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    Chapter 3 Problem 1, 2 and 5 Solutions

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    1. The document provides financial information for Pascal and Sax companies under the cost method of accounting for a business combination, including balances of assets, liabilities, equity, income, and expenses. 2. It calculates goodwill and its amortization under full and partial goodwill methods for years 20x4 and 20x5. 3. It includes consolidated balance sheets for Pascal and Sax for years 20x4 and 20x5 that combine accounts and eliminate entries between the companies under both full and partial goodwill.

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    Chapter 3 Problem 1, 2 and 5 Solutions

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    eia
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    1. The document provides financial information for Pascal and Sax companies under the cost method of accounting for a business combination, including balances of assets, liabilities, equity, income, and expenses. 2. It calculates goodwill and its amortization under full and partial goodwill methods for years 20x4 and 20x5. 3. It includes consolidated balance sheets for Pascal and Sax for years 20x4 and 20x5 that combine accounts and eliminate entries between the companies under both full and partial goodwill.

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    1. The document provides financial information for Pascal and Sax companies under the cost method of accounting for a business combination, including balances of assets, liabilities, equity, income, and expenses. 2. It calculates goodwill and its amortization under full and partial goodwill methods for years 20x4 and 20x5. 3. It includes consolidated balance sheets for Pascal and Sax for years 20x4 and 20x5 that combine accounts and eliminate entries between the companies under both full and partial goodwill.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    30 views30 pages

    Chapter 3 Problem 1, 2 and 5 Solutions

    Uploaded by

    eia
    1. The document provides financial information for Pascal and Sax companies under the cost method of accounting for a business combination, including balances of assets, liabilities, equity, income, and expenses. 2. It calculates goodwill and its amortization under full and partial goodwill methods for years 20x4 and 20x5. 3. It includes consolidated balance sheets for Pascal and Sax for years 20x4 and 20x5 that combine accounts and eliminate entries between the companies under both full and partial goodwill.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 30

    Chapter 3 - ConSta - Subsequent to Acquisition Date

    Problem 1 - Pascal and Sax - Cost Method

    4.) D & A Of Excess Schedule Full GW Partial GW


    Total CI (80%) NCI 20%
    FV of Sax Co. 465,000.00 372,000.00 93,000.00 ==> NCI Under Full GW
    less: BV of SHE - Sax
    CS 240,000.00
    RE 120,000.00 360,000.00 288,000.00 72,000.00
    Allocated Excess 105,000.00 84,000.00 21,000.00
    Less: Allocation
    Inc in Inventory 6,000.00
    Inc in Land 7,200.00
    Inc in Equipment 96,000.00
    Dec in Buildings (24,000.00)
    Dec in Bonds Payable 4,800.00 90,000.00 72,000.00 18,000.00
    Goodwill 15,000.00 12,000.00 3,000.00 90,000.00 ==> NCI Under Partial

    Amortization Schedule: Life 20x4 20x5


    Inventory 6,000.00 1 6,000.00 - DR
    Equipment 96,000.00 8 12,000.00 12,000.00 DR
    Buildings (24,000.00) 4 (6,000.00) (6,000.00) CR
    Bonds Payable 4,800.00 4 1,200.00 1,200.00 DR
    Total 13,200.00 7,200.00

    Goodwill Impairment Loss 3,750.00 - DR

    1.) Conso Balances - Jan. 1, 20x4: Full GW


    a. Retained Earnings - only that of the parent 360,000.00
    b. Non Controlling Interest 93,000.00
    c. SHE (600K + 360K + 93K) 1,053,000.00 (600K + 360K + 90K)

    2.) Conso Balance for Dec 31, 20X4 and Dec 31, 2015 Under Full GW and Partial GW

    Dec 31, 20X4 - Partial Goodwill Dec 31, 20X4 - Full G


    Parent Subsidiary Eliminations Conso Balances Parent Subsidiary
    a. Cash 232,800.00 90,000.00 - 322,800.00 232,800.00 90,000.00
    b. AR 90,000.00 60,000.00 - 150,000.00 90,000.00 60,000.00
    c. Inventory 120,000.00 90,000.00 - 210,000.00 120,000.00 90,000.00
    d. Land 210,000.00 48,000.00 7,200.00 265,200.00 210,000.00 48,000.00
    e. Equipment, net 105,000.00 84,000.00 84,000.00 273,000.00 105,000.00 84,000.00
    f. Buildings, net 315,000.00 252,000.00 (18,000.00) 549,000.00 315,000.00 252,000.00
    g. Investment in Sax - - - - - -
    h. Total Assets 1,072,800.00 624,000.00 82,200.00 1,779,000.00 1,072,800.00 624,000.00
    i. AP 120,000.00 120,000.00 - 240,000.00 120,000.00 120,000.00
    j. BP 240,000.00 120,000.00 (3,600.00) 356,400.00 240,000.00 120,000.00
    k. Total Liabilities 360,000.00 240,000.00 (3,600.00) 596,400.00 360,000.00 240,000.00
    l. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
    m. RE - - - 490,440.00
    n. Sales 480,000.00 240,000.00 720,000.00 480,000.00 240,000.00
    o. Cost of Goods Sold 204,000.00 138,000.00 6,000.00 348,000.00 204,000.00 138,000.00
    p. Gross Profit 276,000.00 102,000.00 (6,000.00) 372,000.00 276,000.00 102,000.00
    q. Expenses - GW Impair 108,000.00 42,000.00 10,200.00 160,200.00 108,000.00 42,000.00
    r. Div Income - - - - - -
    s. CICNI 168,000.00 60,000.00 (25,560.00) 202,440.00 168,000.00 60,000.00
    t. NCICNI - - 9,360.00 9,360.00 - -
    u. CNI 168,000.00 60,000.00 (16,200.00) 211,800.00 168,000.00 60,000.00
    v. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
    w. RE - see below 490,440.00
    x. Controlling Interest 1,090,440.00
    y. NCI - see below 92,160.00
    z1. SHE 1,182,600.00
    z2 Liabilities and SHE 1,779,000.00
    Supporting Computations : Conso Balances - Dec 31, 20x4
    Dec 31, 20x4: Partial Goodwill Full l Goodwill
    CNI CICNI NCICNI CNI CICNI
    Pascal NI - Own 168,000.00 168,000.00 - 168,000.00 168,000.00
    Sax NI 60,000.00 48,000.00 12,000.00 60,000.00 48,000.00
    Amortization (13,200.00) (10,560.00) (2,640.00) (13,200.00) (10,560.00)
    Goodwill Impairment (3,000.00) (3,000.00) - (3,750.00) (3,000.00)
    Conso Balances 211,800.00 202,440.00 9,360.00 211,050.00 202,440.00

