P 4-1Calculations five years after acquisitionPea Corporation purchased 75 percent of the outstanding voting stock of Sen Corporation for $4,800,000on January 1, 2011. Sen's stockholders' equity on this date consisted of the following (in thousands):Capital stock, $10 parAdditional paid-in capitalRetained earnings December 31, 2010Total stockholders' equity$2,0001,2001,600$4,800The excess fair value of the net assets acquired was assigned 10 percent to undervalued inven-tory (sold in 2011), 40 percent to undervalued plant assets with a remaining useful life of eightyears, and 50 percent to goodwill.Comparative trial balances of Pea Corporation and Sen Corporation at December 31, 2015,are as follows (in thousands):PeaSen$7,5304,6806,3701,000$19,580Other assets-netInvestment in Sen-75%$5,200Expenses (including cost of sales)Dividends1,200400$6,800Capital stock, $10 parAdditional paid-in capitalRetained earningsSalesIncome from Sen$6,0001,7003,3408,000540$19,580$2,0001,2001,6002,000$6,800REQUIRED: Determine the amounts that would appear in the consolidated financial statements of PeaCorporation and Subsidiary for each of the following items:1. Goodwill at December 31, 20152. Noncontrolling interest share for 20153. Consolidated retained earnings at December 31, 20144. Consolidated retained earnings at December 31, 20155. Consolidated net income for 20156. Noncontrolling interest at December 31, 20147. Noncontrolling interest at December 31, 2015

Solution: Investment in Sen (75%) January 1,2011 $ 4800…

Calculations five years after acquisition Pea Corporation purchased 75 percent of the outstanding voting stock of Sen Corporation for $4,8 on January 1, 2011. Sen's stockholders' equity on this date consisted of the following (in thousar Capital stock, $10 par Additional paid-in capital Retained earnings December 31, 2010 Total stockholders' equity $2,000 1,200 1,600 $4,800 The excess fair value of the net assets acquired was assigned 10 percent to undervalued tory (sold in 2011), 40 percent to undervalued plant assets with a remaining useful life o years, and 50 percent to goodwill. Comparative trial balances of Pea Corporation and Sen Corporation at December 31, are as follows (in thousands):

Calculations five years after acquisition Pea Corporation purchased 75 percent of the outstanding voting stock of Sen Corporation for $4,8 on January 1, 2011. Sen's stockholders' equity on this date consisted of the following (in thousar Capital stock, $10 par Additional paid-in capital Retained earnings December 31, 2010 Total stockholders' equity $2,000 1,200 1,600 $4,800 The excess fair value of the net assets acquired was assigned 10 percent to undervalued tory (sold in 2011), 40 percent to undervalued plant assets with a remaining useful life o years, and 50 percent to goodwill. Comparative trial balances of Pea Corporation and Sen Corporation at December 31, are as follows (in thousands):

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

P 4-1
Calculations five years after acquisition
Pea Corporation purchased 75 percent of the outstanding voting stock of Sen Corporation for $4,800,000
on January 1, 2011. Sen's stockholders' equity on this date consisted of the following (in thousands):
Capital stock, $10 par
Additional paid-in capital
Retained earnings December 31, 2010
Total stockholders' equity
$2,000
1,200
1,600
$4,800
The excess fair value of the net assets acquired was assigned 10 percent to undervalued inven-
tory (sold in 2011), 40 percent to undervalued plant assets with a remaining useful life of eight
years, and 50 percent to goodwill.
Comparative trial balances of Pea Corporation and Sen Corporation at December 31, 2015,
are as follows (in thousands):
Pea
Sen
$7,530
4,680
6,370
1,000
$19,580
Other assets-net
Investment in Sen-75%
$5,200
Expenses (including cost of sales)
Dividends
1,200
400
$6,800
Capital stock, $10 par
Additional paid-in capital
Retained earnings
Sales
Income from Sen
$6,000
1,700
3,340
8,000
540
$19,580
$2,000
1,200
1,600
2,000
$6,800
REQUIRED: Determine the amounts that would appear in the consolidated financial statements of Pea
Corporation and Subsidiary for each of the following items:
1. Goodwill at December 31, 2015
2. Noncontrolling interest share for 2015
3. Consolidated retained earnings at December 31, 2014
4. Consolidated retained earnings at December 31, 2015
5. Consolidated net income for 2015
6. Noncontrolling interest at December 31, 2014
7. Noncontrolling interest at December 31, 2015

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