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P04-35Student Name:Class:Problem 04-35

Acquisition MethodConsolidated BalancesNon-Part a.Adjustments & EliminationscontrollingConsolidatedAccountsPalomaSan MarcoDebitCreditInterestTotalsRevenues(1,843,000)(675,000)
x: Using the dropdown list, enter a notation in this column to indicate:[A] - Unamortized allocations[*C] - Convert to equity method[D] - Intercompany dividends[E] - Excess amortization expense[I] - Intercompany income accrual[S] - Subsidiary stockholders' equity
x: Enter consolidation entries in the yellow cells in this column. The consolidated totals are verified.
x: Enter noncontrolling interest entries in the yellow cells in this column. The consolidated totals are verified.Cost of goods sold1,100,000322,000Depreciation expense125,000120,000Amortization expense275,00011,000Interest expense27,5007,000Equity in San Marco income(121,500)0.0Separate company net income(437,000)(215,000)Consolidated net income To noncontrolling interest To Paloma Company

Retained earnings, 1/1(2,625,000)(395,000)Net income(437,000)(215,000)Dividends declared350,00025,000Retained earnings, 12/31(2,712,000)(585,000)

Current assets1,204,000430,000Investment in San Marco1,854,0000.0

Customer base0.00.0Buildings and equipment931,000863,000Copyrights950,000107,000Goodwill0.00.0
Jack Terry: NOTE: Use the Goodwill calculation below.Total assets4,939,0001,400,000

Accounts payable(485,000)(200,000)Notes payable(542,000)(155,000)NCI in San Marco

Common stock(900,000)(400,000)Additional paid-in capital(300,000)(60,000)Retained earnings, 12/31(2,712,000)(585,000) Total liabilities and stockholders' equity(4,939,000)(1,400,000)Parentheses indicate a credit balance.

ControllingNoncontrollingInterestInterestFair value at acquisition dateRelative fair values of identifiable net assetsGoodwill

Part b.If the acquisition-date fair value of the noncontrolling interest was $167,500 both goodwill (NCI portion) and the noncontrolling interest balance would be reduced as follows:

Fair value of San Marco CompanyCarrying amount acquiredExcess fair valueto customer baseto goodwillNoncontrolling interest balance beginning of year*
Jack Terry: This number is calculated below.Net income attributable to noncontrolling interestDividends declared to noncontrolling interestNoncontrolling interest end of year

*NCI at beginning of year Common stock-subsidiary APIC-subsidiary Retained earnings-subsidiary 1/1Total Noncontrolling interest percentageNoncontrolling share of subsidiary book value Noncontrolling share of 1/1 customer base excess Noncontrolling share of goodwill (below)
Jack Terry: This number is calculated below.Noncontrolling interest 1/1

ControllingNoncontrollingInterestInterestFair value at acquisition dateRelative fair values of identifiable net assetsGoodwill

Given P04-35Given Data P04-35

San Marco company outstanding common stock acquired by Paloma Corporation90%Cash paid by Paloma Corporation. for San Marco Company shares$1,710,000

San Marco owners equity amounts on 1/1/14: Common stock$400,000 Additional paid-in capital60,000 Retained earnings265,000

Assessed fair value of San Marco's customer base$800,000

Fair-value allocation schedule: Fair value of San Marco Company$1,900,000 Book value of San Marco Company725,000 Excess fair value1,175,000 to customer base (10-year remaining life)800,000 to goodwill$375,000

Account BalancesDecember 31, 2015

PalomaSan MarcoRevenues$(1,843,000)$(675,000)Cost of goods sold1,100,000322,000Depreciation expense125,000120,000Amortization expense275,00011,000Interest expense27,5007,000Equity in income of San Marco(121,500)0.0 Net income$(437,000)$(215,000)

Retained earnings, 1/1$(2,625,000)$(395,000)Net income(437,000)(215,000)Dividends declared350,00025,000 Retained earnings, 12/31$(2,712,000)$(585,000)

Current assets$1,204,000$430,000Investment in San Marco1,854,0000.0Buildings and equipment931,000863,000Copyrights950,000107,000 Total assets$4,939,000$1,400,000

Accounts payable$(485,000)$(200,000)Notes payable(542,000)(155,000)Common stock(900,000)(400,000)Additional paid-in capital(300,000)(60,000)Retained earnings, 12/31(2,712,000)(585,000) Total liabilities and equity$(4,939,000)$(1,400,000)

Note: Credits are indicated by parentheses.

P04-37Student Name:Class:Problem 04-37PADRE, INC. AND SIERRA CORPORATION

- Purchase price allocation and annual amortization

Acquisition-date subsidiary fair value
x: Enter appropriate data in yellow cells. Your entries for "Implied value in excess of book value" and "Total" will be verified.Book value of subsidiaryFair value in excess of book value Allocations to specific accounts based on difference between fair value and book value: Land Buildings and equipment Copyright Notes payable Total

LifeExcessAnnual excess amortizations:(years)Amortizations Buildings and equipment Copyright Notes payable Total

Totals for the business combination for the year ending December 31, 2015PADRE, INC. AND SIERRA CORPORATION

Account NameBalanceExplanationRevenues
x: Enter appropriate data in yellow cells. Your entries will be verified.
x: Enter a short explanation in the space provided.

