Student Name: Class: Problem 04-35 Acquisition Method Consolidated Balances Pierson, Inc.

(1,843,000) 1,100,000 125,000 275,000 27,500 (121,500) (437,000) Steele Corporation (675,000) 322,000 120,000 11,000 7,000 (215,000) Consolidation Entries Debit Credit Noncontrolling Interest Consolidated Totals

Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in Steele income Separate company net income Consolidated net income Noncontrolling interest in Steele's income Controlling interest in CNI Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31 Current assets Investment in Steele

(2,625,000) (437,000) 350,000 (2,712,000) 1,204,000 1,854,000

(395,000) (215,000) 25,000 (585,000) 430,000 -

Customer base Buildings and equipment Copyrights Goodwill Total assets Accounts payable Notes payable NCI in Steele

931,000 950,000 4,939,000 (485,000) (542,000)

863,000 107,000 1,400,000 (200,000) (155,000)

Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and stockholders' equity Parentheses indicate a credit balance.

(900,000) (300,000) (2,712,000) (4,939,000)

(400,000) (60,000) (585,000) (1,400,000)

Given Data P04-35 Steel company outstanding common stock acquired by Pierson Corporation Cash paid by Pierson Corporation. for Steele Company shares Steele owners equity amounts on 1/1/12: Common stock Additional paid-in capital Retained earnings Assessed fair value of Steel's customer base Fair-value allocation schedule: Fair value of Steele Company Book value of Steele Company Excess fair value to customer base (10-year remaining life) to goodwill Account Balances December 31, 2013 Pierson $ (1,843,000) $ 1,100,000 125,000 275,000 27,500 (121,500) $ (437,000) $ $ (2,625,000) $ (437,000) 350,000 $ (2,712,000) $ $ 1,204,000 1,854,000 931,000 950,000 $ 4,939,000 $ $ Steele (675,000) 322,000 120,000 11,000 7,000 (215,000) (395,000) (215,000) 25,000 (585,000)

90% $ 1,710,000

400,000 60,000 265,000 800,000

$ 1,900,000 725,000 1,175,000 800,000 $ 375,000

Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Steele Net income Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31/11 Current assets Investment in Steele Buildings and equipment Copyrights Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and equity Note: Credits are indicated by parentheses.

430,000 863,000 107,000 $ 1,400,000

(485,000) $ (200,000) (542,000) (155,000) (900,000) (400,000) (300,000) (60,000) (2,712,000) (585,000) $ (4,939,000) $ (1,400,000)

Student Name: Class: Problem 04-37

FATHER, INC. AND SAM CORPORATION - Purchase price allocation and annual amortization Acquisition-date subsidiary fair value Book value of subsidiary Fair value in excess of book value Allocations to specific accounts based on difference between fair value and book value: Land Buildings and equipment Copyright Notes payable Total

Annual excess amortizations: Buildings and equipment Copyright Notes payable Total

Life (years)

Excess Amortizations

Student Name: Class: Problem 04-37

Totals for the business combination for the year ending December 31, 2013 FATHER, INC. AND SAM CORPORATION Account Name Revenues Balance Explanation

Cost of goods sold

Depreciation expense

Amortization expense

Interest expense

Equity in income of Sam

Net income

Retained earnings, 1/1

Noncontrolling interest in income of subsidiary Dividends paid

Retained earnings, 12/31

Current assets

Investment in Sam

Land

Buildings and equipment (net)

Copyright

Total assets Accounts payable

Notes payable

Noncontrolling interest in Sam

Common stock

Additional paid-in capital

Retained earnings, 12/31

Total liabilities & equities

Student Name: Class: Problem 04-37

FATHER, INC. AND SAM CORPORATION Consolidation Worksheet Consolidation Entries Debit Credit Noncontrolling Interest Consolidated Totals

Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sam Separate company net income Consolidated net income Noncontrolling interest in Sam's income Controlling interest in CNI Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31 Current assets Investment in Sam

Father (1,360,000) 700,000 260,000 44,000 (105,000) (461,000)

Sam (540,000) 385,000 10,000 5,000 5,000 (135,000)

(1,265,000) (461,000) 260,000 (1,466,000) 965,000 733,000

(440,000) (135,000) 65,000 (510,000) 528,000 -

Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable NCI in Sam 1/1 NCI in Sam 12/31 Common stock Additional paid-in capital Retained earnings, 12/31 Total liabilities and equity Parentheses indicate a credit balance.