    RE - Pascal Co - Jan 1, 20x4 360,000.00 360,000.00


    CICNI - 20x4 202,440.00 202,440.00
    Div Paid (72,000.00) (72,000.00)
    Cons RE - Dec 31, 20x4 490,440.00 490,440.00

    NCI - Jan 1, 20x4 90,000.00 93,000.00


    NCICNI 9,360.00 8,610.00
    Div Paid ( 36,000 x 20%) (7,200.00) (7,200.00)
    NCI - Dec 31, 20x4 92,160.00 94,410.00

    Common Stock - Pascal 600,000.00 600,000.00


    Conso RE - Dec 31, 20x4 490,440.00 490,440.00
    NCI - Dec 31, 20x4 92,160.00 94,410.00
    Conso SHE - Dec 31, 20x4 1,182,600.00 1,184,850.00

    2.) Conso Balance for Dec 31, 20X4 and Dec 31, 2015 Under Full GW and Partial GW
    Dec 31, 20X5 - Partial Goodwill Dec 31, 20X5 - Full G
    Parent Subsidiary Eliminations Conso Balances Parent Subsidiary
    a. Cash 265,200.00 102,000.00 - 367,200.00 265,200.00 102,000.00
    b. AR 180,000.00 96,000.00 - 276,000.00 180,000.00 96,000.00
    c. Inventory 216,000.00 108,000.00 - 324,000.00 216,000.00 108,000.00
    d. Land 210,000.00 48,000.00 7,200.00 265,200.00 210,000.00 48,000.00
    e. Equipment, net 90,000.00 78,000.00 72,000.00 240,000.00 90,000.00 78,000.00
    f. Buildings, net 270,000.00 234,000.00 (12,000.00) 492,000.00 270,000.00 234,000.00
    g. Investment in Sax - - - - - -
    h. Total Assets 1,231,200.00 666,000.00 76,200.00 1,973,400.00 1,231,200.00 666,000.00
    i. AP 120,000.00 120,000.00 - 240,000.00 120,000.00 120,000.00
    j. BP 240,000.00 120,000.00 (2,400.00) 357,600.00 240,000.00 120,000.00
    k. Total Liabilities 360,000.00 240,000.00 (2,400.00) 597,600.00 360,000.00 240,000.00
    l. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
    m. RE, See Below - - - 676,680.00 - -
    n. Sales 540,000.00 360,000.00 900,000.00 540,000.00 360,000.00
    o. Cost of Goods Sold 216,000.00 192,000.00 - 408,000.00 216,000.00 192,000.00
    p. Gross Profit 324,000.00 168,000.00 - 492,000.00 324,000.00 168,000.00
    q. Expenses - GW Impair 132,000.00 78,000.00 7,200.00 217,200.00 132,000.00 78,000.00
    r. Div Income - - - - - -
    s. CICNI 192,000.00 90,000.00 (23,760.00) 258,240.00 192,000.00 90,000.00
    t. NCICNI - - 16,560.00 16,560.00 - -
    u. CNI 192,000.00 90,000.00 (7,200.00) 274,800.00 192,000.00 90,000.00
    v. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
    w. RE - see below 676,680.00
    x. Controlling Interest 1,276,680.00
    y. NCI - see below 99,120.00
    z1. SHE 1,375,800.00
    z2 Liabilities and SHE 1,973,400.00

    Supporting Computations : Conso Balances - Dec 31, 20x5


    Partial Goodwill Full Goodwill
    Dec 31, 20x5:
    CNI CICNI NCICNI CNI CICNI
    Pascal NI - Own 192,000.00 192,000.00 - 192,000.00 192,000.00
    Sax NI 90,000.00 72,000.00 18,000.00 90,000.00 72,000.00
    Amortization (7,200.00) (5,760.00) (1,440.00) (7,200.00) (5,760.00)
    Conso Balances 274,800.00 258,240.00 16,560.00 274,800.00 258,240.00
    RE - Pascal Co - Dec 31, 20x4 490,440.00 490,440.00
    CICNI - 20x5 258,240.00 258,240.00
    Div Paid (72,000.00) (72,000.00)
    Cons RE - Dec 31, 20x5 676,680.00 676,680.00

    NCI - Dec 31, 20x4 92,160.00 94,410.00


    NCICNI - 20x5 16,560.00 16,560.00
    Div Paid ( 48,000 x 20%) (9,600.00) (9,600.00)
    NCI - Dec 31, 20x5 99,120.00 101,370.00

    Common Stock - Pascal 600,000.00 600,000.00


    Conso RE - Dec 31, 20x4 676,680.00 676,680.00
    NCI - Dec 31, 20x4 99,120.00 101,370.00
    Conso SHE - Dec 31, 20x4 1,375,800.00 1,378,050.00

    3.) Journal Entry to record the investment in the Books of the Acquirer

    Jan 01, 20X4: Full Goodwill Partial Goodwill


    Investment in Sax Co. 372,000.00 372,000.00
    Cash 372,000.00
    20x4:
    Cash ( 36,000 x 80%) 28,800.00 28,800.00
    Dividend Income 28,800.00

    4.) D & A Of Excess Schedule Full GW Partial GW


    Total CI (80%) NCI 20%
    FV of Sax Co. 465,000.00 372,000.00 93,000.00
    less: BV of SHE - Sax
    CS 240,000.00
    RE 120,000.00 360,000.00 288,000.00 72,000.00
    Allocated Excess 105,000.00 84,000.00 21,000.00
    Less: Allocation
    Inc in Inventory 6,000.00
    Inc in Land 7,200.00
    Inc in Equipment 96,000.00
    Dec in Buildings (24,000.00)
    Dec in Bonds Payable 4,800.00 90,000.00 72,000.00 18,000.00
    Goodwill 15,000.00 12,000.00 3,000.00

    Amortization Schedule: Life 20x4 20x5


    Inventory 6,000.00 1 6,000.00 - DR
    Equipment 96,000.00 8 12,000.00 12,000.00 DR
    Buildings (24,000.00) 4 (6,000.00) (6,000.00) CR
    Bonds Payable 4,800.00 4 1,200.00 1,200.00 DR
    Total 13,200.00 7,200.00

