On January 1, 2011, Porter Company purchased an 90% interest in the capital stock of Salem Company for $850,000. ...
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miexamfall2012aastudent_selfgradew_oassess.xlsxquestion Statement
| On January 1, 2011, Porter Company purchased an 90% interest in the capital stock of Salem Company for $850,000. | |||
| The fair value of the noncontrolling interest was proportionate to the consideration paid by the controlling interest. | |||
| At that time, Salem Company had capital stock of $550,000 and retained earnings of $80,000. | |||
| Differences between the fair value and the book value of the identifiable assets of Salem Company were as follows: | |||
| Under (Over) Valued | |||
| Equipment | 120,000 | ||
| Land | 25,000 | ||
| Inventory | 40,000 | ||
| In-Process Research & Development | 40,000 | ||
| Bonds payable | -10,000 | ||
| The book values of all other assets and liabilities of Salem Company were equal to their fair values on January 1, 20011 | |||
| The inventory was sold in 2011 and the equipment has a 5-year remaining life as of January 1, 2011. | |||
| The bonds payable mature in 5 years from January 1, 2011 | |||
| At 12/31/13, Salem owes Porter $25000 | |||
| Required for the year ended December 31, 2013: | |||
| 1. Prepare the analysis as of acquisition date including unamortized differential at 1/1/11. | |||
| 2. Prepare the journal entries Porter recorded with respect to its investment in Porter for the year ended 12/31/13. | |||
| 3. Calculate Net income to controlling interest and Net income to non controlling interest for the year 2013. | |||
| 4. Prepare all necessary elimination entries for the year ended 2013. | |||
| 5. Complete the consolidated workpapers for the year ended 12/31/13. | |||
| Use formulas in all calculations. | |||
| Clearly label each part in the spreadsheet tab below | |||
| Do problem on "Additional Question" below for 20 points. | |||
| Partial credit is awarded for all questions. |
Spreadsheet
| INCOME STATEMENT | P CO. | S CO. | ELIMINATIONS | CONS.TOT. | 1. Prepare the analysis as of acquisition date including unamortized differential at 1/1/11. | |||||||||
| 12/31/2013 (000's) | DR. | CR. | ||||||||||||
| Sales | 2,100.00 | 450.00 | 2,550.000 | Jan 1, 2011 | ||||||||||
| Dividend Income | 54.00 | 54.000 | acquisition price | 850 | ||||||||||
| 0.000 | fv of nci | 94 | ||||||||||||
| Total revenues | 2,154.00 | 450.00 | 2,604.00 | total fv | 944 | |||||||||
| book value on Jan 1 | 630 | |||||||||||||
| Cost of goods sold | 950.00 | 200.00 | 1,150.00 | diff | 314 | |||||||||
| Depreciation exp | 50.00 | 30.00 | 80.00 | |||||||||||
| Other Expenses | 60.00 | 50.00 | 110.00 | total fv | 944 | |||||||||
| 0.00 | fv of ID net assets | 845 | ||||||||||||
| Total expenses | 1,060.00 | 280.00 | 1,340.00 | goodwill | 99 | |||||||||
| equipment | 120 | -24 | ||||||||||||
| Total Net income | 1,094.00 | 170.00 | 1,264.00 | land | 25 | |||||||||
| Less net income to noncontrolling interest | 0.00 | inventory | 40 | |||||||||||
| Net income to controlling interest | 1,264.00 | IPR&D | 40 | |||||||||||
| RETAINED EARNINGS | bonds payable | -10 | ||||||||||||
| STATEMENT | total diff | 314 | ||||||||||||
| Retained Earnings 1/1/13 | 500.00 | 230.00 | 730.000 | |||||||||||
| Net income | 1,094.00 | 170.00 | 1,264.00 | 2. Prepare the journal entries Porter recorded with respect to its investment in Porter for the year ended 12/31/13. | ||||||||||
| Dividends declared | 90.00 | 60.00 | 150.00 | |||||||||||
| Retained Earnings 12/31/13 | 1,504.00 | 340.00 | 1,844.00 | |||||||||||
| BALANCE SHEET | ||||||||||||||
| Cash | 76.00 | 65.00 | 141.00 | |||||||||||
| Accounts receivable | 445.00 | 190.00 | 635.00 | |||||||||||
| Inventory | 780.00 | 175.00 | 955.00 | |||||||||||
| Investment in Sub | 850.00 | 850.00 | ||||||||||||
| Land | 215.00 | 320.00 | 535.00 | |||||||||||
| IPR&D | 0.00 | |||||||||||||
| Plant and Equipment | 360.00 | 280.00 | 640.00 | |||||||||||
| Goodwill | 0.00 | |||||||||||||
| Total assets | 2,726.00 | 1,030.00 | 3,756.00 | |||||||||||
| Accounts payable | 132.00 | 110.00 | 242.000 | |||||||||||
| bonds payable | 90.00 | 30.00 | 120.000 | |||||||||||
| Common stock | 1,000.00 | 550.00 | 1,550.000 | |||||||||||
| Paid in capital | 0.000 | |||||||||||||
| Retained earnings | 1,504.00 | 340.00 | 1,844.000 | |||||||||||
| Noncontrolling interest in sub | 0.000 | |||||||||||||
| Total liabilities and equity | 2,726.00 | 1,030.00 | 0.00 | 0.00 | 3,756.00 | |||||||||
| 0.00 | 0.00 | 0.00 | ||||||||||||
|
St Joseph's College: Minority interest(Non-controlling interest = MI% times the book value of the sub |
MI Exam
NTD Spring 2008
Answer Sheet
| Answer Sheet: Must use cell formulas except for Q9 below | enter here | WARNING! INSERTING OR CHANGING ANY FORMAT ON | |
| enter all amounts as positive. | |||
| THIS SPREADSHEET WILL IMPACT YOUR GRADE | |||
| 1. Net income to the controlling interest from consolidated statement of income | |||
| 2. Net income to the controlling interest from Step 3 | |||
| 3. Consolidated Retained Earnings Balance at end of year | |||
| 4. Consolidated Total Assets | |||
| 5. Consolidated Total Liabilities and Equity | |||
| 6. Net income to noncontrolling interest (AKA MI expense) (from consolidated total) | |||
| 7. Noncontrolling Interest on Sub Equity (from consolidated total) | |||
| 8. Adjustment to Parent's Retained Earnings at 1/1/13 | |||
| 9. How many journal entries did the parent record during the year | |||
| with respect to its investment in the sub? Enter 1,2,3,or 4 | |||
| 10. What was the total debits for all of the parent co entries? |
Temporary Grade For Spreadsheet
| 20 | |||||||||||||||||||||||||
| TEMPORARY GRADE | 20 | ||||||||||||||||||||||||
| 1 | 0 | ||||||||||||||||||||||||
| 2 | 1 | ||||||||||||||||||||||||
| 3 | 0 | ||||||||||||||||||||||||
| 4 | 0 | ||||||||||||||||||||||||
| 5 | 1 | ||||||||||||||||||||||||
| 6 | 0 | ||||||||||||||||||||||||
| 7 | 0 | ||||||||||||||||||||||||
| 8 | 0 | ||||||||||||||||||||||||
| 9 | 0 | ||||||||||||||||||||||||
| 10 | 0 | ||||||||||||||||||||||||
| total | 2 | ||||||||||||||||||||||||