292,000 877,000 2,867,000 (191,000) (460,000)

60,000 265,000 95,000 948,000 (148,000) (130,000)

(300,000) (450,000) (1,466,000) (2,867,000)

(100,000) (60,000) (510,000) (948,000)

Given Data P04-37 Sam Corporation outstanding common stock acquired by Father, Inc. Cash paid by Father, Inc. for Sam Corporation shares Sam's assessed fair value Book value of Sam Corporation Sam accounts values on 1/1/13 Book Value 60,000 $ 275,000 100,000 (130,000) Fair Value 225,000 250,000 200,000 (120,000) 80% $ $ $ 680,000 850,000 600,000

Land Buildings and equipment (10-year remaining life) Copyright (20-year life) Notes payable (due in 8 years)

Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Equity in income of Sam Net income Retained earnings, 1/1/13 Net income Dividends paid Retained earnings, 12/31/13 Current assets Investment in Sam Land Buildings and equipment (net) Copyright Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equity Note: Credits are indicated by parentheses.

Father, Sam 12/31/2013 12/31/2013 $ (1,360,000) $ (540,000) 700,000 385,000 260,000 10,000 5,000 44,000 5,000 (105,000) $ (461,000) $ (135,000) $ (1,265,000) $ (461,000) 260,000 $ (1,466,000) $ $ 965,000 733,000 292,000 877,000 $ 2,867,000 $ $ (440,000) (135,000) 65,000 (510,000) 528,000 60,000 265,000 95,000 948,000 (148,000) (130,000) (100,000) (60,000) (510,000) (948,000)

(191,000) $ (460,000) (300,000) (450,000) (1,466,000) $ (2,867,000) $

Student Name: Class: Problem 04-38 ADAMS CORPORATION AND BARSTOW, INC. - Purchase price allocation and excess amortizations Consideration transferred by Adams Noncontrolling interest fair value Acquisition-date total fair value Book value of Barstow Excess fair value over book value Annual Excess Amortizations

Life (years) Land Buildings Equipment Patents Notes payable Goodwill Total

indefinite

ADAMS CORPORATION AND BARSTOW, INC. Consolidation Worksheet For Year Ending December 31, 2013 Noncontrolling Interest

Accounts Revenues Cost of goods sold Depreciation expense Amortization expense Interest expense Investment income Separate company net income Consolidated net income Income to noncontrolling interest Income to controlling interest Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31 Current assets Investment in Barstow

Adams Corp. (940,000) 480,000 100,000 40,000 (108,000) (428,000)

Barstow Inc. (280,000) 90,000 55,000 15,000 (120,000)

Debit

Credit

Consolidated Totals

(1,367,000) (428,000) (110,000) (1,685,000) 610,000 702,000

(340,000) (120,000) 70,000 (390,000) 250,000

Land Buildings Equipment Patents Goodwill Total assets Notes payable Common stock Retained earnings, 12/31 Noncontrolling interest

380,000 490,000 873,000

150,000 250,000 150,000

3,055,000 (860,000) (510,000) (1,685,000)

800,000 (230,000) (180,000) (390,000)

Total liabilities and equity Parentheses indicate a credit balance.

