The determination and allocation of excess schedule (D&A schedule) is used to compare the

company fair value with the recorded book value of the subsidiary. It also schedules the

adjustments that will be made to all subsidiary accounts in the consolidated worksheet process.

Examples 9-2

In January 2, 2013, P Company purchased 80% of the outstanding common stock of S Company

for P1,000,000. NCI is measured at its implied fair value.

S Company’s statement of financial position with the additional fair values is as follows:

S Company’s Book and Estimated Fair Values

January 2, 2013

Assets Book Value Fair Value

Cash and cash equivalents P300,000 P300,000
Accounts receivable 100,000 100,000
Inventory 200,000 240,000
Equipment (net) 600,000 800,000
Total assets 1,200,000 1,440,000
Liabilities and Equity

Current liabilities P200,000 P200,000

Fair value of net assets (assets - liabilities) P1,240,000

The D & A schedule is presented on the next page.

Note the following features of the D & A schedule for and 80% parent ownership interest:

• The “fair value of subsidiary” line contains the implied value of the entire company, the

parent price paid, and the implied value of the NCI.

 • The total stockholders’ equity of the subsidiary (the net assets of the subsidiary at book

value) is allocated 80/20 to the controlling interest and NCI.

• The excess of fair value over book value is shown for the company, the controlling

interest, and the NCI, this line means that the entire adjustment of subsidiary net assets

will be P250,000. The controlling interest paid P200,000 more than the underlying book

value of subsidiary net assets.

• All subsidiary assets and liabilities will be increased to 100% of fair value.

• The excess allocated to inventory and equipment is to be amortized on a date

subsequent to acquisition.

Determination and Allocation of Excess Schedule

Company
Implied Parent NCI Value

Fair Value Price (80%) (20%)*

Fair value of subsidiary P1,250,000 P1,000,000 P250,000