ACT4491 Exercises CH03

ACT4491 Exercises CH03 - EXERCISE 3-1 Determination and...

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Unformatted text preview: EXERCISE 3-1 Determination and Distribution of Excess Schedule Company Parent NCI Implied Price Value Fair Value (80%) (20%) Fair value of subsidiary..................... $450,000 * $360,000 $90,000 Less book value of interest acquired: Common stock ($5 par)............... $ 50,000 Paid-in capital in excess of par.... 100,000 Retained earnings....................... 150,000 Total equity............................ $300,000 $300,000 $300,000 Interest acquired......................... 80% 20% Book value........................................ $240,000 $ 60,000 Excess of fair value over book value........................................... $150,000 $120,000 $ 30,000 Adjustment of identifiable accounts: Worksheet Amortization Adjustment Key Life per Year Equipment......................................... $ 25,000 debit D1 5 $5,000 Goodwill............................................ 125,000 debit D2 Total............................................ $150,000 *$360,000/80% = $450,000 (a) Event Simple Equity Method 20X1 Subsidiary income of Investment in Hill Company.............. 48,000 $60,000 reported to parent Subsidiary Income....................... 48,000 Dividends of $10,000 paid Cash................................................. 8,000 by Hill Investment in Hill Company......... 8,000 20X2 Subsidiary income of Investment in Hill Company.............. 32,000 $40,000 reported to parent Subsidiary Income....................... 32,000 Dividends of $10,000 paid Cash................................................. 8,000 by Hill Investment in Hill Company......... 8,000 Exercise 3-1, Concluded (b) Event Sophisticated Equity Method 20X1 Subsidiary income of Investment in Hill Company.............. 44,000 ($60,000 $5,000 Subsidiary Income....................... 44,000 amortization) 80% reported to parent Dividends of $10,000 paid Cash................................................. 8,000 by Hill Investment in Hill Company......... 8,000 20X2 Subsidiary income of Investment in Hill Company.............. 28,000 ($40,000 $5,000 Subsidiary Income....................... 28,000 amortization) 80% reported to parent Dividends of $10,000 paid Cash................................................. 8,000 by Hill Investment in Hill Company......... 8,000 (c) Event Cost Method 20X1 Subsidiary income of No entry $60,000 reported to parent Dividends of $10,000 paid Cash................................................. 8,000 by Hill Dividend Income......................... 8,000 20X2 Subsidiary income of No entry $40,000 reported to parent Dividends of $10,000 paid Cash................................................. 8,000 by Hill Dividend Income......................... 8,000 EXERCISE 3-2 Determination and Distribution of Excess Schedule Company Parent NCI Implied Price Value Fair Value (75%) (25%) Fair value of subsidiary..................... $616,667 * $462,500 $154,167 Less book value of interest acquired: Common stock ($5 par)............... $ 50,000...
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ACT4491 Exercises CH03 - EXERCISE 3-1 Determination and...

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