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) Willkoms equipment book value12/31/12 ................................................... $210,000 Szabos equipment book value12/31/12 ................................................. 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) balance1/1/11 $400,000 Herbert income2011 40,000 Herbert dividends2011 (subsidiary dividends are intercompany and, thus, eliminated) (10,000) Rambis income2011 (not included in parent's income) 20,000 Amortization2011 (12,000) Herbert income2012 50,000 Herbert dividends2012 (10,000) Rambis income2012 30,000 Amortization2012 (12,000Consolidated Retained Earnings, 12/31/12 $496,000) b. Investment in Rambisequity method Rambis fair value 1/1/11 $574,000 Rambis income 2011 20,000 Rambis dividends 2011 (5,000) Herberts 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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