    Goodwill Impairment Loss 3,750.00 - DR

    Full Goodwill Partial Goodwill


    5.) ELIMINATING ENTRIES Year 20x4
    E1. Common Stock - Sax 240,000.00 240,000.00
    Retained Earnings - Sax 120,000.00 120,000.00
    Investment in Sax Co. 288,000.00
    NCI 72,000.00

    E2. Inventory 6,000.00 6,000.00


    AD - Equipment 96,000.00 96,000.00
    AD - Buildings 192,000.00 192,000.00
    Land 7,200.00 7,200.00
    Discount on BP 4,800.00 4,800.00
    Goodwill 15,000.00 12,000.00
    Buildings (192K + 24K) 216,000.00
    Investment in Sax Co. 84,000.00
    NCI 21,000.00

    E3. Cost of Sales 6,000.00 6,000.00


    Depreciation Expense (12K-6K) 6,000.00 6,000.00
    AD - Buildings 6,000.00 6,000.00
    Interest Expense 1,200.00 1,200.00
    Goodwill Impairment Loss 3,750.00 3,000.00
    Inventory 6,000.00
    AD - Equipment 12,000.00
    Discount on BP 1,200.00
    Goodwill 3,750.00

    E4. Dividend Income 28,800.00 28,800.00


    NCI 7,200.00 7,200.00
    Dividends Declared 36,000.00

    E5. NCI in Sax Co Net Income 8,610.00 9,360.00


    NCI 8,610.00

    Year 20x5
    E1. Investment in Sax Co. 19,200.00 19,200.00
    Ret. Earnings - Pascal (24,000 x 80%) 19,200.00
    RE - Sax, 12/31/x4 144,000.00
    RE - Sax, 01/01/x4 120,000.00
    Increase in RE - Sax 20x4 24,000.00

    E2. Common Stock - Sax 240,000.00 240,000.00


    Retained Earnings - Sax 144,000.00 144,000.00
    Investment in Sax Co. (240k + 144k) X 80% 307,200.00
    NCI (240K+144k) X 20% 76,800.00

    E3. Inventory 6,000.00 6,000.00


    AD - Equipment 96,000.00 96,000.00
    AD - Buildings 192,000.00 192,000.00
    Land 7,200.00 7,200.00
    Discount on BP 4,800.00 4,800.00
    Goodwill 15,000.00 12,000.00
    Buildings (192K + 24K) 216,000.00
    Investment in Sax Co. 84,000.00
    NCI 21,000.00

    E4. Ret. Earnings - Pascal, Beg. (16,950 x 80%) 13,560.00 13,560.00


    NCI (16,950 x 20%) 3,390.00 (13,200 x 20%) 2,640.00
    Deprn. Expense 6,000.00 6,000.00
    AD - Buildings (6,000 x 2) 12,000.00 12,000.00
    Interest Exp. 1,200.00 1,200.00
    Inventory 6,000.00
    AD - Equipment (12,000 x 2) 24,000.00
    Discount on BP (1,200 x 2) 2,400.00
    Goodwill 3,750.00

    E5. Dividend Income 38,400.00 38,400.00


    NCI 9,600.00 9,600.00
    Dividends Declared 48,000.00

    E6. NCI in Sax Co Net Income 16,560.00 16,560.00


    NCI 16,560.00
    Under Partial GW

    Partial GW
    360,000.00
    90,000.00
    1,050,000.00

    20X4 - Full Goodwill


    Eliminations Conso Balances
    - 322,800.00
    - 150,000.00
    - 210,000.00
    7,200.00 265,200.00
    84,000.00 273,000.00 105,000.00
    (18,000.00) 549,000.00 84,000.00
    - - 96,000.00
    84,450.00 1,781,250.00 (12,000.00)
    - 240,000.00 273,000.00
    (3,600.00) 356,400.00
    (3,600.00) 596,400.00
    (240,000.00) 600,000.00 240,000.00
    490,440.00 120,000.00
    720,000.00 (4,800.00)
    6,000.00 348,000.00 1,200.00
    (6,000.00) 372,000.00 356,400.00
    10,950.00 160,950.00
    - -
    (25,560.00) 202,440.00
    8,610.00 8,610.00
    (16,200.00) 211,050.00
    (240,000.00) 600,000.00
    490,440.00
    1,090,440.00
    94,410.00
    1,184,850.00
    1,781,250.00
    dwill
    NCICNI
    -
    12,000.00
    (2,640.00)
    (750.00)
    8,610.00

    20X5 - Full Goodwill


    Eliminations Conso Balances
    - 367,200.00
    - 276,000.00
    - 324,000.00
    7,200.00 265,200.00
    72,000.00 240,000.00 90,000.00
    (12,000.00) 492,000.00 78,000.00
    - - 96,000.00
    78,450.00 1,975,650.00 (24,000.00)
    - 240,000.00 240,000.00
    (2,400.00) 357,600.00
    (2,400.00) 597,600.00 240,000.00
    (240,000.00) 600,000.00 120,000.00
    - 676,680.00 (4,800.00)
    900,000.00 2,400.00
    - 408,000.00 357,600.00
    - 492,000.00
    7,200.00 217,200.00
    - -
    (23,760.00) 258,240.00
    16,560.00 16,560.00
    (7,200.00) 274,800.00
    (240,000.00) 600,000.00
    676,680.00
    1,276,680.00
    101,370.00
    1,378,050.00
    1,975,650.00

    will 78,000.00
    96,000.00
    NCICNI (24,000.00)
    - 150,000.00
    18,000.00
    (1,440.00)
    16,560.00
    dwill

    372,000.00

    28,800.00

    dwill

    288,000.00
    72,000.00

    216,000.00
    84,000.00
    18,000.00
    6,000.00
    12,000.00
    1,200.00
    3,000.00

    36,000.00

    9,360.00

    19,200.00

    307,200.00
    76,800.00

    216,000.00
    84,000.00
    18,000.00

    6,000.00
    24,000.00
    2,400.00
    3,000.00

    48,000.00

    16,560.00
    6.) Worksheet for Consolidated FS - Dec 31, 20x4
    Cost Model - 80% Ownership (Partial Goodwill)
    Adjustments & Eliminations
    Income Statement Pascal Co. Sax Co. Dr Cr
    Sales 480,000 240,000
    Dividend Income 28,800 - 4 28,800
    Total Revenue 508,800 240,000
    Cost of Goods Sold 204,000 138,000 3 6,000
    Depreciation Expense 60,000 24,000 3 6,000
    Interest Expesne - - 3 1,200
    Other Expenses 48,000 18,000
    Goodwill Impairment Loss - - 3 3,000
    Total Costs & Expenses 312,000 180,000
    NET INCOME 196,800 60,000
    NCICNI 5 9,360
    CICNI

