2–21 Ch. 2—Problems
Problem 2-2, Concluded
(3) Roland Company and Subsidiary Downes Company
Consolidated Balance Sheet
July 1, 2016
Assets
Current assets:
Other assets ………………………………………………………………. $ 80,000*
Inventory (including $20,000 adjustment) ………………………. 200,000
$ 280,000
Long-lived assets:
Land (including $50,000 increase) ………………………………… $190,000
Liabilities and Stockholders’ Equity
Current liabilities …………………………………………………………….. $ 240,000
Stockholders’ equity:
Common stock (par) ……………………………………………………. $ 54,000
Paid-in capital in excess of par …………………………………….. 976,000
PROBLEM 2-3
(1) Investment in Entro Corporation ……………………………………….. 400,000
Cash …………………………………………………………………………. 400,000
(2) Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (100%) (0%)
Company fair value ……………………………………. $400,000 $400,000 N/A
Problem 2-3, Concluded
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (100%) (0%)
Price paid for investment ……….. $400,000 $400,000 N/A
Less book value of interest acquired:
Common stock ($5 par) ………. $ 50,000
Adjustment of identifiable accounts:
Worksheet
Adjustment Key
Inventory ($100,000 fair –
$80,000 book value) …………… $ 20,000 debit D1
Land ($40,500 fair – $40,000
book value) ……………………….. 500 debit D2
Building ($202,500 fair –
(3) Elimination entries:
Common Stock—Entro ……………………………………………………. 50,000
Paid-In Capital in Excess of Par—Entro …………………………….. 250,000
2–23 Ch. 2—Problems
PROBLEM 2-4
(1) Investment in Express Corporation ……………………………………. 320,000
Cash …………………………………………………………………………. 320,000
(2) Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (80%) (20%)
Company fair value ……………………………………. $405,400** $320,000 $85,400*
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (80%) (20%)
Price paid for investment ……….. $405,400 $320,000 $ 85,400
Less book value of interest acquired:
Common stock ($10 par) …….. $ 50,000
Adjustment of identifiable accounts:
Worksheet
Adjustment Key
Inventory ($100,000 fair –
$80,000 book value) …………… $ 20,000 debit D1
Land ($50,000 fair – $40,000
book value) ……………………….. 10,000 debit D2
Buildings ($200,000 fair –
Problem 2-4, Concluded
(3) Elimination entries:
Common Stock—Express ($50,000 × 80%) ……………………….. 40,000
Paid-In Capital in Excess of Par—Express ($250,000 × 80%) . 200,000
Retained Earnings—Express ($70,000 × 80%) …………………… 56,000
PROBLEM 2-5
(2) Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (100%) (0%)
Company fair value ……………………………………. $480,000 $480,000 N/A
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (100%) (0%)
Fair value of subsidiary ………….. $480,000 $480,000 N/A
Less book value of interest acquired:
Common stock ($5 par) ………. $ 50,000
Paid-in capital in excess of par 250,000
2–25 Ch. 2—Problems
Problem 2-5, Concluded
Adjustment of identifiable accounts:
Worksheet
Adjustment Key
Inventory ($100,000 fair –
$80,000 book value) …………… $ 20,000 debit D1
Land ($55,000 fair – $40,000
(3) Inventory ……………………………………………………………………….. 20,000
Land ……………………………………………………………………………… 15,000
Buildings ……………………………………………………………………….. 20,000
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PROBLEM 2-6
(1) Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (100%) (0%)
Company fair value ……………………………………. $450,000 $450,000 N/A
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (100%) (0%)
Fair value of subsidiary ………….. $450,000 $450,000 N/A
Less book value of interest acquired:
Common stock ($5 par) ………. $ 50,000
Paid-in capital in excess of par 70,000
Adjustment of identifiable accounts:
Worksheet
Adjustment Key
Inventory ($140,000 fair –
$120,000 book value) …………. $ 20,000 debit D1
Land ($45,000 fair – $35,000
book value) ……………………….. 10,000 debit D2
Building and equipment
($225,000 fair – $180,000
2–27 Ch. 2—Problems
Problem 2-6, Concluded
(2) Aron Company and Subsidiary Shield Company
Worksheet for Consolidated Balance Sheet
December 31, 2015
Eliminations Consolidated
Balance Sheet and Adjustments Balance
Aron Shield Dr. Cr. Sheet
Cash ……………………………………. 185,000 40,000 …………. ………… 225,000
Accounts Receivable ……………… 70,000 30,000 …………. ………… 100,000
Inventory………………………………. 130,000 120,000 (D1) 20,000 ………… 270,000
Investment in Shield ………………. 450,000 ………… …………. (EL) 250,000 …………
Eliminations and Adjustments:
(EL) Eliminate investment in subsidiary against subsidiary equity accounts.
(D) Distribute $200,000 excess of cost over book value to:
(D1) Inventory, $20,000.
(D3) Buildings and equipment, $45,000.
(D5) Premium on bonds payable, ($5,000).