Cost of goods sold

Depreciation expense

Amortization expense

Interest expense

Equity in income of Sierra

Consolidated net income

Net income attributable to NCI

Net income to Padre Company

Retained earnings, 1/1

Dividends declared


Current assets

Investment in Sierra

Land

Buildings and equipment (net)

Copyright

Total assetsAccounts payable

Notes payable

Noncontrolling interest in Sierra

Common stock

Additional paid-in capital


Total liabilities & equities

PADRE, INC. AND SIERRA CORPORATIONConsolidation Worksheet Non-Consolidation EntriescontrollingConsolidatedAccountsPadreSierraDebitCreditInterestTotalsRevenues(1,394,980)(684,900)
x: Enter noncontrolling interest entries in the yellow cells in this column. The consolidated totals are verified.Cost of goods sold774,000432,000Depreciation expense274,00011,600Amortization expense0.06,100Interest expense52,1009,200Equity in income of Sierra(177,120)0.0Separate company net income(472,000)(226,000)Consolidated net income

NI to noncontrolling interestNI to Padre Company

Retained earnings, 1/1(1,275,000)(530,000)Net income(472,000)(226,000)Dividends declared260,00065,000 Retained earnings, 12/31(1,487,000)(691,000)

Current assets856,160764,700Investment in Sierra927,840

Land360,00065,000Buildings and equipment (net)909,000275,400Copyright0.0115,900 Total assets3,053,0001,221,000

Accounts payable(275,000)(194,000)Notes payable(541,000)(176,000)NCI in Sierra 1/1NCI in Sierra 12/31

Common stock(300,000)(100,000)Additional paid-in capital(450,000)(60,000)Retained earnings, 12/31(1,487,000)(691,000) Total liabilities and stockholders' equity(3,053,000)(1,221,000)Parentheses indicate a credit balance.

Given P04-37Given Data P04-37Sierra Corporation outstanding common stock acquired by Padre, Inc.80%Cash paid by Padre, Inc. for Sierra Corporation shares$680,000Sierra's assessed fair value$1,003,400Book value of Sierra Corporation$690,000

Sierra accounts values on 1/1/15BookFairValueValueLand$65,000$290,000Buildings and equipment (10-year remaining life)287,000263,000Copyright (20-year life)122,000216,000Notes payable (due in 8 years)(176,000)(157,600)

Padre,Sierra12/31/1512/31/15Revenues$(1,394,980)$(684,900)Cost of goods sold774,000432,000Depreciation expense274,00011,600Amortization expense0.06,100Interest expense52,1009,200Equity in income of Sierra(177,120)0.0 Net income$(472,000)$(226,000)

Retained earnings, 1/1/15$(1,275,000)$(530,000)Net income(472,000)(226,000)Dividends paid260,00065,000 Retained earnings, 12/31/15$(1,487,000)$(691,000)

Current assets$856,160$764,700Investment in Sierra927,8400.0Land360,00065,000Buildings and equipment (net)909,000275,400Copyright0.0115,900 Total assets$3,053,000$1,221,000

Accounts payable$(275,000)$(194,000)Notes payable(541,000)(176,000)Common stock(300,000)(100,000)Additional paid-in capital(450,000)(60,000)Retained earnings(1,487,000)(691,000) Total liabilities and equity$(3,053,000)$(1,221,000)


P04-38Student Name:Class:Problem 04-38Part a.ADAMS CORPORATION AND BARSTOW, INC.

- Purchase price allocation and excess amortizations

Consideration transferred by Adams
x: Enter appropriate data in yellow cells. Your entries for "Cost in excess of book value" "Goodwill", and "Total" will be verified.Noncontrolling interest fair valueAcquisition-date total fair valueBook value of BarstowExcess fair value over book value

AnnualLifeExcess(years)Amortizations Land Buildings Equipment Patents Notes payable Goodwillindefinite Total

Parts c. and d.ADAMS CORPORATION AND BARSTOW, INC.Consolidation Worksheet - Acquisition MethodFor Year Ending December 31, 2015

Non-AdamsBarstowcontrollingConsolidatedAccountsCorp.Inc.DebitCreditInterestTotalsRevenues(940,000)(280,000)
x: Enter notation in this column to indicate:[A] - Unamortized allocations[*C] - Convert to equity method[D] - Intercompany dividends[E] - Excess amortization expense[I] - Intercompany income accrual[S] - Subsidiary stockholders' equity
x: Enter noncontrolling interest entries in the yellow cells in this column. The consolidated totals are verified.Cost of goods sold480,00090,000Depreciation expense100,00055,000Amortization expense0.0Interest expense40,00015,000Investment income(108,000)Separate company net income(428,000)(120,000)Consolidated net income NI to noncontrolling interest NI to Adams Corporation

Retained earnings, 1/1(1,367,000)(340,000)

Net income(428,000)(120,000)Dividends declared(110,000)70,000Retained earnings, 12/31(1,685,000)(390,000)

Current assets610,000250,000Investment in Barstow702,000

Land380,000150,000Buildings490,000250,000Equipment873,000150,000PatentsGoodwillTotal assets3,055,000800,000

Notes payable(860,000)(230,000)Common stock(510,000)(180,000)Retained earnings, 12/31(1,685,000)(390,000)Noncontrolling interest

Total liabilities and equity(3,055,000)(800,000)Parentheses indicate a credit balance.

