Practice 3- Ch 3 Subsequent to the Date of Consolidation

Practice 3- Ch 3 Subsequent to the Date of Consolidation -...

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Unformatted text preview: 3-1 Ch 3: Subsequent to the Date of Consolidation Four Practice Problems:3-4, 3-12, 3-15 and 3-23. Solutions: Solution D Problem 1: 3-4 (balance of consolidated equipment) Willkom’s equipment book value—12/31/12 ................................................... $210,000 Szabo’s equipment book value—12/31/12 ................................................. 140,000 Original purchase price allocation to Szabo's equipment ($300,000 – $200,000) ................................................................................ 100,000 Amortization of allocation ($100,000 ÷ 10 years for 3 years) ......................................................... (30,000Consolidated equipment.............................................................................. $420,000) 3-2 a. CONSOLIDATED RETAINED EARNINGS Problem 2: 3-12 (Equity method only) (20 Minutes) Herbert (parent) balance—1/1/11 $400,000 Herbert income—2011 40,000 Herbert dividends—2011 (subsidiary dividends are intercompany and, thus, eliminated) (10,000) Rambis income—2011 (not included in parent's income) 20,000 Amortization—2011 (12,000) Herbert income—2012 50,000 Herbert dividends—2012 (10,000) Rambis income—2012 30,000 Amortization—2012 (12,000Consolidated Retained Earnings, 12/31/12 $496,000) b. Investment in Rambis—equity method Rambis fair value 1/1/11 $574,000 Rambis income 2011 20,000 Rambis dividends 2011 (5,000) Herbert’s 2011 excess fair over book value amortization (12,000Investment account balance 1/1/12 $577,000) c. ENTRY *C EQUITY METHOD No entry is needed to convert the past figures to the equity method since that method has already been...
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Practice 3- Ch 3 Subsequent to the Date of Consolidation -...

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