Homework Answers
Part A
|
Allocation of goodwill |
|
|
Goodwill |
$3240000 |
|
Paramount’s share of goodwill: |
$2592000 |
|
Noncontrolling interest’s share of goodwill |
$648000 |
|
Paramount’s acquisition cost |
3492000 |
|
|
Fair value of non-controlling interest |
948000 |
|
|
Total |
4440000 |
|
|
Book value, date of acquisition |
1800000 |
|
|
Revaluations |
||
|
Accounts receivable |
(120000) |
|
|
Inventory |
(150000) |
|
|
Equipment |
(480000) |
|
|
Patents |
240000 |
|
|
deferred tax liabilities |
(90000) |
1200000 |
|
Goodwill |
$3240000 |
Paramount’s share of goodwill = $3492000-(75%*1200000) =2592000 (80%)
Noncontrolling interest’s share of goodwill = $648000 (20%)
Part B
|
Balances as of 2017 year-end |
|
|
Investment in Sun |
$3571000 |
|
Noncontrolling interest in Sun |
$1009000 |
|
Investment |
Noncontrolling interest |
|
|
January 2012 balance |
3492000 |
948000 |
|
Change in Sun’s retained earnings, 2012-2017: ($2160000 – $960000), divided 75:25 |
900000 |
300000 |
|
Write-off of Sun’s identifiable net asset revaluations, 2012-2017: ($120,000 + $150,000 + $(480000-192000) – 240000+72000), divided 75:25 |
292500 |
97500 |
|
Goodwill impairment, 2012-2017: ($3240000 – $2400000), divided 80:20 |
672000 |
168000 |
|
Balance, end of 2017 |
$5356500 |
$1513500 |
480000/10*4 =192000
Part C
|
Consolidation journal |
||
|
Description |
Debit |
Credit |
|
(E) |
||
|
Stockholders’ equity-Sun |
3000000 |
|
|
Investment in Sun |
2250000 |
|
|
Non-controlling interest in Sun |
750000 |
|
|
(R) |
||
|
Goodwill |
2400000 |
|
|
Equipment, net |
192000 |
|
|
Deferred tax liabilities (90000-72000) |
18000 |
|
|
Investment in Sun |
1762500 |
|
|
Non-controlling interest in Sun |
427500 |
480000-(6/10*480000) = 128000
(80%*2400000)-(75%*(192000+18000)) = 1762500
(20%*2400000)-(25%*(192000+18000)) = 427500
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