Consolidated financial statement and determination and distribution of excess income schedule Consolidated financial statement are those kind of statement which contain consolidated financial information of subsidiary and holding company. In this elimination is made in controlling part also. In determination and distribution of excess income schedule Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity. To calculate: Through the information given in the question, prepare consolidation worksheet with the supporting of determination and distribution of excess schedule.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3A.3AP

To determine

Consolidated financial statement and determination and distribution of excess income schedule

Consolidated financial statement are those kind of statement which contain consolidated financial information of subsidiary and holding company. In this elimination is made in controlling part also.

In determination and distribution of excess income schedule Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity.

To calculate:

Through the information given in the question, prepare consolidation worksheet with the supporting of determination and distribution of excess schedule.

Expert Solution & Answer

Answer to Problem 3A.3AP

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earning for controlling interest is $6,74,800 and Non controlling interest is $58,200

Explanation of Solution

Harvard company purchased 90% common stock of Bart company for $7,20,000 . On the date Building valued understated $1,80,000 at the time of purchase which has remaining life of 20 years so that will be depreciated by straight line method.

Step 1- Calculation of Goodwill

Value Analysis Schedule	Company Implied Fair Value	Parent Price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary	$8,00,000	$7,20,000	$77,000
Fair value of net assets excluding Goodwill	$7,30,000	$6,57,000	$73,000
Goodwill	$70,000	$63,000	$7,000

Step 2 - Schedule for Determination and Distribution Excess Schedule

Particulars	Company implied fair value	Parent price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary (a)	$8,00,000	$7,20,000	$80,000
Book value of interest acquired:
Common stock	$3,50,000
Retained Earning	$2,00,000
Total Equity	$5,50,000	$5,50,000	$5,50,000
Interest Acquired		(90%)	(10%)
Book Value(b)	$5,50,000	$4,95,000	$55,000
Excess of fair value over book value (a)-(b)=(c)	$2,50,000	$2,25,000	$25,000
Adjustment of identifiable accounts	Adjustment	Life	Amortization per year
Building	$1,80,000	20	$9,000	A 1
Goodwill	$70,000	-	-	A 2
Total	$2,50,000

A represent non controlling interest portion of excess of fair value over book.

Step 3 Calculation of Internally generated net income:

Bart Company income distribution

Particulars	Amount	Particular	Amount
Amortization(Building Depreciation)	$9,000	Internally generated net income	$40,000
		Adjusted income before tax	$31,000
		Non Controlling interest profit share in subsidiary (10%)	$3,100
		Controlling interest share (90%)	$27,900

Harvard Company income distribution

Particular	Amount
Internally generated net income	$83,000
Non Controlling interest profit share in subsidiary	$27,900
Controlling interest share	$1,30,200

Step 4 Consolidated worksheet of Harvard company and Bart Company, for the year ended December 31,2017

