Solution to Exam 1 Comprehensive example posted

# Solution to Exam 1 - Required 1 Allocate January 2007 acquisition-date good will to Pencil and the noncontrolling interest 2 Calculate Pencils 2010

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1 Required: 1) Allocate January 2007 acquisition-date good will to Pencil and the noncontrolling interest. 2) Calculate Pencil’s 2010 Equity in net income and noncontrolling interest in income. 3) Prepare consolidated entries needed to consolidate the 2010 financial statements of Pencil and Sharpener. Solution: 1) Goodwill to controlling interest: Pencil’s Acquisition cost \$ 27,830 Less controlling interest in the fair value of Sharpener’ s identifiable net assets: ( 12,060) Controlling interest’s share \$ 15,770 Goodwill to noncontrolling interest: Total goodwill \$ 16,600 Less goodwill to controlling interest (15,770) Noncontrolling interest's share \$ 830 2) 2010 Equity in net income and noncontrolling interest in income: total Equity in Net Income NCI in net income sharpener's reported income in 2010 2,000,000 1,800,000 200,000 adjustment for revaluation write-offs PPE (700,000) (630,000) (70,000) favorable leaseholds (600,000) (540,000) (60,000) long-term debt (100,000) (90,000) (10,000) goodwill (200,000) (190,000) (10,000)

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## This note was uploaded on 02/22/2012 for the course ACCT 501 taught by Professor Ma during the Spring '11 term at South Carolina.

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Solution to Exam 1 - Required 1 Allocate January 2007 acquisition-date good will to Pencil and the noncontrolling interest 2 Calculate Pencils 2010

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