Required:
a. Compute the amount of the goodwill as of January 1, 20X7.
Goodwill at acquisition $50,000
Goodwill as of January 1, 20X7:
Fair Value given of Stargell 11,16,900
FV of non-controlling interest 1,23,100
Total FV: 12,41,000
Book Value of net assets -11,61,000
Differential at Accquisition 80,000
Increase in FV of land (30,000)
Goodwill at acquisition 50,000
Balance in investment $11,57,040
Stargell stockholders' equity, January 1, 20X7:
Common Stock 4,87,000
Premium on Stock 2,67,000 1348650
Retained Earnings 4,57,000 138600
Stockholds Equity Jan 1, 20X7 12,11,000 45900
Posey's Ownership Share 0.9 -4050
BV of shares held by Posey 10,89,900 4860
Differential at Jan 1, 20X7 72,000 22,500
Inventory sale deferred Gross Profit (4,860) (21,600)
Balance in Investment in Stargell Stock account, 5,400
January 1, 20X7 11,57,040
Gain $24,000
Gain on constructive retirement of Stargell's bonds:
Original Proceeds from issuance of Stargell's Bonds 10,10,000
b. Compute the balance of Posey’s Investment in Stargell Stock account as of January 1, 20X7. (Do not round your
intermediate calculations. Round your final answer to nearest whole dollar.)
11,57,040
e. Compute the gain or loss on the constructive retirement of Stargell’s bonds that should appear in the 20X7 consolidated
Premium amortized to Jan 2, 20X7
($10k/10)x6
BV of bonds at constructive retirement 10,04,000
Price Paid by Posey (9,80,000)
Gain on constructive retirement of Stargell's bonds 24,000
Income to noncontrolling interest $14,740
Stargell's 20X7 net income *
1,54,000
Add: 20X6 intercompany profit realized in 20X7 54,000
Constructive gain on retirement of bonds 24,000
Less: Unrealized intercompany profit on 20X7 transfer (5,000)
Portion of constructive gain on bond retirement
recognized currently by separate affilates ($24k/4)
(6,000)
Impairment of Goodwill
(25,000)
Subsidiary income to be apportioned 1,47,400
Non-controlling interest's share 0.1
Income to noncontrolling interest 14,740
Net income calculations *
Sales 8,01,000
Other Income 50,000
Total Income
8,51,000
COGS (4,26,000)
Depreciation & Amortization Expense (65,000)
Other Selling Expenses (2,06,000)
Total Expenses (6,97,000)
Net income 1,54,000
c. Compute the income that should be assigned to the noncontrolling interest in the 20X7 consolidated income statement.
(Do not round your intermediate calculations. Round your final answer to nearest whole dollar.)
(6,000)
Total noncontrolling interest 1,28,560$
Total noncontrolling interest, December 31, 20X6:
Stargell's stockholders' equity, December 31, 20X6 12,11,000
Unrealized profit on Intercompany Sale of Inv (5,400)
Stargell's realized equity, December 31, 20X6 12,05,600
Differential assigned to land 30,000
Differential assigned to goodwill 50,000
12,85,600
Non-controlling Interest's share 0.1
Total noncontrolling interest, December 31, 20X6 1,28,560
d. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate
calculations. Round your final answer to nearest whole dollar.)