Particulars	Financial Statement		Elimination & Adjustments		Non- Controlling Interest	Consolidated
Particulars	Harvard	Bart	Debit	Credit	Non- Controlling Interest	Consolidated
Income Statement
Net Sales	($5,80,000)	($2,80,000)	-	-	-	($8,60,000)
Cost of Goods Sold	$2,85,000	$1,55,000	-	-	-	$4,40,000
Other Expenses	$1,40,000	$55,000	-	-	-	$1,95,000
Depreciation	$72,000	$30,000	(5)$9,000	-	-	$1,11,000
Subsidiary Loss	($9,000)	-	(2)$9,000	-	-	-
Net Income	($92,000)	($40,000)	-	-	-	-
Consolidated Income	-	-	-	-	-	($1,14,000)
NCI (see income distribution schedule)	-	-	-	-	($3,100)	-
Controlling Interest (see income distribution schedule)	-	-	-	-	-	($1,10,900)
Retained Earnings Statements:	-	-	-	-	-	-
Balance, January 1,2016- Harvard	($4,84,000)	-		(1)$1,08,000	-	($5,83,900)
	-	-	(5)$8,100	-	-	-
Balance, January 1,2016- Bart		($3,20,000)	(3)$2,88,000	(4)$25,000	($56,100)	-
	-	-	(5)($900)	-	-	-
Net Income (from Above)	($92,000)	($40,000)	-	-	($3,100)	($1,10,900)
Dividend Declared	$20,000	$10,000		(2)$9,000	$1,000	$20,000
Balance, December 31, 2016	($5,56,000)	($3,50,000)	-	-	-	-
NCI in Retained Earning December 2016	-	-	-	-	($58,200)	-
Controlling Interest in Retained Earnings, December 2016	-	-	-	-	-	($6,74,800)
Consolidated Balance Sheet:
Cash	$3,30,000	$1,70,000	-	-	-	$5,00,000
Inventory, December 2016	$2,60,000	$3,40,000	-	-	-	$6,00,000
Investment in Bart	$7,20,000	-	(1)$1,08,000	-	-	-
	-	-	-	(3)$6,03,000	-	-
	-	-	-	(4)$2,25,000	-	-
Land	$99,000	$1,50,000	-	-	-	$2,49,000
Buildings and Equipment	$5,70,000	$3,00,000	$1,80,000	(5)$18,000	-	$7,58,000
Goodwill	-	-	(4)$70,000	-	-	$70,000
Current Liabilities	($1,23,000)	($60,000)	-	-	-	($1,83,000)
Bond Payable	-	($2,00,000)	-	-	-	($2,00,000)
Common Stock-Harvard	($8,00,000)	-	-	-	-	($8,00,000)
Paid in capital in excess of Par- Harvard	$5,00,000	-	-	-	-	($5,00,000)
Common Stock- Bart	-	($3,50,000)	(3)$3,15,000	-	($35,000)	-
Retained Earnings-December 31,2016-	($5,56,000)	($3,50,000)	-	-	-	-
Retained Earnings Non Controlling Interest, December 31, 2016	-	-	-	-	($58,200)	-
Retained Earnings Controlling Interest, December 31, 2016	-	-	-	-	-	($6,74,800)
Total NCI	-	-	-	-	$93,200	$93,200
Totals	$0	$0	$9,88,000	$9,88,000	$0	$0

Conclusion

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earnings for controlling interest is $6,74,800 and Non controlling interest is $58,200 .

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Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3A.3AP

To determine

Consolidated financial statement and determination and distribution of excess income schedule

Consolidated financial statement are those kind of statement which contain consolidated financial information of subsidiary and holding company. In this elimination is made in controlling part also.

In determination and distribution of excess income schedule Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity.

To calculate:

Through the information given in the question, prepare consolidation worksheet with the supporting of determination and distribution of excess schedule.

Expert Solution & Answer

Answer to Problem 3A.3AP

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earning for controlling interest is $6,74,800 and Non controlling interest is $58,200

Explanation of Solution

Harvard company purchased 90% common stock of Bart company for $7,20,000 . On the date Building valued understated $1,80,000 at the time of purchase which has remaining life of 20 years so that will be depreciated by straight line method.

Step 1- Calculation of Goodwill

Value Analysis Schedule	Company Implied Fair Value	Parent Price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary	$8,00,000	$7,20,000	$77,000
Fair value of net assets excluding Goodwill	$7,30,000	$6,57,000	$73,000
Goodwill	$70,000	$63,000	$7,000

Step 2 - Schedule for Determination and Distribution Excess Schedule

Particulars	Company implied fair value	Parent price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary (a)	$8,00,000	$7,20,000	$80,000
Book value of interest acquired:
Common stock	$3,50,000
Retained Earning	$2,00,000
Total Equity	$5,50,000	$5,50,000	$5,50,000
Interest Acquired		(90%)	(10%)
Book Value(b)	$5,50,000	$4,95,000	$55,000
Excess of fair value over book value (a)-(b)=(c)	$2,50,000	$2,25,000	$25,000
Adjustment of identifiable accounts	Adjustment	Life	Amortization per year
Building	$1,80,000	20	$9,000	A 1
Goodwill	$70,000	-	-	A 2
Total	$2,50,000

A represent non controlling interest portion of excess of fair value over book.

