital Punca Company Surrano Company Treasury Stock Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 Total *$148,500 x .15 = $22,275 Eliminating Entries Dr. Cr. Noncontrolli Consolidated ng Balance Interest 3,400,000 6,000 3,406,000 2,299,000 665,000 2,964,000 442,000 (148,500) (22,275) 271,225 2,100,000 1,300,000 42,500 6,000 (1) 42,500 2,142,500 1,306,000 1,540,000 759,000 415,000 250,000 1,955,000 1,009,000 187,500 297,000 (3) 148,500 187,500 297,000 191,000 22,275 22,275 355,000 187,500 0 542,500 150,000 590,000 1,250,000 1,990,000 277,500 270,000 40,000 (3) 40,000 900,000 542,500 250,000 (3) 250,000 (48,000) (3) 488,000 432,000 (3) 930,000 889,736 48,000 42,500 104,118 889,736 14,775 104,118 118,893 (50,000) 488,000 180,000 (1) 432,000 42,500 42,500 (7,500) 14,775 241,000 (3) 241,000 297,000 191,000 22,275 355,000 271,225 626,225 287,500 (2) 42,500 (3) 590,000 (3) 62,618 (4) 62,618 750,000 (4) 62,618 930,000 150,000 50,000 (2) 42,500 2,062,618 2,350,118 427,500 7,500 270,000 900,000 626,225 118,893 2,350,118 1,990,000 Problem 4-14 (continued) (1) To eliminate intercompany dividends (2) To eliminate intercompany dividends receivable and payable (3) To eliminate investment in Surrano company and create noncontrolling interest account (4) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Equity ($531,000 - $48,000) Subsidiary Income purchased (6/12)($297,000) Total book value Difference between implied and book value Undervalued land Balance *$590,000/.85 590,000 410,550 126,225 536,775 53,225 (53,225) -0NonControlling Share 104,118 72,450 22,275 94,725 9,393 (9,393) -0Entire Value 694,118 * 483,000 148,500 631,500 62,618 (62,618) -0- Problem 4-15 Worksheet - Cost Method Punca Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2010 Punca Surrano Company Company Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 2,750,000 3,000 2,753,000 1,919,500 540,000 2,459,500 293,500 (22,275) 271,225 Income Statement Sales Dividend Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Noncontrolling Interest* Net Income to Retained Earnings Retained Earnings Statement Retained Earnings Punca Company 1/1 Surrano Company 7/1 Net Income from above Dividends Declared Punca Company 1/1 Surrano Company 7/1 Retained Earnings 12/31 Balance Sheet Current Assets Investment in Surrano Difference b/w Implied & Book Value Plant and Equipment Total Accounts and Notes Payable Dividends Payable Common Stock: Punca Company 1/1 Surrano Company 7/1 Other Contributed Capital Punca Company 1/1 Surrano Company 7/1 Treasury Stock Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 Total *$148,500 x .15 = $22,275 2,100,000 42,500 2,142,500 1,540,000 415,000 1,955,000 187,500 187,500 650,000 3,000 (1) 42,500 653,000 379,500 125,000 504,500 148,500 148,500 42,500 22,275 22,275 355,000 187,500 0 542,500 150,000 590,000 1,250,000 1,990,000 277,500 270,000 40,000 (3) 40,000 900,000 542,500 250,000 (3) 250,000 (48,000) (3) 48,000 488,000 432,000 42,500 (3) 104,118 930,000 889,736 889,736 14,775 104,118 118,893 (50,000) 488,000 180,000 432,000 (1) 42,500 42,500 (7,500) 14,775 389,500 (3) 389,500 148,500 42,500 22,275 355,000 271,225 626,225 287,500 (2) 42,500 (3) 590,000 (3) 62,618 (4) 62,618 750,000 (4) 62,618 930,000 150,000 50,000 (2) 42,500 2,062,618 2,350,118 427,500 7,500 270,000 900,000 626,225 118,893 2,350,118 1,990,000 Problem 4-15 (continued) (1) To eliminate intercompany dividends (2) To eliminate intercompany dividends receivable and payable (3) To eliminate investment in Surrano company and create noncontrolling interest account (4) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Equity ($531,000 - $48,000) Subsidiary Income purchased (6/12)($297,000) Total book value