    Statement of Retained Earnings


    Retained Earnings, Jan 1
    Pascal Co. 360,000
    Sax Co. 120,000 1 120,000
    Net Income From Above 196,800 60,000
    Total 556,800 180,000
    Dividends Paid
    Pascal Co. 72,000
    Sax Co. 36,000 4
    Retained Earnings, Dec 31 484,800 144,000

    Balance Sheet
    Cash 232,800 90,000
    Accounts Receivable 90,000 60,000
    Inventory 120,000 90,000 2 6,000 3
    Land 210,000 48,000 2 7,200
    Equipment 240,000 180,000
    Building 720,000 540,000 2
    Discount on BP - - 2 4,800 3
    Goodwill - - 2 12,000 3
    Investment in Sax Co. 372,000 1
    2
    Total 1,984,800 1,008,000

    AD - Equipment 135,000 96,000 2 96,000 3


    AD - Building 405,000 288,000 2 192,000
    3 6,000
    Accounts Payable 120,000 120,000
    Bonds Payable 240,000 120,000
    Common Stock, P10 par - Pascal 600,000
    Common Stock, P10 par - Sax 240,000 1 240,000
    Retained Earnings
    Pascal Co. 484,800
    Sax Co. 144,000
    Non-Controlling Interest - 3 7,200 1
    2
    5
    Total 1,984,800 1,008,000 745,560

    Worksheet for Consolidated FS - Dec 31, 20x5


    Cost Model - 80% Ownership (Partial Goodwill)
    Adjustments & Eliminations
    Income Statement Pascal Co. Sax Co. Dr Cr
    Sales 540,000 360,000
    Dividend Income 38,400 - 5 38,400
    Total Revenue 578,400 360,000
    Cost of Goods Sold 216,000 192,000
    Depreciation Expense 60,000 24,000 4 6,000
    Interest Expesne - - 4 1,200
    Other Expenses 72,000 54,000
    Goodwill Impairment Loss - -
    Total Costs & Expenses 348,000 270,000
    NET INCOME 230,400 90,000
    NCICNI 6 16,560
    CICNI

    Statement of Retained Earnings


    Retained Earnings, Jan 1
    Pascal Co. 484,800 2 13,560 1
    Sax Co. 144,000 2 144,000
    Net Income From Above 230,400 90,000
    Total 715,200 234,000
    Dividends Paid
    Pascal Co. 72,000
    Sax Co. 48,000 5
    Retained Earnings, Dec 31 643,200 186,000

    Balance Sheet
    Cash 265,200 102,000
    Accounts Receivable 180,000 96,000
    Inventory 216,000 108,000 3 6,000 4
    Land 210,000 48,000 3 7,200
    Equipment 240,000 180,000
    Building 720,000 540,000 3
    Discount on BP - - 3 4,800 4
    Goodwill - - 3 12,000 4
    Investment in Sax Co. 372,000 1 19,200 2
    3
    Total 2,203,200 1,074,000

    AD - Equipment 150,000 102,000 3 96,000 4


    AD - Building 450,000 306,000 3 192,000
    4 12,000
    Accounts Payable 120,000 120,000
    Bonds Payable 240,000 120,000
    Common Stock, P10 par - Pascal 600,000
    Common Stock, P10 par - Sax 240,000 2 240,000
    Retained Earnings
    Pascal Co. 643,200
    Sax Co. 186,000
    Non-Controlling Interest - 4 2,640 2
    5 9,600 3
    6
    Total 2,203,200 1,074,000 821,160
    ments & Eliminations Consolidated
    Cr Balances
    720,000
    -
    720,000
    348,000
    90,000
    1,200
    66,000
    3,000
    508,200
    211,800
    (9,360)
    202,440

    360,000
    -
    202,440
    562,440

    72,000
    36,000 -
    490,440

    322,800
    150,000
    6,000 210,000
    265,200
    420,000
    216,000 1,044,000
    1,200 3,600
    3,000 9,000
    288,000 -
    84,000
    2,424,600 1,779,000

    12,000 147,000
    495,000

    240,000
    360,000
    600,000
    -

    490,440

    72,000 92,160
    18,000
    9,360
    745,560 2,424,600

    ments & Eliminations Consolidated


    Cr Balances
    900,000
    -
    900,000
    408,000
    90,000
    1,200
    126,000
    -
    625,200
    274,800
    (16,560)
    258,240

    19,200 490,440
    -
    258,240
    748,680

    72,000
    48,000 -
    676,680

    367,200
    276,000
    6,000 324,000
    265,200
    420,000
    216,000 1,044,000
    2,400 2,400
    3,000 9,000
    307,200 -
    84,000
    2,707,800

    24,000 180,000
    552,000

    240,000
    360,000
    600,000
    -

    676,680

    76,800 99,120
    18,000
    16,560
    821,160 2,707,800
    Chapter 3 - ConSta - Subsequent to Acquisition Date

    Problem 2 - Pascal and Sax - Equity Method

    4.) D & A Of Excess Schedule Full GW Partial GW


    Total CI (80%) NCI 20%
    FV of Sax Co. 465,000.00 372,000.00 93,000.00 ==> NCI Under Full GW
    less: BV of SHE - Sax
    CS 240,000.00
    RE 120,000.00 360,000.00 288,000.00 72,000.00
    Allocated Excess 105,000.00 84,000.00 21,000.00
    Less: Allocation
    Inc in Inventory 6,000.00
    Inc in Land 7,200.00
    Inc in Equipment 96,000.00
    Dec in Buildings (24,000.00)
    Dec in Bonds Payable 4,800.00 90,000.00 72,000.00 18,000.00
    Goodwill 15,000.00 12,000.00 3,000.00 90,000.00 ==> NCI Under Partial

    Amortization Schedule: Life 20x4 20x5


    Inventory 6,000.00 1 6,000.00 - DR
    Equipment 96,000.00 8 12,000.00 12,000.00 DR
    Buildings (24,000.00) 4 (6,000.00) (6,000.00) CR
    Bonds Payable 4,800.00 4 1,200.00 1,200.00 DR
    Total 13,200.00 7,200.00

    Goodwill Impairment Loss 3,750.00 - DR

    1.) Conso Balances - Jan. 1, 20x4: Full GW


    a. Retained Earnings - only that of the parent 360,000.00
    b. Non Controlling Interest 93,000.00
    c. SHE (600K + 360K + 93K) 1,053,000.00 (600K + 360K + 90K)