Step 3 Calculation of Internally generated net income:

Bart Company income distribution

Particulars	Amount	Particular	Amount
Amortization(Building Depreciation)	$9,000	Internally generated net income	$40,000
		Adjusted income before tax	$31,000
		Non Controlling interest profit share in subsidiary (10%)	$3,100
		Controlling interest share (90%)	$27,900

Harvard Company income distribution

Particular	Amount
Internally generated net income	$83,000
Non Controlling interest profit share in subsidiary	$27,900
Controlling interest share	$1,30,200

Step 4 Consolidated worksheet of Harvard company and Bart Company, for the year ended December 31,2017

Particulars	Financial Statement		Elimination & Adjustments		Non- Controlling Interest	Consolidated
Particulars	Harvard	Bart	Debit	Credit	Non- Controlling Interest	Consolidated
Income Statement
Net Sales	($5,80,000)	($2,80,000)	-	-	-	($8,60,000)
Cost of Goods Sold	$2,85,000	$1,55,000	-	-	-	$4,40,000
Other Expenses	$1,40,000	$55,000	-	-	-	$1,95,000
Depreciation	$72,000	$30,000	(5)$9,000	-	-	$1,11,000
Subsidiary Loss	($9,000)	-	(2)$9,000	-	-	-
Net Income	($92,000)	($40,000)	-	-	-	-
Consolidated Income	-	-	-	-	-	($1,14,000)
NCI (see income distribution schedule)	-	-	-	-	($3,100)	-
Controlling Interest (see income distribution schedule)	-	-	-	-	-	($1,10,900)
Retained Earnings Statements:	-	-	-	-	-	-
Balance, January 1,2016- Harvard	($4,84,000)	-		(1)$1,08,000	-	($5,83,900)
	-	-	(5)$8,100	-	-	-
Balance, January 1,2016- Bart		($3,20,000)	(3)$2,88,000	(4)$25,000	($56,100)	-
	-	-	(5)($900)	-	-	-
Net Income (from Above)	($92,000)	($40,000)	-	-	($3,100)	($1,10,900)
Dividend Declared	$20,000	$10,000		(2)$9,000	$1,000	$20,000
Balance, December 31, 2016	($5,56,000)	($3,50,000)	-	-	-	-
NCI in Retained Earning December 2016	-	-	-	-	($58,200)	-
Controlling Interest in Retained Earnings, December 2016	-	-	-	-	-	($6,74,800)
Consolidated Balance Sheet:
Cash	$3,30,000	$1,70,000	-	-	-	$5,00,000
Inventory, December 2016	$2,60,000	$3,40,000	-	-	-	$6,00,000
Investment in Bart	$7,20,000	-	(1)$1,08,000	-	-	-
	-	-	-	(3)$6,03,000	-	-
	-	-	-	(4)$2,25,000	-	-
Land	$99,000	$1,50,000	-	-	-	$2,49,000
Buildings and Equipment	$5,70,000	$3,00,000	$1,80,000	(5)$18,000	-	$7,58,000
Goodwill	-	-	(4)$70,000	-	-	$70,000
Current Liabilities	($1,23,000)	($60,000)	-	-	-	($1,83,000)
Bond Payable	-	($2,00,000)	-	-	-	($2,00,000)
Common Stock-Harvard	($8,00,000)	-	-	-	-	($8,00,000)
Paid in capital in excess of Par- Harvard	$5,00,000	-	-	-	-	($5,00,000)
Common Stock- Bart	-	($3,50,000)	(3)$3,15,000	-	($35,000)	-
Retained Earnings-December 31,2016-	($5,56,000)	($3,50,000)	-	-	-	-
Retained Earnings Non Controlling Interest, December 31, 2016	-	-	-	-	($58,200)	-
Retained Earnings Controlling Interest, December 31, 2016	-	-	-	-	-	($6,74,800)
Total NCI	-	-	-	-	$93,200	$93,200
Totals	$0	$0	$9,88,000	$9,88,000	$0	$0

Conclusion

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earnings for controlling interest is $6,74,800 and Non controlling interest is $58,200 .

