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calculations, journal entry and note notations

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PAT CORPORATION AND SUBSIDIARY P 4-12 CONSOLIDATION WORKING PAPERS FOR YEAR ENDED DECEMBER 31,2012 80% | Adjustments & Eliminations | Consolidated (in thousands) Pat Sci Debits Credits Statements INCOME STATEMENT 1,800 | 76 | (1,200) | (380) | Sales 600 | 2,400 Income from Sci 76 (1,500) || (560) || Cost of sales (300) | (180) Operating expenses Consolidated NI 416 Noncontrolling interest share Controlling share of NI 296 120 416 RETAINED EARNINGS Retained earnings--Pat Retained earnings--Sci 244 244 100 100 Controlling share of NI 296 | 120 | 296 Dividends (200) (40) | (240) Retained earnings 12/31 340 180 400 BALANCE SHEET Cash 12 | 30 | 42 Receivables-net 52 | 40 | 92 Advance to Sci 40 40 Inventories 164 | 120 | 284 Other current assets 160 10 | 170 Land 320 60 | 380 Plant assets--net 680 460 1,140 Investment in Sci 560 560 | Dividends receivable Goodwill Total assets 1,988 720 2,708 Accounts payable Dividends payable 48 | 30 78 20 | 20 Other liabilities 200 90 290 Capital stock Retained earnings Total equities 1,400 400 1,800 340 180 400 | 1,988 720 Noncontrolling interest 2,588
Transcribed Image Text:PAT CORPORATION AND SUBSIDIARY P 4-12 CONSOLIDATION WORKING PAPERS FOR YEAR ENDED DECEMBER 31,2012 80% | Adjustments & Eliminations | Consolidated (in thousands) Pat Sci Debits Credits Statements INCOME STATEMENT 1,800 | 76 | (1,200) | (380) | Sales 600 | 2,400 Income from Sci 76 (1,500) || (560) || Cost of sales (300) | (180) Operating expenses Consolidated NI 416 Noncontrolling interest share Controlling share of NI 296 120 416 RETAINED EARNINGS Retained earnings--Pat Retained earnings--Sci 244 244 100 100 Controlling share of NI 296 | 120 | 296 Dividends (200) (40) | (240) Retained earnings 12/31 340 180 400 BALANCE SHEET Cash 12 | 30 | 42 Receivables-net 52 | 40 | 92 Advance to Sci 40 40 Inventories 164 | 120 | 284 Other current assets 160 10 | 170 Land 320 60 | 380 Plant assets--net 680 460 1,140 Investment in Sci 560 560 | Dividends receivable Goodwill Total assets 1,988 720 2,708 Accounts payable Dividends payable 48 | 30 78 20 | 20 Other liabilities 200 90 290 Capital stock Retained earnings Total equities 1,400 400 1,800 340 180 400 | 1,988 720 Noncontrolling interest 2,588
P 4-12 Workpapers (two years after acquisition, fair value/book differentials, adjustments) Pat Corporation acquired an 80 percent interest in Sci Corporation for $480,000 on January 1, 2011, when Sci's stockholders' equity consisted of $400,000 capital stock and $50,000 retained earnings. The excess fair value over book value acquired was assigned to plant assets that were undervalued by $100,000 and to goodwill. The undervalued plant assets had a four-year useful life. ADDITIONAL INFORMATION 1. Pat's account receivable includes $10,000 owed by Sci. 2. Sci mailed its check for $40,000 to Pat on December 30, 2012, in settlement of the advance. 3. A $20,000 dividend was declared by Sci on December 30, 2012, but was not recorded by Pat. 4. Financial statements for Pat and Sci Corporations for 2012 follow (in thousands): Pat Sci Statements of Income and Retained Earnings for the Year Ended December 31 Sales $1,800 $600 Income from Sci Cost of sales 76 Operating expenses Net Income (1,200) (380) 296 (300) (180) 120 Add: Retained earnings January 1 Less: Dividends Retained earnings December 31 244 100 (40) (200) $ 340 $180 Balance Sheet at December 31 Cash 2$ 12 $ 30 Accounts receivable-net 52 40 Inventories 164 120 Advance to Sci 40 Other current assets 160 10 Land 320 60 Plant assets--net 680 460 Investment in Sci Total assets 560 $1,988 $720 Pat Sci $ 30 Accounts payable Dividends payable Other liabilities $ 48 20 200 1,400 340 $1,988 90 Capital stock Retained earnings Total liabilities and stockholders' equity 400 180 $720 REQUIRED: Prepare consolidation workpapers for Pat Corporation and Subsidiary for 2012.
Transcribed Image Text:P 4-12 Workpapers (two years after acquisition, fair value/book differentials, adjustments) Pat Corporation acquired an 80 percent interest in Sci Corporation for $480,000 on January 1, 2011, when Sci's stockholders' equity consisted of $400,000 capital stock and $50,000 retained earnings. The excess fair value over book value acquired was assigned to plant assets that were undervalued by $100,000 and to goodwill. The undervalued plant assets had a four-year useful life. ADDITIONAL INFORMATION 1. Pat's account receivable includes $10,000 owed by Sci. 2. Sci mailed its check for $40,000 to Pat on December 30, 2012, in settlement of the advance. 3. A $20,000 dividend was declared by Sci on December 30, 2012, but was not recorded by Pat. 4. Financial statements for Pat and Sci Corporations for 2012 follow (in thousands): Pat Sci Statements of Income and Retained Earnings for the Year Ended December 31 Sales $1,800 $600 Income from Sci Cost of sales 76 Operating expenses Net Income (1,200) (380) 296 (300) (180) 120 Add: Retained earnings January 1 Less: Dividends Retained earnings December 31 244 100 (40) (200) $ 340 $180 Balance Sheet at December 31 Cash 2$ 12 $ 30 Accounts receivable-net 52 40 Inventories 164 120 Advance to Sci 40 Other current assets 160 10 Land 320 60 Plant assets--net 680 460 Investment in Sci Total assets 560 $1,988 $720 Pat Sci $ 30 Accounts payable Dividends payable Other liabilities $ 48 20 200 1,400 340 $1,988 90 Capital stock Retained earnings Total liabilities and stockholders' equity 400 180 $720 REQUIRED: Prepare consolidation workpapers for Pat Corporation and Subsidiary for 2012.
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