    2.) Conso Balance for Dec 31, 20X4 and Dec 31, 2015 Under Full GW and Partial GW

    Dec 31, 20X4 - Partial Goodwill Dec 31, 20X4 - Full G


    Parent Subsidiary Eliminations Conso Balances Parent Subsidiary
    a. Cash 232,800.00 90,000.00 - 322,800.00 232,800.00 90,000.00
    b. AR 90,000.00 60,000.00 - 150,000.00 90,000.00 60,000.00
    c. Inventory 120,000.00 90,000.00 - 210,000.00 120,000.00 90,000.00
    d. Land 210,000.00 48,000.00 7,200.00 265,200.00 210,000.00 48,000.00
    e. Equipment, net 105,000.00 84,000.00 84,000.00 273,000.00 105,000.00 84,000.00
    f. Buildings, net 315,000.00 252,000.00 (18,000.00) 549,000.00 315,000.00 252,000.00
    g. Investment in Sax - - - - - -
    h. Total Assets 1,072,800.00 624,000.00 82,200.00 1,779,000.00 1,072,800.00 624,000.00
    i. AP 120,000.00 120,000.00 - 240,000.00 120,000.00 120,000.00
    j. BP 240,000.00 120,000.00 (3,600.00) 356,400.00 240,000.00 120,000.00
    k. Total Liabilities 360,000.00 240,000.00 (3,600.00) 596,400.00 360,000.00 240,000.00
    l. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
    m. RE - - - 490,440.00
    n. Sales 480,000.00 240,000.00 720,000.00 480,000.00 240,000.00
    o. Cost of Goods Sold 204,000.00 138,000.00 6,000.00 348,000.00 204,000.00 138,000.00
    p. Gross Profit 276,000.00 102,000.00 (6,000.00) 372,000.00 276,000.00 102,000.00
    q. Expenses - GW Impair 108,000.00 42,000.00 10,200.00 160,200.00 108,000.00 42,000.00
    r. Div Income - - - - - -
    s. CICNI 168,000.00 60,000.00 (25,560.00) 202,440.00 168,000.00 60,000.00
    t. NCICNI - - 9,360.00 9,360.00 - -
    u. CNI 168,000.00 60,000.00 (16,200.00) 211,800.00 168,000.00 60,000.00
    v. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
    w. RE - see below 490,440.00
    x. Controlling Interest 1,090,440.00
    y. NCI - see below 92,160.00
    z1. SHE 1,182,600.00
    z2 Liabilities and SHE 1,779,000.00
    Supporting Computations : Conso Balances - Dec 31, 20x4
    Dec 31, 20x4: Partial Goodwill Full l Goodwill
    CNI CICNI NCICNI CNI CICNI
    Pascal NI - Own 168,000.00 168,000.00 - 168,000.00 168,000.00
    Sax NI 60,000.00 48,000.00 12,000.00 60,000.00 48,000.00
    Amortization (13,200.00) (10,560.00) (2,640.00) (13,200.00) (10,560.00)
    Goodwill Impairment (3,000.00) (3,000.00) - (3,750.00) (3,000.00)
    Conso Balances 211,800.00 202,440.00 9,360.00 211,050.00 202,440.00

    RE - Pascal Co - Jan 1, 20x4 360,000.00 360,000.00


    CICNI - 20x4 202,440.00 202,440.00
    Div Paid (72,000.00) (72,000.00)
    Cons RE - Dec 31, 20x4 490,440.00 490,440.00

    NCI - Jan 1, 20x4 90,000.00 93,000.00


    NCICNI 9,360.00 8,610.00
    Div Paid ( 36,000 x 20%) (7,200.00) (7,200.00)
    NCI - Dec 31, 20x4 92,160.00 94,410.00

    Common Stock - Pascal 600,000.00 600,000.00


    Conso RE - Dec 31, 20x4 490,440.00 490,440.00
    NCI - Dec 31, 20x4 92,160.00 94,410.00
    Conso SHE - Dec 31, 20x4 1,182,600.00 1,184,850.00

    2.) Conso Balance for Dec 31, 20X4 and Dec 31, 2015 Under Full GW and Partial GW
    Dec 31, 20X5 - Partial Goodwill Dec 31, 20X5 - Full G
    Parent Subsidiary Eliminations Conso Balances Parent Subsidiary
    a. Cash 265,200.00 102,000.00 - 367,200.00 265,200.00 102,000.00
    b. AR 180,000.00 96,000.00 - 276,000.00 180,000.00 96,000.00
    c. Inventory 216,000.00 108,000.00 - 324,000.00 216,000.00 108,000.00
    d. Land 210,000.00 48,000.00 7,200.00 265,200.00 210,000.00 48,000.00
    e. Equipment, net 90,000.00 78,000.00 72,000.00 240,000.00 90,000.00 78,000.00
    f. Buildings, net 270,000.00 234,000.00 (12,000.00) 492,000.00 270,000.00 234,000.00
    g. Investment in Sax - - - - - -
    h. Total Assets 1,231,200.00 666,000.00 76,200.00 1,973,400.00 1,231,200.00 666,000.00
    i. AP 120,000.00 120,000.00 - 240,000.00 120,000.00 120,000.00
    j. BP 240,000.00 120,000.00 (2,400.00) 357,600.00 240,000.00 120,000.00
    k. Total Liabilities 360,000.00 240,000.00 (2,400.00) 597,600.00 360,000.00 240,000.00
    l. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
    m. RE - - - 676,680.00 - -
    n. Sales 540,000.00 360,000.00 900,000.00 540,000.00 360,000.00
    o. Cost of Goods Sold 216,000.00 192,000.00 - 408,000.00 216,000.00 192,000.00
    p. Gross Profit 324,000.00 168,000.00 - 492,000.00 324,000.00 168,000.00
    q. Expenses - GW Impair 132,000.00 78,000.00 7,200.00 217,200.00 132,000.00 78,000.00
    r. Div Income - - - - - -
    s. CICNI 192,000.00 90,000.00 (23,760.00) 258,240.00 192,000.00 90,000.00
    t. NCICNI - - 16,560.00 16,560.00 - -
    u. CNI 192,000.00 90,000.00 (7,200.00) 274,800.00 192,000.00 90,000.00
    v. CS/Ordinary Shares 600,000.00 240,000.00 (240,000.00) 600,000.00 600,000.00 240,000.00
    w. RE - see below 676,680.00
    x. Controlling Interest 1,276,680.00
    y. NCI - see below 99,120.00
    z1. SHE 1,375,800.00
    z2 Liabilities and SHE 1,973,400.00