Given P04-38Given Data P04-38Barstow, Inc. outstanding voting shares90% acquired by Adams CorporationCash paid by Adams Corporation for $603,000 Barstow, Inc. sharesFair value of 10% NCI - B4 & after acquisition$67,000

Barstow account values on 12/31/13BookFair MarketValueValueCurrent assets$160,000$160,000Land120,000150,000Buildings (10-year life)220,000200,000Equipment (5-year life)160,000200,000Patents (10-year life)0.050,000Notes Payable (5-year life)(200,000)(180,000)Common stock(180,000)Retained earnings, 12/31/13(280,000)

Adjusted Trial BalancesDecember 31, 2015

AdamsBarstow,CorporationInc.DebitsCurrent assets$610,000$250,000Land380,000150,000Buildings490,000250,000Equipment873,000150,000Investment in Barstow, Inc.702,0000.0Cost of goods sold480,00090,000Depreciation expense100,00055,000Interest expense40,00015,000Dividends paid110,00070,000 Total debits$3,785,000$1,030,000

CreditsNotes payable$860,000$230,000Common stock510,000180,000Retained earnings, 1/1/151,367,000340,000Revenues940,000280,000Investment income108,0000.0 Total credits$3,785,000$1,030,000

P04-42Student Name:Class:Problem 04-42

Part c. onlyBRETZ, INC. AND KEANE COMPANYConsolidation WorksheetYear Ending December 31, 2015

Non-Bretz,KeaneConsolidation EntriescontrollingConsolidatedAccountsInc.CompanyDebitCreditInterestTotalsRevenues(402,000)(300,000)
x: Enter notation in this column to indicate:[A] - Unamortized allocations[*C] - Convert to equity method[D] - Intercompany dividends[E] - Excess amortization expense[I] - Intercompany income accrual[S] - Subsidiary stockholders' equity
x: Enter noncontrolling interest entries in the yellow cells in this column. The consolidated totals are verified.Operating expenses200,000120,000Equity in Keane earnings(144,000)0.0Separate company net income(346,000)(180,000)Consolidated net income NI attributable to noncontrolling interest NI attributable to Bretz, Inc.

Retained earnings, 1/1(797,000)(500,000)Net income(346,000)(180,000)Dividends paid143,00060,000 Retained earnings, 12/31(1,000,000)(620,000)

Current assets224,000190,000Investment in Keane Company994,5000.0

Trademarks106,000600,000Copyrights210,000300,000Equipment (net)380,000110,000Goodwill Total assets1,914,5001,200,000

Liabilities(453,000)(200,000)Common stock(400,000)(300,000)Additional paid-in capital(60,000)(80,000)Additional paid-in capital - step acquisition(1,500)0.0Retained earnings 12/31(1,000,000)(620,000)Non-controlling interest 1/1Non-controlling interest 12/31 Total liabilities and equity(1,914,500)(1,200,000)Parentheses indicate a credit balance.

Given P04-42Given Data P04-42

Keane Company outstanding shares acquired by Bretz, Inc.60%Cash paid by Bretz, Inc. for Keane Company shares$573,000Book value of Keane Company$810,000Keane copyright undervalued (6-year remaining live)$120,000Keane's net income for 2014$150,000Cash dividends paid by Keane during 2014$80,000Additional Keane shares purchased by Bretz on 1/1/1530%Amount paid by Bretz for Keane shares$300,000

Financial Information for 2015Bretz,KeaneInc.CompanyRevenues$(402,000)$(300,000)Operating expenses200,000120,000Equity in Keane earnings(144,000)0.0 Net income$(346,000)$(180,000)

Retained earnings, 1/1$(797,000)$(500,000)Net income(346,000)(180,000)Dividends paid143,00060,000 Retained earnings, 12/31$(1,000,000)$(620,000)

Current assets$224,000$190,000Investment in Keane Company994,5000.0Trademarks106,000600,000Copyrights210,000300,000Equipment (net)380,000110,000 Total assets$1,914,500$1,200,000

Liabilities$(453,000)$(200,000)Common stock(400,000)(300,000)Additional paid-in capital(60,000)(80,000)Additional paid-in capital - step acquisition(1,500)0.0Retained earnings 12/31(1,000,000)(620,000) Total liabilities and equity$(1,914,500)$(1,200,000)


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