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# ch03_hw - 36 An Introduction to Consolidated Financial...

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36 An Introduction to Consolidated Financial Statements CHAPTER 3 AN INTRODUCTION TO CONSOLIDATED FINANCIAL STATEMENTS SOLUTIONS TO EXERCISES Solution E3-1 Solution E3-2 1 b 1 d 2 c 2 b 3 d 3 d 4 d 4 d 5 b 5 a 6 a 6 d 7 c Solution E3-3 [AICPA adapted] 1 c Consolidated current assets \$146,000 Less: Apex’s current assets (106,000) Add: Receivable from Apex 2,000 Nadir’s current assets \$ 42,000 2 d Noncontrolling interest of \$35,100/30% = \$117,000 3 c Advance to Hill \$75,000 + receivable from Ward \$200,000 = \$275,000 4 a 5 a Owen accounts for Sharp using the equity method, therefore, consolidated retained earnings is equal to Owen’s retained earnings, or \$1,240,000. 6 d All intercompany receivables and payables are eliminated. 36

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37 An Introduction to Consolidated Financial Statements Solution E3-6 Preliminary computation Cost of Slider stock \$1,250,000 Fair value acquired (\$1,000,000 × 100%) 1,000,000 Goodwill \$ 250,000 1 Journal entry to record push down values Inventories 20,000 Land 50,000 Buildings net 150,000 Equipment net 80,000 Goodwill 250,000 Retained earnings 210,000 Note payable 10,000 Push-down capital 750,000 2 Slider Corporation Balance Sheet January 1, 2007 Assets Cash \$ 70,000 Accounts receivable 80,000 Inventories 100,000 Land 200,000 Buildings net 500,000 Equipment net 300,000 Goodwill 250,000 Total assets \$1,500,000 Liabilities Accounts payable \$ 100,000 Note payable 150,000 Total liabilities 250,000 Stockholders’ equity Capital stock \$ 500,000 Push-down capital 750,000 Total stockholders’ equity 1,250,000 Total liabilities and stockholders’ equity \$1,500,000 37
Chapter 3 38 Solution E3-8 1 Capital stock The capital stock appearing in the consolidated balance sheet at December 31, 2006 is \$1,800,000, the capital stock of Poball, the parent company. 2 Goodwill at December 31, 2006 Investment cost at January 2, 2006 \$700,000 Book value acquired (\$600,000 × 80%) (480,000 ) Excess (considered goodwill since no fair value information is given) \$220,000 3

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ch03_hw - 36 An Introduction to Consolidated Financial...

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