    Supporting Computations : Conso Balances - Dec 31, 20x5


    Partial Goodwill Full Goodwill
    Dec 31, 20x5:
    CNI CICNI NCICNI CNI CICNI
    Pascal NI - Own 192,000.00 192,000.00 - 192,000.00 192,000.00
    Sax NI 90,000.00 72,000.00 18,000.00 90,000.00 72,000.00
    Amortization (7,200.00) (5,760.00) (1,440.00) (7,200.00) (5,760.00)
    Conso Balances 274,800.00 258,240.00 16,560.00 274,800.00 258,240.00
    RE - Pascal Co - Dec 31, 20x4 490,440.00 490,440.00
    CICNI - 20x5 258,240.00 258,240.00
    Div Paid (72,000.00) (72,000.00)
    Cons RE - Dec 31, 20x5 676,680.00 676,680.00

    NCI - Dec 31, 20x4 92,160.00 94,410.00


    NCICNI - 20x5 16,560.00 16,560.00
    Div Paid ( 48,000 x 20%) (9,600.00) (9,600.00)
    NCI - Dec 31, 20x5 99,120.00 101,370.00

    Common Stock - Pascal 600,000.00 600,000.00


    Conso RE - Dec 31, 20x4 676,680.00 676,680.00
    NCI - Dec 31, 20x4 99,120.00 101,370.00
    Conso SHE - Dec 31, 20x4 1,375,800.00 1,378,050.00

    3.) Journal Entry to record the investment in the Books of the Acquirer

    Jan 01, 20X4: Full Goodwill Partial Goodwill


    Investment in Sax Co. 372,000.00 372,000.00
    Cash 372,000.00
    20x4:
    Cash ( 36,000 x 80%) 28,800.00 28,800.00
    Investment in Sax Co. 28,800.00

    Dec. 31, 20X4:


    Investment in Sax Co. 48,000.00 48,000.00
    Investment Income (P60,000 x 80%) 48,000.00

    Investment Income (P16,950 x 80%) 13,560.00 13,560.00


    Investment in Sax Co. 13,560.00

    4.) D & A Of Excess Schedule Full GW Partial GW


    Total CI (80%) NCI 20%
    FV of Sax Co. 465,000.00 372,000.00 93,000.00
    less: BV of SHE - Sax
    CS 240,000.00
    RE 120,000.00 360,000.00 288,000.00 72,000.00
    Allocated Excess 105,000.00 84,000.00 21,000.00
    Less: Allocation
    Inc in Inventory 6,000.00
    Inc in Land 7,200.00
    Inc in Equipment 96,000.00
    Dec in Buildings (24,000.00)
    Dec in Bonds Payable 4,800.00 90,000.00 72,000.00 18,000.00
    Goodwill 15,000.00 12,000.00 3,000.00

    Amortization Schedule: Life 20x4 20x5


    Inventory 6,000.00 1 6,000.00 - DR
    Equipment 96,000.00 8 12,000.00 12,000.00 DR
    Buildings (24,000.00) 4 (6,000.00) (6,000.00) CR
    Bonds Payable 4,800.00 4 1,200.00 1,200.00 DR
    Total 13,200.00 7,200.00

    Goodwill Impairment Loss 3,750.00 - DR

    Full Goodwill Partial Goodwill


    5.) ELIMINATING ENTRIES Year 20x4
    E1. Common Stock - Sax 240,000.00 240,000.00
    Retained Earnings - Sax 120,000.00 120,000.00
    Investment in Sax Co. 288,000.00
    NCI 72,000.00

    E2. Inventory 6,000.00 6,000.00


    AD - Equipment 96,000.00 96,000.00
    AD - Buildings 192,000.00 192,000.00
    Land 7,200.00 7,200.00
    Discount on BP 4,800.00 4,800.00
    Goodwill 15,000.00 12,000.00
    Buildings (192K + 24K) 216,000.00
    Investment in Sax Co. 84,000.00
    NCI 21,000.00

    E3. Cost of Sales 6,000.00 6,000.00


    Depreciation Expense (12K-6K) 6,000.00 6,000.00
    AD - Buildings 6,000.00 6,000.00
    Interest Expense 1,200.00 1,200.00
    Goodwill Impairment Loss 3,750.00 3,000.00
    Inventory 6,000.00
    AD - Equipment 12,000.00
    Discount on BP 1,200.00
    Goodwill 3,750.00

    E4. Investment Income 34,440.00 34,440.00


    NCI (36,000 x 20%) 7,200.00 7,200.00
    Dividends Declared - Sax 36,000.00
    Investment in Sax Co. 5,640.00

    E5. NCI in Sax Co Net Income 8,610.00 9,360.00


    NCI 8,610.00
    =====0=====0=====0=====0====0=====0=====0=====0=====0=====0=====0=====0====0=====0====0=====0====0=====0====0====0=====0=====0==
    20X5 Entries in the Books of Parent relative to its Investment in Sax - (Not required but necessary)
    Full Goodwill Partial Goodwill
    Year 20x5
    Jan 1 to Dec 31, 20X5:
    Cash (P48,000 x 80%) 38,400.00 38,400.00
    Investment in Sax Co. 38,400.00

    Dec 31, 20X4:


    Investment in Sax Co. 72,000.00 72,000.00
    Investment Income (P90,000 x 80%) 72,000.00

    Investment Income 5,760.00 5,760.00


    Investment in Sax Co. (P7,200 x 80%) 5,760.00

    =====0=====0=====0=====0====0=====0=====0=====0=====0=====0=====0=====0====0=====0====0=====0====0=====0====0====0=====0=====0==
    Full Goodwill Partial Goodwill
    Year 20x5
    E1. Common Stock - Sax 240,000.00 240,000.00
    Retained Earnings - Sax 144,000.00 144,000.00
    Investment in Sax Co. (240k + 144k) X 80% 307,200.00
    NCI (240K+144k) X 20% 76,800.00

    E2. AD - Equipment (P96,000 - 12,000) 84,000.00 84,000.00


    AD - Buildings (P192,000 + 6,000) 198,000.00 198,000.00
    Land 7,200.00 7,200.00
    Discount on BP (P4,800 - 1,200) 3,600.00 3,600.00
    Goodwill (P15,000 - 3,750) 11,250.00 (P12,000 - 3,000) 9,000.00
    Buildings (192K + 24K) 216,000.00
    Investment in Sax Co. (80%) 70,440.00
    NCI (20%) 17,610.00 (17,610 - 3000+750)

