# Accounting Chapter 3 Homework Cumulatively depreciate the write-up to Building

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Authors Paul M. Fischer, Rita H. Cheng, William J. Tayler

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3-79 Ch. 3—Problems
Problem 3A-1, Concluded
See solution to Problem 3-2 for value analysis, D&D schedule, and amortization schedules.
(CY) Eliminate the current-year entries made in the investment account and in the
subsidiary income account.
(EL) Eliminate the pro rata share of Solar Company equity balances at the beginning
Income Distribution Schedules
Solar Company
Building depreciation ………………… \$3,000 Internally generated net
income ………………………………. \$90,000
PROBLEM 3A-2
Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (80%) (20%)
Company fair value ………………………………………….. \$1,040,000 \$850,000 \$190,000
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (80%) (20%)
Fair value of subsidiary ………………… \$1,040,000 \$850,000 \$190,000
Less book value of interest acquired:
Common stock (\$10 par) …………. \$ 150,000
Worksheet Amortization
Land ………………………………………….. \$ 20,000 debit D1
Equipment ………………………………….. 80,000 debit D2 10 \$8,000
Problem 3A-2, Continued
Annual Current Prior
Account Adjustments Life Amount Year Years Total Key
Subject to amortization:
Equipment ……………………….. 10 \$ 8,000 \$ 8,000 \$16,000 \$24,000 (A2)
(CY) Eliminate the current-year entries made in the investment account to arrive at the
January 1, 2017, balance:
(CY1) 80% of subsidiary loss.
determination and distribution of excess schedule:
(D1) Increase Land by \$20,000.
(D3) Increase Building by \$60,000.
(A2) Record \$8,000 annual increase in equipment depreciation for current and prior years.
(A3) Record \$3,000 annual increase in building depreciation for current and prior years.
Problem 3A-2, Continued
Baker Enterprises and Kohlenberg International
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2017
Financial Eliminations Non-
Baker Kohlenberg Dr. Cr. Interest dated
Income Statement:
Sales ………………………………………………. (650,000) (320,000) ……….. ……….. ……….. (970,000)
Cost of Goods Sold …………………………… 260,000 240,000 ……….. ……….. ……….. 500,000
Operating Expense …………………………… 170,000 70,000 ……….. ……….. ……….. 240,000
schedule)…………………………………………. ……….. ……….. ……….. ……….. 6,200 ………..
Controlling Interest (see distribution
schedule)…………………………………………. ……….. ……….. ……….. ……….. ……….. (130,200)
Retained Earnings:
Retained Earnings, January 1, 2017—
Baker …………………………………………. (625,000) ……….. (A2–A3) 17,600 ……….. ……….. (607,400)
Problem 3A-2, Continued
Baker Enterprises and Kohlenberg International
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2017
(Concluded)
Financial Eliminations Non-
Baker Kohlenberg Dr. Cr. Interest dated
Balance Sheet:
Cash ……………………………………………….. 288,000 170,000 ……….. ……….. ……….. 458,000
Inventory …………………………………………. 135,000 400,000 ……….. ……….. ……….. 535,000
Goodwill ………………………………………….. ……….. ……….. (D4) 130,000 ……….. ……….. 130,000
Liabilities …………………………………………. (248,000) (40,000) ……….. ……….. ……….. (288,000)
Bonds Payable …………………………………. ……….. (200,000) ……….. ……….. ……….. (200,000)
Common Stock—Baker ……………………… (1,200,000) ……….. ……….. ……….. ……….. (1,200,000)
Common Stock—Kohlenberg ……………… ……….. (150,000) (EL) 120,000 ……….. (30,000) ………..
Problem 3A-2, Concluded
Subsidiary Kohlenberg International Income Distribution
Internally generated net loss ……. \$20,000
Building depreciation ………………. 3,000
Equipment depreciation ………….. 8,000
Parent Baker Enterprises Income Distribution
80% × Kohlenberg adjusted Internally generated net
3-85 Ch. 3—Problems
PROBLEM 3A-3
Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (90%) (10%)
Company fair value ………………………………………….. \$800,000 \$720,000 \$80,000
Based on the above information, the following D&D schedule is prepared:
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (90%) (10%)
Fair value of subsidiary ………………… \$800,000 \$720,000 \$ 80,000
Less book value of interest acquired:
Common stock (\$10 par) …………. \$350,000
Retained earnings ………………….. 200,000
Worksheet Amortization
Building ……………………………………… \$180,000 debit D1 20 \$9,000
Goodwill …………………………………….. 70,000 debit D2
Total …………………………………. \$250,000
Annual Current Prior
Account Adjustments Life Amount Year Years Total Key
Problem 3A-3, Continued
Harvard Company and Subsidiary Bart Company
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2016
Financial Eliminations Non-
Harvard Bart Dr. Cr. Interest dated
Income Statement:
Sales ………………………………………………. (580,000) (280,000) ……….. ……….. ……….. (860,000)
Consolidated Net Income …………………… ……….. ……….. ……….. ……….. ……….. (114,000
Noncontrolling Interest (see
distribution schedule) …………………… ……….. ……….. ……….. ……….. (3,100) ………..
