Question

3. On January 1, 2018, William Co. acquired 70% of Noah Inc. by paying $650,000. The fair value of the nontrolling interest was $270,000 on that day. Noah reported common stock on that date of $420,000 with retained earnings of $252,000. A building was undervalued on Noah's financial records by $28,000 This building had a ten-year remaining life. Unrecorded copyrights with fair values of $80,000 were to be recognized and amortized over 20 years. Noah earned income and paid cash dividends as follows: Net Income 20136 S105,000 201419 134,400 201520 154,000 Dividends Paid S 54,600 61,600 84,000 Prepare the 2020 A1 consolidation entry that would be made to record Goodwill and allocate it between the controlling and non-controlling interest.

Answer 1

Date of acquisition = Jan-1-2018 willian Comp acquired 70t of Noah INC. William Comp - 70% → Noah INC 1-1-2018 purchase consideration - $650,000 fair value of NCY as on Date of Acquisi yo $270,000 Net Assets of Noah Common Stock Retained Earnings Downward Revaluation 2 of Building J - . $420,000 $252,000 ($ 28,000) - $80,000 copy rights recognised 2 in financials $724,000 Net assets Date of as on acquisition ]

calculation of goodwill/sain on Bargain Purchase Purchase 4) fair value consideration paid - of ne Interest - $650,000 $270,000 $920,000 LESS : Net opsets of NarH INC ($724,000) C100%) Goodwill $196,000 Consolidation Entry ① Net assets (100%) ak or $724,000 Goodwill ak (Blfigure) or $196,000 Te purchase consideration peid To cash / Bank al $650,000 TO Non controlling 2 $270,000 Interest I (consolidation Entry ay an DOA) © Revaluation Reserve ak or $28,000 To Buildings al $28,000 ( Being undervalue of Revaluation) © Copy right alc or $80,000 TO Revaluation Resewe ak $80,000 (being Recording of Copy rights and charged to Revaluational) 15Pro e Camera

poiny a 0 Depreciation (Amortisation 3YYS copy righy SYTS Building 2018 = 252,000 - 28,000 Life = 20458 - 220,000 Amortiz - 80,000 x3 20 Life = 10yrs Amortiz = $12,000 for 3 yrs Depreciation 3 yrs - 224,000 x 3 10 Depy $67,200 8? ЗүS SP cooo Net Income 2018 - 105,000 2019 - 19u, 400 2020 - 154,000 or 393,400 E Dividend 2 - $54000 paid J. $61,600 $ 84,000 (200,200) 2 (67,200) 0.03 Deprecad e (12,000) -) Amorti Revenue Income for } 2020 S $114,000 Net Camera 5Pro

= Net Income $114,000 Revenue Non controlliy Intergt to (301) $ 34,200 Controlling 4 (Parent) 601) toov $79.800 Non controlling Interest as an Date of Acquisitions Non controlling Interest 2 oy on 2020 U trg 270,000 $304,200