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3A.3AP

To determine

Consolidated financial statement and determination and distribution of excess income schedule

Consolidated financial statement are those kind of statement which contain consolidated financial information of subsidiary and holding company. In this elimination is made in controlling part also.

In determination and distribution of excess income schedule Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity.

To calculate:

Through the information given in the question, prepare consolidation worksheet with the supporting of determination and distribution of excess schedule.

Expert Solution & Answer

Answer to Problem 3A.3AP

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earning for controlling interest is $6,74,800 and Non controlling interest is $58,200

Explanation of Solution

Harvard company purchased 90% common stock of Bart company for $7,20,000 . On the date Building valued understated $1,80,000 at the time of purchase which has remaining life of 20 years so that will be depreciated by straight line method.

Step 1- Calculation of Goodwill

Value Analysis Schedule	Company Implied Fair Value	Parent Price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary	$8,00,000	$7,20,000	$77,000
Fair value of net assets excluding Goodwill	$7,30,000	$6,57,000	$73,000
Goodwill	$70,000	$63,000	$7,000

Step 2 - Schedule for Determination and Distribution Excess Schedule

Particulars	Company implied fair value	Parent price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary (a)	$8,00,000	$7,20,000	$80,000
Book value of interest acquired:
Common stock	$3,50,000
Retained Earning	$2,00,000
Total Equity	$5,50,000	$5,50,000	$5,50,000
Interest Acquired		(90%)	(10%)
Book Value(b)	$5,50,000	$4,95,000	$55,000
Excess of fair value over book value (a)-(b)=(c)	$2,50,000	$2,25,000	$25,000
Adjustment of identifiable accounts	Adjustment	Life	Amortization per year
Building	$1,80,000	20	$9,000	A 1
Goodwill	$70,000	-	-	A 2
Total	$2,50,000

A represent non controlling interest portion of excess of fair value over book.

Step 3 Calculation of Internally generated net income:

Bart Company income distribution

Particulars	Amount	Particular	Amount
Amortization(Building Depreciation)	$9,000	Internally generated net income	$40,000
		Adjusted income before tax	$31,000
		Non Controlling interest profit share in subsidiary (10%)	$3,100
		Controlling interest share (90%)	$27,900

Harvard Company income distribution

Particular	Amount
Internally generated net income	$83,000
Non Controlling interest profit share in subsidiary	$27,900
Controlling interest share	$1,30,200

Step 4 Consolidated worksheet of Harvard company and Bart Company, for the year ended December 31,2017

Particulars	Financial Statement		Elimination & Adjustments		Non- Controlling Interest	Consolidated
Particulars	Harvard	Bart	Debit	Credit	Non- Controlling Interest	Consolidated
Income Statement
Net Sales	($5,80,000)	($2,80,000)	-	-	-	($8,60,000)
Cost of Goods Sold	$2,85,000	$1,55,000	-	-	-	$4,40,000
Other Expenses	$1,40,000	$55,000	-	-	-	$1,95,000
Depreciation	$72,000	$30,000	(5)$9,000	-	-	$1,11,000
Subsidiary Loss	($9,000)	-	(2)$9,000	-	-	-
Net Income	($92,000)	($40,000)	-	-	-	-
Consolidated Income	-	-	-	-	-	($1,14,000)
NCI (see income distribution schedule)	-	-	-	-	($3,100)	-
Controlling Interest (see income distribution schedule)	-	-	-	-	-	($1,10,900)
Retained Earnings Statements:	-	-	-	-	-	-
Balance, January 1,2016- Harvard	($4,84,000)	-		(1)$1,08,000	-	($5,83,900)
	-	-	(5)$8,100	-	-	-
Balance, January 1,2016- Bart		($3,20,000)	(3)$2,88,000	(4)$25,000	($56,100)	-
	-	-	(5)($900)	-	-	-
Net Income (from Above)	($92,000)	($40,000)	-	-	($3,100)	($1,10,900)
Dividend Declared	$20,000	$10,000		(2)$9,000	$1,000	$20,000
Balance, December 31, 2016	($5,56,000)	($3,50,000)	-	-	-	-
NCI in Retained Earning December 2016	-	-	-	-	($58,200)	-
Controlling Interest in Retained Earnings, December 2016	-	-	-	-	-	($6,74,800)
Consolidated Balance Sheet:
Cash	$3,30,000	$1,70,000	-	-	-	$5,00,000
Inventory, December 2016	$2,60,000	$3,40,000	-	-	-	$6,00,000
Investment in Bart	$7,20,000	-	(1)$1,08,000	-	-	-
	-	-	-	(3)$6,03,000	-	-
	-	-	-	(4)$2,25,000	-	-
Land	$99,000	$1,50,000	-	-	-	$2,49,000
Buildings and Equipment	$5,70,000	$3,00,000	$1,80,000	(5)$18,000	-	$7,58,000
Goodwill	-	-	(4)$70,000	-	-	$70,000
Current Liabilities	($1,23,000)	($60,000)	-	-	-	($1,83,000)
Bond Payable	-	($2,00,000)	-	-	-	($2,00,000)
Common Stock-Harvard	($8,00,000)	-	-	-	-	($8,00,000)
Paid in capital in excess of Par- Harvard	$5,00,000	-	-	-	-	($5,00,000)
Common Stock- Bart	-	($3,50,000)	(3)$3,15,000	-	($35,000)	-
Retained Earnings-December 31,2016-	($5,56,000)	($3,50,000)	-	-	-	-
Retained Earnings Non Controlling Interest, December 31, 2016	-	-	-	-	($58,200)	-
Retained Earnings Controlling Interest, December 31, 2016	-	-	-	-	-	($6,74,800)
Total NCI	-	-	-	-	$93,200	$93,200
Totals	$0	$0	$9,88,000	$9,88,000	$0	$0