Difference between implied and book value Undervalued land Balance *$590,000/.85 590,000 410,550 126,225 536,775 53,225 (53,225) -0NonControlling Share 104,118 72,450 22,275 94,725 9,393 (9,393) -0Entire Value 694,118 * 483,000 148,500 631,500 62,618 (62,618) -0- Problem 4-16 Workpaper - Interim Basis, Partial Equity Method Pillow Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December 31, 2009 Pillow Satin Company Company Income Statement Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Net Income Purchased Noncontrolling Interest * Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Pillow Company Satin Company Net Income from above Dividends Declared Pillow Company Satin Company Retained Earnings 12/31 Balance Sheet Current Assets Investment in Satin Difference b/w Implied & Book Value Plant and Equipment Total Accounts and Notes Payable Dividends Payable Common Stock: Pillow Company Satin Company Other Contributed Capital Pillow Company Satin Company Treasury Stock Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 Total * ($150,000 .10) = $15,000. **$52,667 - $5,000 = $47,667 1,940,000 90,000 2,030,000 1,261,000 484,000 1,745,000 285,000 285,000 976,000 (1) 90,000 976,000 584,000 242,000 826,000 150,000 (3) 45,000 150,000 135,000 15,000 15,000 2,916,000 1,845,000 726,000 2,571,000 345,000 (45,000) (15,000) 285,000 Eliminating Entries Dr. Cr. Noncontrolling Consolidated Interest Balance 2,916,000 315,360 285,000 0 600,360 390,600 510,000 (60,000) 299,200 179,200 (3) 1,334,000 2,234,600 270,240 1,000,000 200,000 (3) 200,000 364,000 600,360 90,000 (3) 90,000 (32,000) (3) 299,200 344,200 (3) 741,200 707,134 32,000 54,000 47,667 ** 707,134 9,000 47,667 56,667 562,000 (4) 741,200 (1) 344,200 (2) (3) (1) 9,467 (4) 9,467 54,000 54,000 54,000 474,000 36,000 9,467 (6,000) 9,000 209,200 (3) 209,200 150,000 135,000 15,000 315,360 285,000 600,360 515,800 1,905,467 2,421,267 394,240 6,000 1,000,000 364,000 600,360 56,667 2,421,267 124,000 60,000 (2) 54,000 2,234,600 Problem 4-16 (continued) (1) To eliminate intercompany dividends and income (2) To eliminate intercompany receivables and payables (3) To eliminate investment in Satin Company and create noncontrolling interest account (4) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Equity ($499,200 - $32,000) Subsidiary Income purchased (4/12)($150,000) Total book value Difference between implied and book value Undervalued land Balance $474,000/.90 474,000 420,480 45,000 465,480 8,520 (8,520) -0NonControlling Share 52,667 46,720 5,000 51,720 947 (947) -0Entire Value 526,667 * 467,200 50,000 517,200 9,467 (9,467) -0- Problem 4-17 Pillow Company and Subsidiary Consolidated Statements Workpaper Workpaper - Partial Equity Method For the Year Ended December 31, 2009 Pillow Satin Company Company Income Statement Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Other Expenses Total Cost and Expense Net Income Noncontrolling Interest ($10,000 .10) Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 2,590,666 (1) 90,000 2,590,666 1,650,333 645,333 2,295,666 295,000 (10,000) 285,000 1,940,000 90,000 2,030,000 1,261,000 484,000 1,745,000 285,000 285,000 650,666 650,666 389,333 161,333 550,666 100,000 10,000 100,000 90,000 10,000 Net Income to Retained Earnings Pillow Satin Company Company Retained Earnings Statement Retained Earnings 1/1 Pillow Company Satin Company Net Income from above Dividends Declared Pillow Company Satin Company Retained Earnings 12/31 Balance Sheet Current Assets Investment in Satin Difference b/w Implied & Book Value Plant and Equipment Total Accounts and Notes Payable Dividends Payable Common Stock Pillow Company Satin Company Other Contributed Capital Pillow Company Satin