accounting assignment

ch._4_excel_with_hw.xlsx

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HW

Chapter 4 HW requires time and thought; expectation is ALL will be done
	No grade credit for portions not attempted
Chapter HW:
BIG acquires Small but Minority ownership as well
a] schedule of excess of book value for Small by minority. Controlling & total
b] create Consolidated Balance Sheet with consolidating entries after acquisition & before Operations
c] Prepare consolidating entries & consolidated statement of income for period
d] Complete BIG IS, in Big IS enter income form Small/acquisition for period
e] complete sections identified as to be completed by student
f] complete consolidated BS with entries after period operations
	NOTE add or delete any explanatory sections or lines as you deem necessary
Transaction		CONTROL PREMIUM
				BIG2 acquires controlling [& consolidating]interest in SMALL2	70%
				SMALL shares our standing	250,000
				BIG Shares acquired
				Price per share paid by BIG2	$ 14.00
				Price paid by BIG2
				Minority interest [shares] not acquired
				Minority market price per share	$ 12.00
				Value of minority interest assuming using minority per share price
				Fair value of Small2 shares with premium for control
Assignment of Fair Value: Book/Excess
				SMALL2 Fair value
				Book value	2,300,000
				Excess value
To by Completed by student
				Excess (Under) value assigned to:	Life	per YR.
			PPE	200,000	5
			Trademarks	220,000	indefinite
			Licenses	500,000	10
			Goodwill [to be determined by student]		N/A
			Total [to be determined by student]
Assignment of Fair Value: Controlling/Minority
			Allocable to:	Controlling	Minority	SMALL
To by Completed by student			Ownership	70%	30%	100%
				FV adjustment and Goodwill
	enter Amounts and Asset typeèè
			Goodwill [to be determined by student]
			Total
			Total Fair value and Goodwill: to be determined by student
Assignment of Amortization of Fair value tear 1: Fair Value
NO Premium					------Amortization------
			Allocable to:	SMALL	Controlling	Minority
			Ownership	100%	70%	30%
		By Asset type
Consolidated Balance Sheet After Acquisition & before Operation
CASH is the amount which balances the BS					To by Completed by student
			BIG2	SMALL2	Consolidating Entries
Assets:			$s	$s	Debit	Credit	Consolidated
Cash [after investment then compute cash to balance]				300,000
A/R			2,600,000	300,000
Inventory			1,900,000	250,000
Current Assets				850,000
Net PPE			3,700,000	2,400,000
Investments [student to complete investment then cash to balance BS]
Intangibles [Patents/copywriters]
Goodwill
Total Assets			11,200,000	3,250,000
Current Liabilities			1,200,000	300,000
Long term Debt			2,000,000	650,000
Total Liabilities			3,200,000	950,000
Equity: Capital			5,000,000	1,700,000
Non-controlling Interest NCI]
Equity: Retained earnings			3,000,000	600,000
Total Equity			8,000,000	2,300,000
Total Liabilities & Equity			11,200,000	3,250,000
		Check		0
We added in all the Net Assets BUT Only Big2 share as Investment
then added Minority in interest to Equity
					To by Completed by student
Period Operations			CONSOLIDATED Income Statement				BIG2
			BIG2	SMALL2	Dr.	Cr.	Consolidated
		Net Revenue	14,750,000	3,100,000
		CoGS	8,500,000	1,500,000
		Gross Profit	6,250,000	1,600,000
		Depreciation Expense	400,000	200,000
		Interest Expense	100,000	70,000
		Other Expenses	2,700,000	885,000
		Small equity-Other (Income)/Expense*		0
Non-Controlling Interest [Income]/reduction in Income			0	0
		Income before tax		445,000
		Taxes	1,000,000	185,000
		Net Income		260,000
To by Completed by student		BIG2	3rd Party
	Allocable to:	Controlling	Minority	SMALL	Debit/[Credit]
	Ownership	70%	30%	100%	Amortization/year to
	Total Fair value and Goodwill: to be determined by student				BIG2	Minority	Total:
	Goodwill [to be determined by student]
	Total
			BIG2	Minority
To by Completed by student		SMALL2 Net Income			Total:
		Share%
		Share $s
		Amortization of Excess
		Share net of Amortzn.
				SMALL2 paid in Period dividends of:	$ 140,000
To by Completed by student				BIG2
				Minority
			BIG2 Ending Investment			Small Ending RE
Consolidating PE BS after period operation					To by Completed by student
CASH is the amount which balances the BS				Before consolidating Entries	Consolidating	Consolidating
			BIG2 PE	SMALL2 PE	Adjustments	Adjustments
Assets:			$s	$s	Debit	Credit	Consolidated
Cash
A/R			2,800,000	400,000
Intercompany A/R			400,000	0
Inventory			2,000,000	300,000
Current Assets
Net PPE			2,800,000	400,000
Investments				0
Intangibles [Patents/copywriters]			2,000,000	300,000
Goodwill			0	0
Total Assets				700,000
Current Liabilities			1,100,000	260,000
Intercompany A/P			0	400,000
Long term Debt			4,600,000	600,000
Total Liabilities				1,260,000
Equity: Capital			5,000,000	1,700,000
NCI Equity	[1]			0
Equity: Retained earnings
Total Equity
Total Liabilities & Equity
		Check	0
Aid to completion NOT REQUIRED è & ê	Equity		BIG2 PE	SMALL2 PE
	Eliminate Intercompany A/R Intercompany A/P {part of each company's
		A/R & A/P on separate line for clarity
	Add Acquisition accounting values in Consolidation
		Allocable to:	Controlling	Minority	SMALL
		Ownership	70%	30%	100%
To consolidated IS
	Amortization relating to BIG2			To Asset	After PE [BIG2]
		Total
to NCI Equity in BS
	Amortization relating to Minority interest				After PE [Minority & BIG2]
				After Amortizing Minority interest BS amortization]
	Combined adjustment as done;
NCI Equity
		Beginning
		Net @ PE