PROBLEM 2-7
(1) Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (80%) (20%)
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (80%) (20%)
Fair value of subsidiary ………….. $400,000 $320,000 $ 80,000
Less book value of interest acquired:
Common stock ($5 par) ………. $ 50,000
Paid-in capital in excess of par 70,000
Adjustment of identifiable accounts:
Worksheet
Adjustment Key
Inventory ($140,000 fair –
$120,000 book value) …………. $ 20,000 debit D1
Land ($45,000 fair – $35,000
book value) ……………………….. 10,000 debit D2
Buildings and equipment
($225,000 fair – $180,000
net book value) ………………….. 45,000 debit D3
Problem 2-7, Concluded
(2) Aron Company and Subsidiary Shield Company
Worksheet for Consolidated Balance Sheet
December 31, 2015
Eliminations Consolidated
Balance Sheet
and Adjustments Balance
Aron Shield Dr. Cr. NCI Sheet
Cash ………………………………… 315,000 40,000 …………. ………… ………… 355,000
Accounts Receivable ………….. 70,000 30,000 …………. ………… ………… 100,000
Inventory …………………………… 130,000 120,000 (D1) 20,000 ………… ………… 270,000
Investment in Shield …………… 320,000 ………… …………. (EL) 200,000 ………… …………
Eliminations and Adjustments:
(EL) Eliminate investment in subsidiary against 80% of the subsidiary equity accounts.
(D)/(NCI) Distribute $120,000 excess of cost over book value and $30,000 NCI adjustment to:
(D2) Land, $10,000.
(D4) Copyrights, $15,000.
(D6) Goodwill, $65,000.
Ch. 2—Problems 2–30
PROBLEM 2-8
(1) Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (100%) (0%)
Company fair value ……………………………………. $500,000 $500,000 N/A
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (100%) (0%)
Fair value of subsidiary ………….. $500,000 $500,000 N/A
Less book value of interest acquired:
Common stock ($1 par) ………. $ 10,000
Adjustment of identifiable accounts:
Worksheet
Adjustment Key
Inventory ($60,000 fair –
$50,000 book value) …………… $ 10,000 debit D1
Land ($80,000 fair – $40,000
book value) ……………………….. 40,000 debit D2
Buildings ($320,000 fair –
2–31 Ch. 2—Problems
Problem 2-8, Concluded
(2) Palto Company and Subsidiary Saleen Company
Worksheet for Consolidated Balance Sheet
January 1, 2015
Eliminations Consolidated
Balance Sheet
and Adjustments Balance
Palto Saleen Dr. Cr. Sheet
Cash ………………………………… 61,000 ………… …………. ………… 61,000
Accounts Receivable ………….. 65,000 20,000 …………. ………… 85,000
Current Liabilities ……………….. (80,000) (40,000) …………. ………… (120,000)
Bonds Payable ………………….. (200,000) (100,000) …………. ………… (300,000)
Common Stock ($1 par)—
Saleen …………………………… ………… (10,000) (EL) 10,000 ………… …………
Paid-In Capital in Excess of
Totals………………………………………………………………………………………………………………. 0
Eliminations and Adjustments:
(EL) Eliminate the investment in the subsidiary against the subsidiary equity accounts.
(D) Distribute $340,000 excess of cost over book value as follows:
(D1) Inventory, $10,000.
(D3) Buildings, $170,000.
(D5) Copyright, $50,000.
PROBLEM 2-9
(1) Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (100%) (0%)
Company fair value ……………………………………. $400,000 $400,000 N/A
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (100%) (0%)
Price paid for investment ……….. $400,000 $400,000 N/A
Less book value of interest acquired:
Common stock ($1 par) ………. $ 10,000
Paid-in capital in excess of par 90,000
Adjustment of identifiable accounts:
Worksheet
Adjustment Key
Inventory ($60,000 fair –
$50,000 book value) …………… $ 10,000 debit D1
Land ($80,000 fair – $40,000
book value) ……………………….. 40,000 debit D2
Problem 2-9, Concluded
(2) Palto Company and Subsidiary Saleen Company
Worksheet for Consolidated Balance Sheet
January 1, 2015
Eliminations Consolidated
Balance Sheet
and Adjustments Balance
Palto Saleen Dr. Cr. Sheet
Cash ………………………………… 161,000 ………… …………. ………… 161,000
Accounts Receivable ………….. 65,000 20,000 …………. ………… 85,000
Inventory …………………………… 80,000 50,000 (D1) 10,000 ………… 140,000
Investment in Saleen ………….. 400,000 ………… …………. (EL) 160,000 …………
Common Stock ($1 par)—
Saleen …………………………… ………… (10,000) (EL) 10,000 ………… …………
Paid-In Capital in Excess of
Par—Saleen …………………… ………… (90,000) (EL) 90,000 ………… …………
Retained Earnings—Saleen … ………… (60,000) (EL) 60,000 ………… …………
Common Stock—Palto ……….. (20,000) ………… …………. ………… (20,000)
Eliminations and Adjustments:
(EL) Eliminate the investment in the subsidiary against the subsidiary equity accounts.
(D) Distribute $240,000 excess of cost over book value as follows:
(D2) Land, $40,000.
(D4) Equipment, $20,000.
(D6) Gain on acquisition (close to Palto’s Retained Earnings), $50,000.
Ch. 2—Problems 2–34
PROBLEM 2-10
(1) Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (80%) (20%)
Company fair value ……………………………………. $492,000 $400,000 $92,000*
Fair value of net assets excluding goodwill …… 450,000 360,000 90,000
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (80%) (20%)
Fair value of subsidiary ………….. $492,000 $400,000 $ 92,000
Less book value of interest acquired:
Common stock ($1 par) ………. $ 10,000
Paid-in capital in excess of par 90,000
Adjustment of identifiable accounts:
Worksheet
Adjustment Key
Inventory ($60,000 fair –
$50,000 book value) …………… $ 10,000 debit D1
Land ($80,000 fair – $40,000
book value) ……………………….. 40,000 debit D2
Buildings ($320,000 fair –
$150,000 net book value) ……. 170,000 debit D3