Company Treasury Stock Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31 Total *$52,667 + $4,000 = $56,667 Eliminating Entries Noncontrolling Consolidated Interest Balance Dr. Cr. 315,360 315,360 285,000 0 600,360 390,600 510,000 (60,000) 299,200 179,200 (3) 1,334,000 2,234,600 270,240 1,000,000 200,000 (3) 200,000 364,000 600,360 90,000 (3) 90,000 (32,000) (3) 32,000 299,200 349,200 54,000 (3) 52,667* 741,200 712,134 712,134 4,000 52,667 56,667 562,000 (4) 741,200 349,200 (1) 54,000 54,000 (6,000) 4,000 259,200 (3) 259,200 100,000 90,000 10,000 285,000 600,360 515,800 (2) 54,000 (3) 474,000 (1) 36,000 9,467 (4) 9,467 9,467 1,905,467 2,421,267 394,240 6,000 1,000,000 364,000 600,360 56,667 2,421,267 124,000 60,000 (2) 54,000 2,234,600 Problem 4-17 (continued) (1) To eliminate intercompany dividends (2) To eliminate intercompany receivables and payables (3) To eliminate investment in Satin Company and create noncontrolling interest account (4) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired Parent Share Purchase price and implied value Less: Book value of equity acquired: Equity ($499,200 - $32,000) Subsidiary Income purchased (4/12)($150,000) Total book value Difference between implied and book value Undervalued land Balance *$474,000/.90 474,000 420,480 45,000 465,480 8,520 (8,520) -0NonControlling Share 52,667 46,720 5,000 51,720 947 (947) -0Entire Value 526,667 * 467,200 50,000 517,200 9,467 (9,467) -0- Problem 4-18 Consolidated Statement of Cash Flows - Indirect Method P Company and Subsidiary Consolidated Statement of Cash Flows For the Year Ended December 31, 2011 Cash flows from operating activities: Consolidated net income Adjustments to convert consolidated net income to net cash flow from operating activities Depreciation expense Increase in accounts receivable Increase in inventories Decrease in accounts payable Increase in accrued payable Net cash flow from operating activities Cash flows from investing activities: Purchases of plant assets Cash flows from financing activities: Proceeds from the issuance of bonds Proceeds from the issuance of common stock * Cash dividends paid ** Net cash flow from financing activities Decrease in cash * ($600,000 + $275,000) ($450,000 + $225,000) = $200,000 ** ($60,000 + ($40,000 .20)) = $68,000. 240,000 200,000 (68,000) 372,000 ($50,000) $330,000 95,000 (110,000) (20,000) (232,000) 60,000 (207,000) 123,000 (545,000) Problem 4-19 Parks Company and Subsidiary Consolidated Statement of Cash Flows Direct Method For the Year Ended December 31, 2012 Cash flows from operating activities: Cash received from customers (1) Cash received from investment income Total cash provided by operating activities Less cash paid for: Merchandise purchases (2) Operating expenses (3) Net cash flow from operating activities Cash flows from investing activities: Purchase of plant assets (4) Cash flows from financing activities: Proceeds from the issuance of common stock Retirement of bonds payable Cash dividends paid (5) Net cash flow from financing activities Increase in cash (1) Accrual basis sales Plus: beginning accounts receivable Less: ending accounts receivable Cash received from customers (2) Accrual basis cost of goods sold Less: beginning inventory Plus: ending inventory Plus: beginning accounts payable Less: ending accounts payable Cash paid for merchandise purchases (3) Operating expenses Plus: beginning accrued expenses Less: ending accrued expenses Cash paid for operating expenses (4) Increase in property, plant, and equipment Add: Depreciation Cash paid for purchases of plant assets (5) Beginning retained earnings Plus: consolidated net income Total Less: ending retained earnings Dividends paid by Parks Company Plus: dividends paid by SCR, Inc. to noncontrolling interest ($8,000 .10) Cash paid for dividends $ 87,500 (50,000) (20,300) 17,200 $20,700 $239,000 90,000 (55,000) $274,000 $104,000 (92,000) 126,000 88,500 (67,500) $159,000 $72,000 41,000 (30,000) $83,000 $6,000 27,000 $33,000 $112,500 37,500 150,000 130,500 19,500 800 $20,300 $274,000 4,500 $278,500 $159,000 83,000 242,000 $36,500 (33,000)