Conclusion

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earnings for controlling interest is $6,74,800 and Non controlling interest is $58,200 .

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3A.3AP

To determine

Consolidated financial statement and determination and distribution of excess income schedule

Consolidated financial statement are those kind of statement which contain consolidated financial information of subsidiary and holding company. In this elimination is made in controlling part also.

In determination and distribution of excess income schedule Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity.

To calculate:

Through the information given in the question, prepare consolidation worksheet with the supporting of determination and distribution of excess schedule.

Expert Solution & Answer

Answer to Problem 3A.3AP

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earning for controlling interest is $6,74,800 and Non controlling interest is $58,200

Explanation of Solution

Harvard company purchased 90% common stock of Bart company for $7,20,000 . On the date Building valued understated $1,80,000 at the time of purchase which has remaining life of 20 years so that will be depreciated by straight line method.

Step 1- Calculation of Goodwill

Value Analysis Schedule	Company Implied Fair Value	Parent Price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary	$8,00,000	$7,20,000	$77,000
Fair value of net assets excluding Goodwill	$7,30,000	$6,57,000	$73,000
Goodwill	$70,000	$63,000	$7,000

Step 2 - Schedule for Determination and Distribution Excess Schedule

Particulars	Company implied fair value	Parent price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary (a)	$8,00,000	$7,20,000	$80,000
Book value of interest acquired:
Common stock	$3,50,000
Retained Earning	$2,00,000
Total Equity	$5,50,000	$5,50,000	$5,50,000
Interest Acquired		(90%)	(10%)
Book Value(b)	$5,50,000	$4,95,000	$55,000
Excess of fair value over book value (a)-(b)=(c)	$2,50,000	$2,25,000	$25,000
Adjustment of identifiable accounts	Adjustment	Life	Amortization per year
Building	$1,80,000	20	$9,000	A 1
Goodwill	$70,000	-	-	A 2
Total	$2,50,000

A represent non controlling interest portion of excess of fair value over book.

