Due in AN HOUR 1 question[accounting]

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Question

Peri Company acquired 60% of the outstanding common stock of
Sam Company on June 30, 2011 for $283,800. On that date, the fair value of
the non-controlling interest was $189,200.
On the acquisition date, Sam Company
had retained earnings in the amount of $60,000, and the fair value of its
recorded assets and liabilities was equal to their book value. The excess of
cost over the fair value of the recorded net assets was attributed to
an unrecorded manufacturing formula held by Sam Company, which
had an expected remaining useful life of five years from June 30, 2011.
On December 31, 2011, Peri company sold equipment (with an
original cost of $200,000 and accumulated depreciation of $50,000)
to Sam Company for $175,000. This equipment has since been
depreciated at an annual rate of 20% of the purchase price.
During 2012, Sam Company sold land to Peri Company at a
profit of $30,000. Peri still holds the land acquired from Sam.
The inventory of Peri Company on December 31, 2012 included goods
purchased from Sam Company on which Sam recognized a profit
of $7,500.
During 2013, Sam Company sold goods to Peri Company for
$375,000, of which $160,000 was unpaid at December 31, 2013. The
December 31, 2013 inventory of Paul Company included goods acquired
from Sam Company on which Sam recognized a profit of $10,500.
During 2013 Peri Company sold goods to Sam Company for $600,000
at a markup on sales of 20%. At December 31, 2013, 30% of these goods
remain unsold by Sam Company. Sam Company still owes Peri
Company $160,000 for these inventory purchases.
During 2013, Peri Company sold a trademark to Sam Company for $100,000. The trademark
had a book value of $20,000 at the sale date. Sam still holds the trademark at 12/31/13.
The trademark is not amortizable and is not impaired. Sam still owes Peri for the trademark sale.
On January 1, 2013 Sam Company reports $600,000 in bonds outstanding with
a book value of $564,000. Peri purchases half of these bonds on the open
market for $291,000. Attribute the income effects of this transaction to the parent company.
Required: Carefully Follow and label each step.
Points
1. Prepare the acquisition analysis as of acquisition date. Compute the
unamortized differential as of 1/1/2013. 10
2. Analyze each intercompany transaction. Label as either upstream
downstream. 15
3. Calculate Net income to the controlling interest for the year 2013 20
4. Verify the calculation of the balance in the acccount equity in sub
earnings and record the parent company entries with respect to its investment during 2013 20
5. Prepare all elimination entries for 2013. 20
6. Complete the consolidating spreadsheet for the year ended 2013. 15
total 100

spreadsheet

INCOME STATEMENT P CO. S CO. ELIMINATIONS CONS.TOT.
FYE 12/31/13 DR. CR.
Sales 2,475,500 1,120,000 3,595,500
Equity in sub earnings 56,340 56,340
Interest income-bonds 33,000 33,000
Gain on sale of trademark 80,000 80,000
Total revenues 2,644,840 1,120,000 3,764,840
Cost of goods sold 1,730,000 690,500 2,420,500
Expenses 654,500 251,000 905,500
loss from bond extinguishment 0
Interest expense-bonds 72,000 72,000
Total expenses 2,384,500 1,013,500 3,398,000
Total net income 260,340 106,500 366,840
Less income to NCI 0
Net income to controlling interest 260,340 106,500 366,840
RETAINED EARNINGS
STATEMENT
Retained Earnings 1/1 811,360 211,500 1,022,860
Net income 260,340 106,500 366,840
Dividends declared 100,000 60,000 160,000
Retained Earnings 12/31 971,700 258,000 1,229,700
BALANCE SHEET
Cash 119,500 708,000 827,500
Accounts receivable 442,000 125,000 567,000
Inventory 362,000 201,000 563,000
Other current assets 40,500 13,000 53,500
Land 150,000 150,000
Investment in S 383,700 383,700
Property and equipment 825,000 241,000 1,066,000
Accumulated depreciation (207,000) (53,000) (260,000)
MFG formula 0
Trademark 100,000 100,000
Investment in S bonds 294,000 294,000
Total assets 2,409,700 1,335,000 3,744,700
Accounts payable 395,000 132,000 527,000
Other liabilities 43,000 19,000 62,000
Bonds payable 600,000 600,000
Discount on bonds payable (24,000) (24,000)
Common stock 1,000,000 300,000 1,300,000
Paid in capital 0 50,000 50,000
Retained earnings 971,700 258,000 1,229,700
Noncontrolling interest in sub 0
Total liabilities and equity 2,409,700 1,335,000 0 0 3,744,700
TRUE TRUE TRUE TRUE
0

answer sheet

Answer Sheet: Must use cell references Enter Here WARNING! INSERTING OR CHANGING ANY FORMAT ON
1. What is the unamortized differential this sheet will impact your grade!!!
at January 1, 2013?
2. What amount of the intercompany Equipment gain or loss that must be confirmed in 2013?
Enter as a positive value if gain or a negative value if loss.
3. What is the amount of the parent company intercompany inventory profit that
must be unconfirmed in 2013? Enter as a positive value.
4. What is the amount of the subsidiary intercompany inventory profit that is confirmed in 2013?
5. What is the amount of the subsidiary intercompany inventory profit that is unconfirmed in
2013? Enter as a positive value.
6. What is the gain or loss on the extinguishment of the bond? Enter as a positive value
if a gain and as as negative value if a loss.
7. What is the NonControlling Interest Claim on the Subsidiary's Net Income?
Enter as a positive amount.
8. What is the Net Income Attributed to the Controlling Interest?
9. What are the total debits/credits for the entries by the parent company with respect to
its subsidiary recorded in 2013? (do not combine entries)
10. What are consolidated total assets in the Consolidated Balance Sheet?
11. What is the NonControlling Interest Claim on the Subsidiary's Equity at 12/31/13
as presented in the Consolidated Balance Sheet?
12. What is the adjustment to the Parent Company's Retained Earnings at 1/1/13
to reflect the "full" equity method? Enter as a positive amount.
13. What is the adjustment to the land account in the elimination entries?
Enter as a positive amount.
14. What is the total elimination for intercompany sales in 2013? Included both
upstream and downstream sales.
15. What is the total intercompany receivable and payables eliminated?
16. What is the amortization of the differential in 2013?