![Firda Arfianti - LC53 - Equity Method, Two Consecutive Years [PDF]](https://pdfs.asia/img/200x200/firda-arfianti-lc53-equity-method-two-consecutive-years.jpg)
9 0 76 KB
Nama : Firda Arfianti NIM
: 2301949596
Kelas
: LC53
SESI 6 – ADVANCED ACCOUNTING Equity Method, Two Consecutive Years Kerjakan PROBLEM 4-12, halaman 185, Parker Company dan Sid Company ANSWER: PROBLEM 4-12 Equity Method, Two Consecutive Years On January 1, 2017, Parker Company purchased 90% of the outstanding common stock of Sid Company for $180,000. At that time, Sid’s stockholders’ equity consisted of common stock, $120,000; other contributed capital, $20,000; and retained earnings, $25,000. Assume that any difference between book value of equity and the value implied by the purchase price is attributable to land. On December 31, 2017, the two companies’ trial balances were as follows: Parker
Sid
Cash
$ 65,000
$ 35,000
Accounts Receivable
40,000
30,000
Inventory
25,000
15,000
Investment in Sid Company
184,500
—0—
Plant and Equipment
110,000
85,000
Land
48,500
45,000
Dividends Declared
20,000
15,000
Cost of Goods Sold
150,000
60,000
Operating Expenses
35,000
15,000
Total Debits
$678,000
$300,000
Accounts Payable
$ 20,000
$ 15,000
Other Liabilities
15,000
25,000
Common Stock, par value $10
200,000
120,000
Other Contributed Capital
70,000
20,000
Retained Earnings, 1/1
55,000
25,000
Sales
300,000
95,000
Equity in Subsidiary Income
18,000
—0—
Total Credits
$678,000
$300,000
Required: A. Prepare a consolidated statements workpaper on December 31, 2017. Answer: Parker Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December, 2017 Parker Sid Eliminating Entries Company Company Dr. Cr. Income Statement Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Operating Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Parker Company Sid Company Net Income from above Dividends Declared Parker Company Sid Company Retained Earnings 12/31 Balance Sheet Cash Accounts Receivable Inventory 12/31 Investment in Sid Company Difference h/w Implied & Book Value Plant and Equipment Land Total Accounts Payable Other Liabilities Common Stock Parker Company Sid Company
300,000 18,000 318,000 150,000 35,000 185,000 133,000
95,000 (1) 95,000 60,000 15,000 75,000 20,000
133,000
20,000
Noncontrolling Interest
395,000 18,000
2,000* 2,000
18,000
55,000 133,000
65,000 40,000 25,000 184,500
25,000 (2) 20,000
25,000 18,000
(15,000) 30,000
(1) 43,000
2,000
133,000 (20,000)
13,500 13,500
35,000 30,000 15,000
(2) 110,000 48,500 473,000 20,000 15,000
395,000 210,000 50,000 260,000 135,000 (2,000) 133,000
55,000
(20,000) 168,000
Consolidated Balance
85,000 45,000 (3) 210,000 15,000 25,000
200,000
(1,500) 500
168,000
100,000 70,000 40,000 (1) (2) 35,000 (3)
35,000
4,500 180,000 35,000 195,000 128,500 533,500 35,000 40,000 200,000
120,000 (2)
Other Contributed Capital Parker Company Sid Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31
70,000 168,000
473,000
70,000 20,000 (2) 30,000
210,000
20,000 43,000 (2) 253,000
13,500 20,000
500 20,000 20,500
253,000
*($20,000 x 0.10) = $2,000 (1) To eliminate intercompany dividends and income (2) To eliminate investment in Sid Company and create noncontrolling interest account (3) To allocate the difference between implied and book value Computation and Allocation of Difference between Implied and Book Value Acquired
Purchase price and implied value Less: Book value of equity acquired: Difference between implied and book value Undervalued land Balance *$180,000/0.90
Parent Share 180,000 148,500 31,500 (31,500) -0-
Non-Controlling Share 20,000 16,500 3,500 (3,500) -0-
Entire Value 200,000* 165,000 35,000 (35,000) -0-
B. Prepare a consolidated statements workpaper on December 31, 2018, assuming trial balances for Parker and Sid on that date were: Parker
Sid
Cash
$ 70,000
$ 20,000
Accounts Receivable
60,000
35,000
Inventory
40,000
30,000
Investment in Sid Company
193,500
—0—
Plant and Equipment
125,000
90,000
Land
48,500
45,000
Dividends Declared
20,000
15,000
Cost of Goods Sold
160,000
65,000
Operating Expenses
35,000
20,000
Total Debits
$752,000
$320,000
Accounts Payable
$ 16,500
$ 16,000
Other Liabilities
15,000
24,000
Common Stock, par value $10
200,000
120,000
Other Contributed Capital
70,000
20,000
168,000 20,500 533,500
Retained Earnings, 1/1
168,000
30,000
Sales
260,000
110,000
Equity in Subsidiary Income
22,500
—0—
$752,000
$320,000
Total Credits Answer:
Parker Company and Subsidiary Consolidated Statements Workpaper For the Year Ended December, 2018 Parker Sid Eliminating Entries Company Company Dr. Cr. Income Statement Sales Equity in Subsidiary Income Total Revenue Cost of Goods Sold Operating Expenses Total Cost and Expense Net Income Noncontrolling Interest Net Income to Retained Earnings Retained Earnings Statement Retained Earnings 1/1 Parker Company Sid Company Net Income from above Dividends Declared Parker Company Sid Company Retained Earnings 12/31 Balance Sheet Cash Accounts Receivable Inventory 12/31 Investment in Sid Company Difference h/w Implied & Book Value Plant and Equipment Land Total Accounts Payable Other Liabilities Common Stock Parker Company
260,000 22,500 282,500 160,000 35,000 195,000 87,500 87,500
110,000 (1) 110,000 65,000 20,000 85,000 25,000
Noncontrolling Interest
370,000 22,500
2,500* 2,500
25,000
22,500
30,000 (2) 25,000
30,000 22,500
(15,000) 40,000
(1) 52,500
13,500 13,500
(1) (2) 35,000 (3)
9,000 184,500 35,000
168,000 87,500
70,000 60,000 40,000 193,500
2,500
200,000
87,500 (20,000)
(1,500) 1,000
235,500
20,000 35,000 30,000
(2) 125,000 48,500 537,000 16,500 15,000
370,000 225,000 55,000 280,000 90,000 (2,500) 87,500
168,000
(20,000) 235,500
Consolidated Balance
90,000 45,000 (3) 220,000 16,000 24,000
35,000
215,000 128,500 598,500 35,000 40,000 200,000
Sid Company Other Contributed Capital Parker Company Sid Company Retained Earnings from above Noncontrolling Interest 1/1 Noncontrolling Interest 12/31
120,000 (2)
120,000
20,000 (2) 40,000
20,000 52,500 (2)
70,000 235,500
70,000 13,500 20,500
1,000 **20,500 21,500
537,000 220,000 262,500 262,500 *($25,000 x 0.10) = $2,500; **$20,000 + [($30,000 - $25,000) x 0.10] = $20,500 (1) To eliminate intercompany dividends and income (2) To eliminate investment in Sid Company and create noncontrolling interest account (3) To allocate the difference between implied and book value
235,000 21,500 598,500