Step 3 Calculation of Internally generated net income:

Bart Company income distribution

Particulars	Amount	Particular	Amount
Amortization(Building Depreciation)	$9,000	Internally generated net income	$40,000
		Adjusted income before tax	$31,000
		Non Controlling interest profit share in subsidiary (10%)	$3,100
		Controlling interest share (90%)	$27,900

Harvard Company income distribution

Particular	Amount
Internally generated net income	$83,000
Non Controlling interest profit share in subsidiary	$27,900
Controlling interest share	$1,30,200

Step 4 Consolidated worksheet of Harvard company and Bart Company, for the year ended December 31,2017

Particulars	Financial Statement		Elimination & Adjustments		Non- Controlling Interest	Consolidated
Particulars	Harvard	Bart	Debit	Credit	Non- Controlling Interest	Consolidated
Income Statement
Net Sales	($5,80,000)	($2,80,000)	-	-	-	($8,60,000)
Cost of Goods Sold	$2,85,000	$1,55,000	-	-	-	$4,40,000
Other Expenses	$1,40,000	$55,000	-	-	-	$1,95,000
Depreciation	$72,000	$30,000	(5)$9,000	-	-	$1,11,000
Subsidiary Loss	($9,000)	-	(2)$9,000	-	-	-
Net Income	($92,000)	($40,000)	-	-	-	-
Consolidated Income	-	-	-	-	-	($1,14,000)
NCI (see income distribution schedule)	-	-	-	-	($3,100)	-
Controlling Interest (see income distribution schedule)	-	-	-	-	-	($1,10,900)
Retained Earnings Statements:	-	-	-	-	-	-
Balance, January 1,2016- Harvard	($4,84,000)	-		(1)$1,08,000	-	($5,83,900)
	-	-	(5)$8,100	-	-	-
Balance, January 1,2016- Bart		($3,20,000)	(3)$2,88,000	(4)$25,000	($56,100)	-
	-	-	(5)($900)	-	-	-
Net Income (from Above)	($92,000)	($40,000)	-	-	($3,100)	($1,10,900)
Dividend Declared	$20,000	$10,000		(2)$9,000	$1,000	$20,000
Balance, December 31, 2016	($5,56,000)	($3,50,000)	-	-	-	-
NCI in Retained Earning December 2016	-	-	-	-	($58,200)	-
Controlling Interest in Retained Earnings, December 2016	-	-	-	-	-	($6,74,800)
Consolidated Balance Sheet:
Cash	$3,30,000	$1,70,000	-	-	-	$5,00,000
Inventory, December 2016	$2,60,000	$3,40,000	-	-	-	$6,00,000
Investment in Bart	$7,20,000	-	(1)$1,08,000	-	-	-
	-	-	-	(3)$6,03,000	-	-
	-	-	-	(4)$2,25,000	-	-
Land	$99,000	$1,50,000	-	-	-	$2,49,000
Buildings and Equipment	$5,70,000	$3,00,000	$1,80,000	(5)$18,000	-	$7,58,000
Goodwill	-	-	(4)$70,000	-	-	$70,000
Current Liabilities	($1,23,000)	($60,000)	-	-	-	($1,83,000)
Bond Payable	-	($2,00,000)	-	-	-	($2,00,000)
Common Stock-Harvard	($8,00,000)	-	-	-	-	($8,00,000)
Paid in capital in excess of Par- Harvard	$5,00,000	-	-	-	-	($5,00,000)
Common Stock- Bart	-	($3,50,000)	(3)$3,15,000	-	($35,000)	-
Retained Earnings-December 31,2016-	($5,56,000)	($3,50,000)	-	-	-	-
Retained Earnings Non Controlling Interest, December 31, 2016	-	-	-	-	($58,200)	-
Retained Earnings Controlling Interest, December 31, 2016	-	-	-	-	-	($6,74,800)
Total NCI	-	-	-	-	$93,200	$93,200
Totals	$0	$0	$9,88,000	$9,88,000	$0	$0

Conclusion

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earnings for controlling interest is $6,74,800 and Non controlling interest is $58,200 .

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Answer 5

Chapter 3, Problem 3A.3AP

To determine

Consolidated financial statement and determination and distribution of excess income schedule

Consolidated financial statement are those kind of statement which contain consolidated financial information of subsidiary and holding company. In this elimination is made in controlling part also.

In determination and distribution of excess income schedule Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity.

To calculate:

Through the information given in the question, prepare consolidation worksheet with the supporting of determination and distribution of excess schedule.