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Brown Mackie College - AA - AC 3200
CHAPTER 5ANSWERS TO QUESTIONS1. a. The difference between implied and book value is the total difference between the value ofthe subsidiary in total, as implied by the acquisition cost of an investment in that subsidiary, and the book value of the subs
Brown Mackie College - AA - AC 3200
CHAPTER 6Note: The letter A indicated for a question, exercise, or problem means that the question, exercise, or problem relates to the chapter appendix. ANSWERS TO QUESTIONS 1. No. If all of the merchandise sold by one affiliate to another has subsequen
Brown Mackie College - AA - AC 3200
CHAPTER 7Note: The letter A indicated for a question, exercise, or problem means that the question, exercise, or problem relates to a chapter appendix. ANSWERS TO QUESTIONS 1. Intercompany profit in depreciable asset transfers is realized as a result of
Brown Mackie College - AA - AC 3200
CHAPTER 8ANSWERS TO QUESTIONS 1. The three types of transactions that result in a change in a parent companys ownership interest are: a. The parent company may buy additional shares of subsidiary stock or sell a portion of its holdings; b. The subsidiary
Brown Mackie College - AA - AC 3200
CHAPTER 9ANSWERS TO QUESTIONS 1. Constructive retirement refers to the purchase of an affiliate's outstanding bonds from outsiders. From a consolidated entity viewpoint, the consolidated entity has retired its outstanding debt, and is thus treated as an
Brown Mackie College - AA - AC 3200
CHAPTER 10ANSWERS TO QUESTIONS1. Extension of payment periods. The debtor continues to manage the business, and the creditorsmerely extend the payment due date(s) for existing debts. Composition agreements. A composition agreement is an agreement betwe
Brown Mackie College - AA - AC 3200
Chapter 11ANSWERS TO QUESTIONS1. There might be considerable training costs in switching to IFRS because U.S. investors and accountants will need to learn how to apply and interpret IFRS. The use of IFRS might also reduce the quality of financial report
Brown Mackie College - AA - AC 3200
CHAPTER 12ANSWERS TO QUESTIONS 1. An exchange rate is the ratio between a unit of one currency and the amount of another currency for which that unit can be exchanged at a particular time. A direct quotation is one in which the exchange rate is quoted in
Brown Mackie College - AA - AC 3200
CHAPTER 13Note: The letter A or B indicated for a question, exercise, or problem means that the question, exercise, or problem relates to a chapter appendix. ANSWERS TO QUESTIONS 1. (1) The parent company must control more than 50 percent of the voting s
Brown Mackie College - AA - AC 3200
CHAPTER 14ANSWERS TO QUESTIONS1.Segmented financial reports would have the most significance for a highly diversified company because the industries in which the company operates may have widely different rates of profitability, degrees of risk, and op
Brown Mackie College - AA - AC 3200
CHAPTER 15ANSWERS TO QUESTIONS 1. A partnership is not subject to an income tax, but the individual partners report their share of partnership income, whether distributed or not, on their respective individual tax returns. 2. A partner's capital balance
Brown Mackie College - AA - AC 3200
