Practice 6 Consolidated Statement one year after acquisition

Pam Acquired 90% of Sun ownership on Dec.30, 2016 paid cash $5200 and issued 100 shares
par $10, MV 50. Investment expense is $200
Dec.31, 2016 Dec.31, 2017
Pam Corporation Sun Corporation Pam Sun
(in thousands) BV FV BV FV 253.5 100
Cash 6600 6600 200 200 540 200
Receivable-net 700 700 300 300 1200 600
Inventories 900 1200 500 600 800 500
Other current assests 600 800 400 400 1200 600
Land 1200 11200 600 800 9500 3800
Buildings - net 8000 15000 4000 5000 8000 1800
Equipment - net 7000 9000 2000 1700 10501.5
Investment in Sun
Total assets 25000 44500 8000 9000 31995 7600
Account payable 2000 2000 700 700 2300 1200
Notes payable 3700 3500 1400 1300 4000
Common stock 10000 4000 11000 4000
Paid-in capital 5000 1000 9000 1000
Retained earnings 4300 900 5695 1400
25000 8000 31995 7600
Instructions: 1. Prepare the schedule of the excess of FV>BV and their allocation to
Assets/Liabilities; 2. Journal entries to record: the acquisition, the allocation of Excess
FV>BV; Elimination and adjusting entries for consolidated balance sheet
After one year of opEration, on Dec. 31, 2017 the two companies reported the following
Income Statement 2017 PAM SUN
Sales 9523.5 2200 undervalued
Investment Income Sun 571.5 inventory was sold
Total Revenue 10095 2200 in 2017
Cost of Sales & Operating Expenses 4000 700
Depreciation -building 200 80 Building depr.-40 yr
Depreciation -equipment 700 360 Equipment depr.
Other expenses 1800 120 5 yr
Total Operating Expenses 6700 1260 Notes retired 2017
Operating Income 3395 940
Interest expense 300 140
Net Income 3095 800
Controlling Interest
Retained Earnings as of Dec. 31, 2016 4100 900
7195 1700
Less Dividend 1500 300
Retained Earnings as of Dec. 31, 2017 5695 1400
Instructions: 1. Calculate Pam income from Sun 2017; 2. Calculate Investment in Sun on
Dec. 2017; 3. Prepare amortization scheldule; 4. Entries to eliminate reciprocal account and
establish non controlling interest; 4. Entries to assign the unamortized excess to identifiable
assets and goodwill; 5.Prepare Consolidated Balance sheet and Income Statement for 2017
 Pam (before Pam (after Sun Adjustment CBS
acquisition) acquisition)
Cash 6,600 2,650 200 200 2,850
Receivable-net 700 700 300 300 1,000
Inventories 900 900 600 600 1,500
Other current assests 600 600 400 400 1,000
Land 1,200 1,200 800 800 2,000
Buildings - net 8,000 8,000 5,000 5,000 13,000
Equipment - net 7,000 7,000 1,700 1,700 8,700
Investment in Sun 7,700 7,700 -
Goodwill 2,390 2,390
Total assets 25,000 28,750 9,000 32,440
Account payable 2,000 2,000 700 700 2,700
Notes payable 3,700 3,700 1,300 1,300 5,000
Common stock 10,000 11,000 11,000
Paid-in capital 5,000 8,000 8,000
Retained earnings 4,300 4,050 4,050
Minority Interest 1,690 1,690
Total Liability and Equity 25,000 28,750 11,390 11,390 32,440
1 1 1 1
 Acquisition Entry 9,390.24 Implied value
Investment in Sun 7,700 7,000 FV
Common Stock 1,000 2390.2439 Goodwill
Paid in Capital 3,000
Cash 3,700 Closing Entry
>>>>>
Investment Expense 250 Retained Earnings 250
Cash 250 Investment Expense 250

Entry Penggabungan cash 4000

Cash 200 mv 25
Receivable-net 300 par 10
Inventories 600 shares 100 lembar
Other current assests 400
Land 800 cont.int 82%
Buildings - net 5,000
Equipment - net 1,700 beli :
Goodwill 2,390 10% lebih mahal
Account payable 700
Notes payable 1,300
Investment in Sun 7,700
Minority Interest 1,690
 Pam (before Pam (after Sun Adjustment CBS
acquisition) acquisition)
Cash 6,600 2,350 200 200 2,550
Receivable-net 700 700 300 300 1,000
Inventories 900 900 600 600 1,500
Other current assests 600 600 400 400 1,000
Land 1,200 1,200 800 800 2,000
Buildings - net 8,000 8,000 5,000 5,000 13,000
Equipment - net 7,000 7,000 1,700 1,700 8,700
Investment in Sun 5,950 5,950 -
Total assets 25,000 26,700 9,000 29,750
Account payable 2,000 2,000 700 700 2,700
Notes payable 3,700 3,700 1,300 1,300 5,000
Common stock 10,000 11,000 11,000
Paid-in capital 5,000 5,950 5,950
Retained earnings 4,300 4,050 389 4,439
Minority Interest 661 661
Total Liability and Equity 25,000 26,700 9,000 9,000 29,750
1 1 1 1
 Acquisition Entry 6,611.11 Implied value
Investment in Sun 5,950 7,000 FV
Common Stock 1,000 -388.89 Gain
Paid in Capital 950
Cash 4,000 Closing Entry
>>>>>
Investment Expense 250 Retained Earnings 250
Cash 250 Investment Expense

Entry Penggabungan
Cash 200 cash 4000
Receivable-net 300 mv
Inventories 600 par 10
Other current assests 400 shares 100 lembar
Land 800
Buildings - net 5,000 cont.int 90%
Equipment - net 1,700
Account payable 700 (x-10)*100=950
Notes payable 1,300 100x=950+1000
Investment in Sun 5,950 100x=1950
Minority Interest 661 x=1950/100
Gain on bargain purchase 388.89
ntry

250
 Pam (before Pam (after Sun Adjustment CBS
acquisition) acquisition)
Cash 6,600 2,350 200 200 2,550
Receivable-net 700 700 300 300 1,000
Inventories 900 900 600 600 1,500
Other current assests 600 600 400 400 1,000
Land 1,200 1,200 800 800 2,000
Buildings - net 8,000 8,000 5,000 5,000 13,000
Equipment - net 7,000 7,000 1,700 1,700 8,700
Investment in Sun 7,700 7,700 -
Total assets 25,000 28,450 9,000 29,750
Account payable 2,000 2,000 700 700 2,700
Notes payable 3,700 3,700 1,300 1,300 5,000
Common stock 10,000 11,000 11,000
Paid-in capital 5,000 7,700 7,700
Retained earnings 4,300 4,050 (700) 3,350
Minority Interest - -
Total Liability and Equity 25,000 28,450 9,000 9,000 29,750
1 1 1 1

13 0.875
0.8125
 Acquisition Entry 7,700.00 Implied value
Investment in Sun 7,700 7,000 FV
Common Stock 1,000 700.00 Goodwill
Paid in Capital 2,700
Cash 4,000 Closing Entry
>>>>>
Investment Expense 250 Retained Earnings 250
Cash 250 Investment Expense

Entry Penggabungan
Cash 200 cash 4000
Receivable-net 300 mv
Inventories 600 par 10
Other current assests 400 shares 100 lembar
Land 800
Buildings - net 5,000 cont.int 90%
Equipment - net 1,700
Account payable 700 (x-10)*100=950 19.5
Notes payable 1,300 100x=950+1000
Investment in Sun 7,700 100x=1950
Minority Interest - x=1950/100
Gain on bargain purchase -700.00
ntry

250