Expert Solution & Answer

Answer to Problem 3A.3AP

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earning for controlling interest is $6,74,800 and Non controlling interest is $58,200

Explanation of Solution

Harvard company purchased 90% common stock of Bart company for $7,20,000 . On the date Building valued understated $1,80,000 at the time of purchase which has remaining life of 20 years so that will be depreciated by straight line method.

Step 1- Calculation of Goodwill

Value Analysis Schedule	Company Implied Fair Value	Parent Price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary	$8,00,000	$7,20,000	$77,000
Fair value of net assets excluding Goodwill	$7,30,000	$6,57,000	$73,000
Goodwill	$70,000	$63,000	$7,000

Step 2 - Schedule for Determination and Distribution Excess Schedule

Particulars	Company implied fair value	Parent price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary (a)	$8,00,000	$7,20,000	$80,000
Book value of interest acquired:
Common stock	$3,50,000
Retained Earning	$2,00,000
Total Equity	$5,50,000	$5,50,000	$5,50,000
Interest Acquired		(90%)	(10%)
Book Value(b)	$5,50,000	$4,95,000	$55,000
Excess of fair value over book value (a)-(b)=(c)	$2,50,000	$2,25,000	$25,000
Adjustment of identifiable accounts	Adjustment	Life	Amortization per year
Building	$1,80,000	20	$9,000	A 1
Goodwill	$70,000	-	-	A 2
Total	$2,50,000

A represent non controlling interest portion of excess of fair value over book.

Step 3 Calculation of Internally generated net income:

Bart Company income distribution

Particulars	Amount	Particular	Amount
Amortization(Building Depreciation)	$9,000	Internally generated net income	$40,000
		Adjusted income before tax	$31,000
		Non Controlling interest profit share in subsidiary (10%)	$3,100
		Controlling interest share (90%)	$27,900

Harvard Company income distribution

Particular	Amount
Internally generated net income	$83,000
Non Controlling interest profit share in subsidiary	$27,900
Controlling interest share	$1,30,200

Step 4 Consolidated worksheet of Harvard company and Bart Company, for the year ended December 31,2017

Particulars	Financial Statement		Elimination & Adjustments		Non- Controlling Interest	Consolidated
Particulars	Harvard	Bart	Debit	Credit	Non- Controlling Interest	Consolidated
Income Statement
Net Sales	($5,80,000)	($2,80,000)	-	-	-	($8,60,000)
Cost of Goods Sold	$2,85,000	$1,55,000	-	-	-	$4,40,000
Other Expenses	$1,40,000	$55,000	-	-	-	$1,95,000
Depreciation	$72,000	$30,000	(5)$9,000	-	-	$1,11,000
Subsidiary Loss	($9,000)	-	(2)$9,000	-	-	-
Net Income	($92,000)	($40,000)	-	-	-	-
Consolidated Income	-	-	-	-	-	($1,14,000)
NCI (see income distribution schedule)	-	-	-	-	($3,100)	-
Controlling Interest (see income distribution schedule)	-	-	-	-	-	($1,10,900)
Retained Earnings Statements:	-	-	-	-	-	-
Balance, January 1,2016- Harvard	($4,84,000)	-		(1)$1,08,000	-	($5,83,900)
	-	-	(5)$8,100	-	-	-
Balance, January 1,2016- Bart		($3,20,000)	(3)$2,88,000	(4)$25,000	($56,100)	-
	-	-	(5)($900)	-	-	-
Net Income (from Above)	($92,000)	($40,000)	-	-	($3,100)	($1,10,900)
Dividend Declared	$20,000	$10,000		(2)$9,000	$1,000	$20,000
Balance, December 31, 2016	($5,56,000)	($3,50,000)	-	-	-	-
NCI in Retained Earning December 2016	-	-	-	-	($58,200)	-
Controlling Interest in Retained Earnings, December 2016	-	-	-	-	-	($6,74,800)
Consolidated Balance Sheet:
Cash	$3,30,000	$1,70,000	-	-	-	$5,00,000
Inventory, December 2016	$2,60,000	$3,40,000	-	-	-	$6,00,000
Investment in Bart	$7,20,000	-	(1)$1,08,000	-	-	-
	-	-	-	(3)$6,03,000	-	-
	-	-	-	(4)$2,25,000	-	-
Land	$99,000	$1,50,000	-	-	-	$2,49,000
Buildings and Equipment	$5,70,000	$3,00,000	$1,80,000	(5)$18,000	-	$7,58,000
Goodwill	-	-	(4)$70,000	-	-	$70,000
Current Liabilities	($1,23,000)	($60,000)	-	-	-	($1,83,000)
Bond Payable	-	($2,00,000)	-	-	-	($2,00,000)
Common Stock-Harvard	($8,00,000)	-	-	-	-	($8,00,000)
Paid in capital in excess of Par- Harvard	$5,00,000	-	-	-	-	($5,00,000)
Common Stock- Bart	-	($3,50,000)	(3)$3,15,000	-	($35,000)	-
Retained Earnings-December 31,2016-	($5,56,000)	($3,50,000)	-	-	-	-
Retained Earnings Non Controlling Interest, December 31, 2016	-	-	-	-	($58,200)	-
Retained Earnings Controlling Interest, December 31, 2016	-	-	-	-	-	($6,74,800)
Total NCI	-	-	-	-	$93,200	$93,200
Totals	$0	$0	$9,88,000	$9,88,000	$0	$0