Controlling Interest (see
distribution schedule) …………………… ……….. ……….. ……….. ……….. ……….. (110,900)
Retained Earnings Statement:
Retained Earnings, January 1,
2016—Harvard ……………………………. (484,000) ……….. ……….. (CV) 108,000 ……….. ………..
Problem 3A-3, Continued
Harvard Company and Subsidiary Bart Company
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2016
(Concluded)
Financial Eliminations Non-
Harvard Bart Dr. Cr. Interest dated
Balance Sheet:
Cash ……………………………………………….. 330,000 170,000 ……….. ……….. ……….. 500,000
Inventory …………………………………………. 260,000 340,000 ……….. ……….. ……….. 600,000
……….. ……….. ……….. (EL) 603,000 ……….. ………..
……….. ……….. ……….. (D) 225,000 ……….. ………..
Goodwill ………………………………………….. ……….. ……….. (D2) 70,000 ……….. ……….. 70,000
Current Liabilities ……………………………… (123,000) (60,000) ……….. ……….. ……….. (183,000)
Bonds Payable …………………………………. ……….. (200,000) ……….. ……….. ……….. (200,000)
Common Stock—Harvard ………………….. (800,000) ……….. ……….. ……….. ……….. (800,000)
Paid-In Capital in Excess of
Problem 3A-3, Concluded
(CV) Convert from the cost to the equity method as of January 1, 2016 [90% × (\$320,000 –
\$200,000)].
(CY2) Eliminate the 90% ownership portion of the subsidiary dividends.
(EL) Eliminate the 90% ownership portion of the subsidiary equity accounts against the
(A) Record amortizations resulting from the revaluations of entry 3. Record \$9,000 annual
increase in building depreciation for current and prior years. See amortization
schedule.
Subsidiary Bart Company Income Distribution
Building depreciation ………………… \$9,000 Internally generated net
income …………………………… \$40,000
PROBLEM 3B-1
Entry to record investment:
Problem 3B-1, Concluded
Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (90%) (10%)
Company fair value ………………………………………….. \$800,000 \$720,000 \$80,000
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (90%) (10%)
Fair value of subsidiary ………………… \$800,000 \$720,000 \$ 80,000
Less book value of interest acquired:
Common stock (\$10 par) …………. \$100,000
Paid-in capital in excess of par 150,000
Worksheet Amortization
Inventory (\$200,000 fair – \$150,000
book value)……………………………. \$ 50,000 debit D1
Depreciable fixed assets (\$500,000
fair – \$400,000 book value) ……… 100,000 debit D2 20 \$5,000
Investment in marketable securities
(\$170,000 – \$150,000 book value) 20,000 debit D3
PROBLEM 3B-2
Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (80%) (20%)
Company fair value ………………………………………….. \$2,740,000 \$2,240,000 \$500,000
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (80%) (20%)
Fair value of subsidiary ………………… \$2,740,000 \$2,240,000 \$ 500,000
Less book value of interest acquired:
Common stock (\$100 par) ……….. \$1,000,000
Retained earnings ………………….. 847,000
Worksheet Amortization
Depreciable fixed assets
(\$2,800,000 fair – \$2,100,000
book value)……………………………. \$ 700,000 debit D1 20 \$ 35,000
3-91 Ch. 3—Problems
Problem 3B-2, Continued
Todd Company and Subsidiary Keller Company
Worksheet for Consolidated Balance Sheet
December 31, 2016
Financial Eliminations Non-
Todd Keller Dr. Cr. Interest dated
Cash ………………………………………….. 1,200,000 50,000 …………. ………….. ………….. 1,250,000
Accounts Receivable …………………… 2,400,000 300,000 …………. ………….. ………….. 2,700,000
Payables ……………………………………. (7,200,000) (1,750,000) …………. ………….. ………….. (8,950,000)
Accruals …………………………………….. (1,615,000) (400,000) …………. ………….. ………….. (2,015,000)
Deferred Tax Liability …………………… …………. ………….. …………. (D1t) 210,000 ………….. (210,000)
Common Stock (\$100 par)—Todd …. (1,000,000) ………….. …………. ………….. ………….. (1,000,000)
(CY) N/A because worksheet is prepared on the same day as consolidation.
(EL) Elimination of 80% of the subsidiary equity against the investment.