    E3. Deprn. Expense 6,000.00 6,000.00


    AD - Buildings 6,000.00 6,000.00
    Interest Exp. 1,200.00 1,200.00
    AD - Equipment 12,000.00
    Discount on BP 1,200.00

    E4. Investment Income (P72,000 - (7,200 x 80%) 66,240.00 66,240.00


    NCI (P48,000 x 20%) 9,600.00 9,600.00
    Dividends Declared 48,000.00
    Investment in Sax Co. 27,840.00

    E5. NCI in Sax Co Net Income 16,560.00 16,560.00


    NCI 16,560.00
    Under Partial GW

    Partial GW
    360,000.00
    90,000.00
    1,050,000.00

    20X4 - Full Goodwill


    Eliminations Conso Balances
    - 322,800.00
    - 150,000.00
    - 210,000.00
    7,200.00 265,200.00
    84,000.00 273,000.00 105,000.00
    (18,000.00) 549,000.00 84,000.00
    - - 96,000.00
    84,450.00 1,781,250.00 (12,000.00)
    - 240,000.00 273,000.00
    (3,600.00) 356,400.00
    (3,600.00) 596,400.00
    (240,000.00) 600,000.00 240,000.00
    490,440.00 120,000.00
    720,000.00 (4,800.00)
    6,000.00 348,000.00 1,200.00
    (6,000.00) 372,000.00 356,400.00
    10,950.00 160,950.00
    - -
    (25,560.00) 202,440.00
    8,610.00 8,610.00
    (16,200.00) 211,050.00
    (240,000.00) 600,000.00
    490,440.00
    1,090,440.00
    94,410.00
    1,184,850.00
    1,781,250.00
    dwill
    NCICNI
    -
    12,000.00
    (2,640.00)
    (750.00)
    8,610.00

    20X5 - Full Goodwill


    Eliminations Conso Balances
    - 367,200.00
    - 276,000.00
    - 324,000.00
    7,200.00 265,200.00
    72,000.00 240,000.00 90,000.00
    (12,000.00) 492,000.00 78,000.00
    - - 96,000.00
    78,450.00 1,975,650.00 (24,000.00)
    - 240,000.00 240,000.00
    (2,400.00) 357,600.00
    (2,400.00) 597,600.00 240,000.00
    (240,000.00) 600,000.00 120,000.00
    - 676,680.00 (4,800.00)
    900,000.00 2,400.00
    - 408,000.00 357,600.00
    - 492,000.00
    7,200.00 217,200.00
    - -
    (23,760.00) 258,240.00
    16,560.00 16,560.00
    (7,200.00) 274,800.00
    (240,000.00) 600,000.00
    676,680.00
    1,276,680.00
    101,370.00
    1,378,050.00
    1,975,650.00

    will 78,000.00
    96,000.00
    NCICNI (24,000.00)
    - 150,000.00
    18,000.00
    (1,440.00)
    16,560.00
    dwill
    Investment in Sax Co. (Partial)
    372,000.00 372,000.00 28,800.00
    48,000.00 13,560.00
    420,000.00 42,360.00
    28,800.00 Bal. 377,640.00
    288,000.00 E1
    84,000.00 E2
    5,640.00 E4
    48,000.00 377,640.00 377,640.00

    13,560.00 Investment Income (Partial)


    13,560.00 48,000.00
    34,440.00 Bal
    E4 34,440.00
    34,440.00 34,440.00

    dwill

    288,000.00
    72,000.00
    216,000.00
    84,000.00
    18,000.00

    6,000.00
    12,000.00
    1,200.00
    3,000.00

    (48,000 - 13,560)

    36,000.00
    5,640.00

    9,360.00
    ==0=====0======0=====0

    dwill

    Investment in Sax Co. (Partial)


    377,640.00 38,400.00
    38,400.00 72,000.00 5,760.00
    449,640.00 44,160.00
    Bal. 405,480.00
    307,200.00 E1
    72,000.00 70,440.00 E2
    27,840.00 E4
    405,480.00 405,480.00
    5,760.00

    ==0=====0======0=====0 Investment Income (Partial)


    dwill 5,760.00 72,000.00
    66,240.00 Bal
    E4 66,240.00
    66,240.00 66,240.00
    307,200.00
    76,800.00

    216,000.00
    70,440.00
    15,360.00

    12,000.00
    1,200.00

    48,000.00
    27,840.00

    16,560.00
    6.) Worksheet for Consolidated FS - Dec 31, 20x4
    Equity Model - 80% Ownership (Partial Goodwill)
    Adjustments & Eliminations
    Income Statement Pascal Co. Sax Co. Dr Cr
    Sales 480,000 240,000
    Investment Income 34,440 - 4 34,440
    Total Revenue 514,440 240,000
    Cost of Goods Sold 204,000 138,000 3 6,000
    Depreciation Expense 60,000 24,000 3 6,000
    Interest Expesne - - 3 1,200
    Other Expenses 48,000 18,000
    Goodwill Impairment Loss - - 3 3,000
    Total Costs & Expenses 312,000 180,000
    NET INCOME 202,440 60,000
    NCICNI 5 9,360
    CICNI

    Statement of Retained Earnings


    Retained Earnings, Jan 1
    Pascal Co. 360,000
    Sax Co. 120,000 1 120,000
    Net Income From Above 202,440 60,000
    Total 562,440 180,000
    Dividends Paid
    Pascal Co. 72,000
    Sax Co. 36,000 4
    Retained Earnings, Dec 31 490,440 144,000

    Balance Sheet
    Cash 232,800 90,000
    Accounts Receivable 90,000 60,000
    Inventory 120,000 90,000 2 6,000 3
    Land 210,000 48,000 2 7,200
    Equipment 240,000 180,000
    Building 720,000 540,000 2
    Discount on BP - - 2 4,800 3
    Goodwill - - 2 12,000 3
    Investment in Sax Co. 377,640 2
    2
    4
    Total 1,990,440 1,008,000

    AD - Equipment 135,000 96,000 2 96,000 3


    AD - Building 405,000 288,000 2 192,000
    3 6,000
    Accounts Payable 120,000 120,000
    Bonds Payable 240,000 120,000
    Common Stock, P10 par - Pascal 600,000
    Common Stock, P10 par - Sax 240,000 1 240,000
    Retained Earnings
    Pascal Co. 490,440
    Sax Co. 144,000
    Non-Controlling Interest - 4 7,200 1
    2
    5
    Total 1,990,440 1,008,000 751,200