CHAPTER 16ANSWERS TO QUESTIONS 1. Realization gains or losses are allocated to partners in their profit and loss ratio because the changes in asset values are the result of risk assumed by the partnership. Also, because it may be difficult to separate ga
Brown Mackie College - AA - AC 3200
CHAPTER 17ANSWERS TO QUESTIONS 1. The performance of services by nonbusiness organizations is based on social need rather than on the profit motive and there is no conscious or deliberate effort by such organizations to derive a profit from their operati
Brown Mackie College - AA - AC 3200
CHAPTER 18ANSWERS TO QUESTIONS 1. Fund Entities Governmental Funds (1) General Fund - to account for all unrestricted resources except those required to be accounted for in another fund. (2) Special Revenue Funds - to account for the proceeds of specific
Brown Mackie College - AA - AC 3200
CHAPTER 10 DETERMINING HOW COSTS BEHAVE 10-1 1. 2. The two assumptions are Variations in the level of a single activity (the cost driver) explain the variations in the related total costs. Cost behavior is approximated by a linear cost function within the
Brown Mackie College - AA - AC 3200
CHAPTER 22 MANAGEMENT CONTROL SYSTEMS, TRANSFER PRICING, AND MULTINATIONAL CONSIDERATIONS 22-1 A management control system is a means of gathering and using information to aid and coordinate the planning and control decisions throughout an organization an
Brown Mackie College - AA - AC 3200
CHAPTER 1 THE ACCOUNTANT'S ROLE IN THE ORGANIZATION ACCOUNTANT'See the front matter of this Solutions Manual for suggestions regarding your choices of assignment material for each chapter.1-1 Management accounting measures, analyzes and reports financia
Brown Mackie College - AA - AC 3200
CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES 2-1 A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a brand category, an activity, and a department. 2-2 Dir
Brown Mackie College - AA - AC 3200
CHAPTER 3 COST-VOLUME-PROFIT ANALYSIS NOTATION USED IN CHAPTER 3 SOLUTIONS SP: VCU: CMU: FC: TOI: Selling price Variable cost per unit Contribution margin per unit Fixed costs Target operating income3-1 Cost-volume-profit (CVP) analysis examines the beha
Brown Mackie College - AA - AC 3200
CHAPTER 4 JOB COSTING 4-1Cost poola grouping of individual cost items. Cost tracingthe assigning of direct costs to the chosen cost object. Cost allocationthe assigning of indirect costs to the chosen cost object. Cost-allocation basea factor that links
Brown Mackie College - AA - AC 3200
CHAPTER 5 ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT 5-1 Broad averaging (or peanut-butter costing) describes a costing approach that uses broad averages for assigning (or spreading, as in spreading peanut butter) the cost of resources uniformly
Brown Mackie College - AA - AC 3200
CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY ACCOUNTING 6-1 a. b. c. d. The budgeting cycle includes the following elements: Planning the performance of the company as a whole as well as planning the performance of its subunits. Management agrees on what is
Brown Mackie College - AA - AC 3200
CHAPTER 7 FLEXIBLE BUDGETS, DIRECT-COST VARIANCES, AND MANAGEMENT CONTROL 7-1 Management by exception is the practice of concentrating on areas not operating as expected and giving less attention to areas operating as expected. Variance analysis helps man
Brown Mackie College - AA - AC 3200
CHAPTER 8 FLEXIBLE BUDGETS, OVERHEAD COST VARIANCES, AND MANAGEMENT CONTROL 8-1 Effective planning of variable overhead costs involves: 1. Planning to undertake only those variable overhead activities that add value for customers using the product or serv
Brown Mackie College - AA - AC 3200