(D)/(NCI) Distribute the balance of the investment account, \$762,400 and the \$130,600 NCI adjustment, to the specific subsidiary
Ch. 3—Problems 3–92
Problem 3B-2, Concluded
Todd Company and Subsidiary Keller Company
Consolidated Balance Sheet
December 31, 2016
Assets
Current assets:
Cash …………………………………………………………………………. \$ 1,250,000
Accounts receivable ……………………………………………………. 2,700,000
Liabilities and Stockholders’ Equity
Payables ………………………………………………………………………… \$ 8,950,000
Accruals …………………………………………………………………………. 2,015,000
Deferred tax liability …………………………………………………………. 210,000
Total liabilities …………………………………………………………………. \$11,175,000
Stockholders’ equity:
PROBLEM 3B-3
(1) Company Parent NCI
Implied Price Value
Value Analysis Schedule Fair Value (90%) (10%)
Company fair value ……………………………………. \$700,000 \$630,000 \$70,000
Determination and Distribution of Excess Schedule
Company Parent NCI
Implied Price Value
Fair Value (90%) (10%)
Fair value of subsidiary ………….. \$700,000 \$630,000 \$ 70,000
Less book value of interest acquired:
Worksheet Amortization
Building and equipment …………. \$100,000 debit D1 10 \$10,000
DTL on above adjustment ………. (30,000) credit D1t 10 (3,000)
Problem 3B-3, Continued
(2) Campton Corporation and Subsidiary Dorn Corporation
Worksheet for Consolidated Financial Statements
For Year Ended December 31, 2015
Eliminations Consolidated Controlling Consolidated
Trial Balance
Campton Dorn Dr. Cr. Statement NCI Earnings Sheet
Current Assets …………………………… 150,000 100,000 …………. ………… ………… ………… …………. 250,000
Land …………………………………………. 400,000 100,000 …………. ………… ………… ………… …………. 500,000
Current Tax Liability ……………………. (9,000) (12,000) …………. ………… ………… ………… …………. (21,000)
Deferred Tax Liability ………………….. (6,000) ………… (D2) 6,000 ………… ………… ………… …………. …………
Other Current Liabilities ………………. (130,000) (100,000) …………. ………… ………… ………… …………. (230,000)
Deferred Tax Liability ………………….. ………… ………… (A1t) 3,000 (D1t) 30,000 ………… ………… …………. (27,000)
Common Stock (\$5 par)—
Campton ………………………………… (500,000) ………… …………. ………… ………… ………… …………. (500,000)
Expenses…………………………………… 89,000 50,000 (A1) 10,000 ………… 149,000 ………… ………. …………
Provision for Tax ………………………… 15,000 12,000 …………. (A1t) 3,000 24,000 ………… …………. …………
Total ………………………………………. 0 0 725,600 725,600 ………… ………… …………. …………
Consolidated Net Income ………………………………………………………………………………………….……… (56,000) ………… …………. …………
To NCI (see distribution schedule) ………………………………………………………………………………. 900 (900) …………. …………
3-95 Ch. 3—Problems
Problem 3B-3, Continued
Subsidiary Dorn Corporation Income Distribution
Internally generated
Equipment depreciation …. (A1) \$10,000 income before tax ……………. \$40,000
Adjusted net income before tax . \$30,000
(CY1) Eliminate current-year investment entries.
(EL) Eliminate the 90% ownership portion of the subsidiary equity accounts against
the investment.
(D)/(NCI) Distribute the excess cost and NCI adjustment in accordance with the determina-
tion and distribution of excess schedule:
(D1) Increase building and equipment by \$100,000.
(D2) Record current portion of DTA.
(D3) Record a noncurrent DTA of \$54,000 for the portion of the tax loss carryover to
be used in future years.
(A1) Record \$10,000 annual increase in building and equipment depreciation for cur-
Problem 3B-3, Concluded
(3) Campton Corporation and Subsidiary Dorn Corporation
Consolidated Income Statement
For Year Ended December 31, 2015
Sales ……………………………………………………………………………………….. \$479,000
Cost of goods sold …………………………………………………………………….. 250,000
Gross profit ………………………………………………………………………………. \$229,000
Campton Corporation and Subsidiary Dorn Corporation
Retained Earnings Statement
For Year Ended December 31, 2015
NCI
Controlling
Campton Corporation and Subsidiary Dorn Corporation
Consolidated Balance Sheet
December 31, 2015
Assets
Current assets ……………………………………………………………….. \$ 250,000
Property, plant, and equipment:
Land …………………………………………………………………………. \$ 500,000
Liabilities and Stockholders’ Equity
Liabilities:
Current liabilities …………………………………………………………. \$ 230,000
Current tax liability ………………………………………………………. 21,000

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