    Worksheet for Consolidated FS - Dec 31, 20x5


    Cost Model - 80% Ownership (Partial Goodwill)
    Adjustments & Eliminations
    Income Statement Pascal Co. Sax Co. Dr Cr
    Sales 540,000 360,000
    Investment Income 66,240 - 4 66,240
    Total Revenue 606,240 360,000
    Cost of Goods Sold 216,000 192,000
    Depreciation Expense 60,000 24,000 3 6,000
    Interest Expesne - - 3 1,200
    Other Expenses 72,000 54,000
    Goodwill Impairment Loss - -
    Total Costs & Expenses 348,000 270,000
    NET INCOME 258,240 90,000
    NCICNI 5 16,560
    CICNI

    Statement of Retained Earnings


    Retained Earnings, Jan 1
    Pascal Co. 490,440
    Sax Co. 144,000 1 144,000
    Net Income From Above 258,240 90,000
    Total 748,680 234,000
    Dividends Paid
    Pascal Co. 72,000
    Sax Co. 48,000 4
    Retained Earnings, Dec 31 676,680 186,000

    Balance Sheet
    Cash 265,200 102,000
    Accounts Receivable 180,000 96,000
    Inventory 216,000 108,000
    Land 210,000 48,000 2 7,200
    Equipment 240,000 180,000
    Building 720,000 540,000 3
    Discount on BP - - 3 3,600 3
    Goodwill - - 3 9,000
    Investment in Sax Co. 405,480 2
    2
    4
    Total 2,236,680 1,074,000

    AD - Equipment 150,000 102,000 2 84,000 3


    AD - Building 450,000 306,000 2 198,000
    3 6,000
    Accounts Payable 120,000 120,000
    Bonds Payable 240,000 120,000
    Common Stock, P10 par - Pascal 600,000
    Common Stock, P10 par - Sax 240,000 1 240,000
    Retained Earnings
    Pascal Co. 676,680
    Sax Co. 186,000
    Non-Controlling Interest - 5 9,600 2
    2
    5
    Total 2,236,680 1,074,000 791,400
    ments & Eliminations Consolidated
    Cr Balances
    720,000
    -
    720,000
    348,000
    90,000
    1,200
    66,000
    3,000
    508,200
    211,800
    (9,360)
    202,440

    360,000
    -
    202,440
    562,440

    72,000
    36,000 -
    490,440

    322,800
    150,000
    6,000 210,000
    265,200
    420,000
    216,000 1,044,000
    1,200 3,600
    3,000 9,000
    288,000 -
    84,000
    5,640
    2,424,600 1,779,000

    12,000 147,000
    495,000
    240,000
    360,000
    600,000
    -

    490,440

    72,000 92,160
    18,000
    9,360
    751,200 2,424,600

    ments & Eliminations Consolidated


    Cr Balances
    900,000
    -
    900,000
    408,000
    90,000
    1,200
    126,000
    -
    625,200
    274,800
    (16,560)
    258,240

    490,440
    -
    258,240
    748,680

    72,000
    48,000 -
    676,680

    367,200
    276,000
    324,000
    265,200
    420,000
    216,000 1,044,000
    1,200 2,400
    9,000
    307,200 -
    70,440
    27,840
    2,707,800

    12,000 180,000
    552,000

    240,000
    360,000
    600,000
    -

    676,680

    76,800 99,120
    15,360
    16,560
    791,400 2,707,800
    Problem 5 - Cost Method

    D & A of Excess Schedule; Full Partial (CI) NCI


    Consideration/FV of Subsidiary 760,000.00 646,000.00 114,000.00
    BV of SHE Acquired (500K + 100k) 600,000.00 510,000.00 90,000.00
    Excess 160,000.00 136,000.00 24,000.00
    Allocation:
    Increase in Inventory 70,000.00
    Increase in Patent 90,000.00 160,000.00 136,000.00 24,000.00

    Amortization Of Allocated Excess:


    20x5 20x6
    Inventory - P70,000 / 1yr 70,000.00 -
    Patent - P90,000 / 10 yrs 9,000.00 9,000.00
    Total 79,000.00 9,000.00

    1-2.) 20x5 CNI CICNI NCICNI


    Parent's Net Income from own operations 28,000.00 28,000.00 -
    Subsidiary's net Income 30,000.00 25,500.00 4,500.00
    Amortization (79,000.00) (67,150.00) (11,850.00)
    Net Income/(Loss) (21,000.00) (13,650.00) (7,350.00)
    (2) (1)
    20x6 CNI CICNI NCICNI
    Parent's Net Income from own operations
    (P45,000) - (15,000 x 85%) (57,750.00) (57,750.00) -
    Subsidiary's net Income 52,000.00 44,200.00 7,800.00
    Amortization (9,000.00) (7,650.00) (1,350.00)
    Net Income/(Loss) (14,750.00) (21,200.00) 6,450.00
    (2) (1)

    3.) Pen's Retained Earnings, 12/31/x6 91,000.00


    Parent's share on undistributed Earnings of Silk:
    RE - Silk, 12/31/x6 (100K+30K+52K-15K) 167,000.00
    RE - Silk, 12/31/x4 100,000.00
    Undistributed Earnings 67,000.00
    Amortization: 20x5 (79,000.00)
    20x6 (9,000.00) (88,000.00)
    Adjusted Earnings/(Deficit) (21,000.00)
    X CI %age 85% (17,850.00)
    Consolidated Retained Earnings - 12/31/X6 73,150.00
    OR
    Pen's Retained Earnings, 12/31/x6 91,000.00
    Parent's share in Subs adjsuted NI:
    20X5 = (7,350) /15% x 85%) (41,650.00)
    20X6 = 6,450 / 15% X 85% 36,550.00
    20X6 Dividends Income from Subs (15,000 x 85%) (12,750.00)
    Consolidated Retained Earnings - 12/31/X6 73,150.00

    4.) FV of NCI, 12/31/x4 114,000.00 114,000.00


    Share on Undistributed Earnings: NCICNI -x5 (7,350.00)
    (21,000) x 15% (3,150.00) NCICNI -x6 6,450.00
    NCI Value, 12/31/x6 110,850.00 Div (15K x 15%) (2,250.00)
    NCI, 12/31/x6 110,850.00

    5.) Patent, 12/31/x4 90,000.00


    Less: Amortization, 20x5 to 20x6:
    (9,000 x 2years) 18,000.00
    Patent, 12/31/x6 72,000.00
    760,000.00
    114,000.00

    Loss (57,750.00)
    Div Inc. 12,750.00
    (45,000.00)

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