(3,055,000)

(800,000)

Student Name: Class: Problem 04-38

Given Data P04-38 Barstow, Inc. outstanding voting shares acquired by Adams Corporation Cash paid by Adams Corporation for Barstow, Inc. shares Fair value of 10% NCI - B4 & after acquisition Barstow account values on 12/31/11 Book Fair Market Value Value 160,000 $ 160,000 120,000 150,000 220,000 200,000 160,000 200,000 50,000 (200,000) (180,000) (180,000) (280,000) 90% $ $ 603,000 67,000

Current assets Land Buildings (10-year life) Equipment (5-year life) Patents (10-year life) Notes Payable (5-year life) Common stock Retained earnings, 12/31/11

Adjusted Trial Balances December 31, 2013 Adams Corporation Debits Current assets Land Buildings Equipment Investment in Barstow, Inc. Cost of goods sold Depreciation expense Interest expense Dividends paid Total debits Credits Notes Payable Common stock Retained earnings, 1/1/13 Revenues Investment income Total credits $ 610,000 380,000 490,000 873,000 702,000 480,000 100,000 40,000 110,000 $ 3,785,000 Barstow, Inc. Corporation $ 250,000 150,000 250,000 150,000 90,000 55,000 15,000 70,000 $ 1,030,000

860,000 510,000 1,367,000 940,000 108,000 $ 3,785,000

230,000 180,000 340,000 280,000 $ 1,030,000

Student Name: Class: Problem 04-42

Part c. only
BRETZ, INC. AND KEANE COMPANY Consolidation Worksheet Year Ending December 31, 2013 Noncontrolling Interest

Accounts

Bretz, Inc.

Keane Company

Consolidation Entries Debit Credit

Consolidated Totals

Revenues Operating expenses Equity in Keane earnings Separate company net income
Consolidated net income NCI in Keane's income Bretz's share of NCI

(402,000) 200,000 (144,000) (346,000)

(300,000) 120,000 (180,000)

Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31 Current assets Investment in Keane Company

(797,000) (346,000) 143,000 (1,000,000) 224,000 994,500

(500,000) (180,000) 60,000 (620,000) 190,000 -

Trademarks Copyrights Equipment (net) Goodwill Total assets Liabilities Common stock Additional paid-in capital Additional paid-in capital - step acquisition Retained earnings 12/31 Non-controlling interest 1/1 Non-controlling interest 12/31 Total liabilities and equity
Parentheses indicate a credit balance.

106,000 210,000 380,000 1,914,500 (453,000) (400,000) (60,000) (1,500) (1,000,000)

600,000 300,000 110,000 1,200,000 (200,000) (300,000) (80,000) (620,000)

(1,914,500)

(1,200,000)

Given Data P04-42 Keane Company outstanding shares acquired by Bretz, Inc. Cash paid by Bretz, Inc. for Keane Company shares Book value of Keane Company Keane copyright undervalued (6-year remaining live) Keane's net income for 2012 Cash dividends paid by Keane during 2012 Additional Keane shares purchased by Bretz on 1/1/13 Amount paid by Bretz for Keane shares Financial Information for 2013 Bretz, Keane Inc. Company (402,000) $ (300,000) 200,000 120,000 (144,000) (346,000) $ (180,000) (500,000) (180,000) 60,000 (620,000)

60% $ $ $ $ $ $ 573,000 810,000 120,000 150,000 80,000 30% 300,000

Revenues Operating expenses Equity in Keane earnings Net income Retained earnings, 1/1 Net income Dividends paid Retained earnings, 12/31 Current assets Investment in Keane Company Trademarks Copyrights Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Additional paid-in capital - step acquisition Retained earnings 12/31 Total liabilities and equity Note: Credits are indicated by parentheses.

$ $

(797,000) $ (346,000) 143,000 $ (1,000,000) $ $ 224,000 994,500 106,000 210,000 380,000 $ 1,914,500 $ $

190,000 600,000 300,000 110,000 $ 1,200,000

(453,000) $ (200,000) (400,000) (300,000) (60,000) (80,000) (1,500) (1,000,000) (620,000) $ (1,914,500) $ (1,200,000)