CHAPTER 9 INVENTORY COSTING AND CAPACITY ANALYSIS 9-1 No. Differences in operating income between variable costing and absorption costing are due to accounting for fixed manufacturing costs. Under variable costing only variable manufacturing costs are inc
Brown Mackie College - AA - AC 3200
CHAPTER 11 DECISION MAKING AND RELEVANT INFORMATION 11-1 1. 2. 3. 4. 5. The five steps in the decision process outlined in Exhibit 11-1 of the text are Identify the problem and uncertainties Obtain information Make predictions about the future Make decisi
Brown Mackie College - AA - AC 3200
CHAPTER 12 PRICING DECISIONS AND COST MANAGEMENT 12-1 The three major influences on pricing decisions are 1. Customers 2. Competitors 3. Costs 12-2 Not necessarily. For a one-time-only special order, the relevant costs are only those costs that will chang
Brown Mackie College - AA - AC 3200
CHAPTER 13 STRATEGY, BALANCED SCORECARD, AND STRATEGIC PROFITABILITY ANALYSIS 13-1 Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives. 13-2 The five key forces to cons
Brown Mackie College - AA - AC 3200
CHAPTER 14 COST ALLOCATION, CUSTOMER-PROFITABILITY ANALYSIS, AND SALES-VARIANCE ANALYSIS 14-1 Disagree. Cost accounting data plays a key role in many management planning and control decisions. The division president will be able to make better operating a
Brown Mackie College - AA - AC 3200
CHAPTER 15 ALLOCATION OF SUPPORT-DEPARTMENT COSTS, COMMON COSTS, AND REVENUES 15-1 The single-rate (cost-allocation) method makes no distinction between fixed costs and variable costs in the cost pool. It allocates costs in each cost pool to cost objects
Brown Mackie College - AA - AC 3200
CHAPTER 16 COST ALLOCATION: JOINT PRODUCTS AND BYPRODUCTS 16-1 Exhibit 16-1 presents many examples of joint products from four different general industries. These include: Industry Separable Products at the Splitoff Point Food Processing: Lamb Lamb cuts,
Brown Mackie College - AA - AC 3200
CHAPTER 17 PROCESS COSTING 17-1 Industries using process costing in their manufacturing area include chemical processing, oil refining, pharmaceuticals, plastics, brick and tile manufacturing, semiconductor chips, beverages, and breakfast cereals. 17-2 Pr
Brown Mackie College - AA - AC 3200
CHAPTER 18 SPOILAGE, REWORK, AND SCRAP 18-1 Managers have found that improved quality and intolerance for high spoilage have lowered overall costs and increased sales. 18-2 Spoilageunits of production that do not meet the standards required by customers f
Brown Mackie College - AA - AC 3200
CHAPTER 19 BALANCED SCORECARD: QUALITY, TIME, AND THE THEORY OF CONSTRAINTS 19-1 Quality costs (including the opportunity cost of lost sales because of poor quality) can be as much as 10% to 20% of sales revenues of many organizations. Quality-improvement
Brown Mackie College - AA - AC 3200
CHAPTER 20 INVENTORY MANAGEMENT, JUST-IN-TIME, AND SIMPLIFIED COSTING METHODS 20-1 Cost of goods sold (in retail organizations) or direct materials costs (in organizations with a manufacturing function) as a percentage of sales frequently exceeds net inco
Brown Mackie College - AA - AC 3200
CHAPTER 21 CAPITAL BUDGETING AND COST ANALYSIS 21-1 No. Capital budgeting focuses on an individual investment project throughout its life, recognizing the time value of money. The life of a project is often longer than a year. Accrual accounting focuses o
University of Phoenix - COM - 135
RFP Analysis 1RFP Analysis Name COM 135 January 29, 2010 InstructorRFP Analysis 2 RFP Analysis 1. Review the Purpose section of the RFP. In two to three sentences, describe the reason behind the Web development project. What does the county want to achi
Berkeley - CHEMICAL E - 154
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