Conclusion

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earnings for controlling interest is $6,74,800 and Non controlling interest is $58,200 .

Answer 6

Chapter 3, Problem 3A.3AP

To determine

Consolidated financial statement and determination and distribution of excess income schedule

Consolidated financial statement are those kind of statement which contain consolidated financial information of subsidiary and holding company. In this elimination is made in controlling part also.

In determination and distribution of excess income schedule Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity.

To calculate:

Through the information given in the question, prepare consolidation worksheet with the supporting of determination and distribution of excess schedule.

Expert Solution & Answer

Answer to Problem 3A.3AP

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earning for controlling interest is $6,74,800 and Non controlling interest is $58,200

Explanation of Solution

Harvard company purchased 90% common stock of Bart company for $7,20,000 . On the date Building valued understated $1,80,000 at the time of purchase which has remaining life of 20 years so that will be depreciated by straight line method.

Step 1- Calculation of Goodwill

Value Analysis Schedule	Company Implied Fair Value	Parent Price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary	$8,00,000	$7,20,000	$77,000
Fair value of net assets excluding Goodwill	$7,30,000	$6,57,000	$73,000
Goodwill	$70,000	$63,000	$7,000

Step 2 - Schedule for Determination and Distribution Excess Schedule

Particulars	Company implied fair value	Parent price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary (a)	$8,00,000	$7,20,000	$80,000
Book value of interest acquired:
Common stock	$3,50,000
Retained Earning	$2,00,000
Total Equity	$5,50,000	$5,50,000	$5,50,000
Interest Acquired		(90%)	(10%)
Book Value(b)	$5,50,000	$4,95,000	$55,000
Excess of fair value over book value (a)-(b)=(c)	$2,50,000	$2,25,000	$25,000
Adjustment of identifiable accounts	Adjustment	Life	Amortization per year
Building	$1,80,000	20	$9,000	A 1
Goodwill	$70,000	-	-	A 2
Total	$2,50,000

A represent non controlling interest portion of excess of fair value over book.

Step 3 Calculation of Internally generated net income:

Bart Company income distribution

Particulars	Amount	Particular	Amount
Amortization(Building Depreciation)	$9,000	Internally generated net income	$40,000
		Adjusted income before tax	$31,000
		Non Controlling interest profit share in subsidiary (10%)	$3,100
		Controlling interest share (90%)	$27,900

Harvard Company income distribution

Particular	Amount
Internally generated net income	$83,000
Non Controlling interest profit share in subsidiary	$27,900
Controlling interest share	$1,30,200

Step 4 Consolidated worksheet of Harvard company and Bart Company, for the year ended December 31,2017

Particulars	Financial Statement		Elimination & Adjustments		Non- Controlling Interest	Consolidated
Particulars	Harvard	Bart	Debit	Credit	Non- Controlling Interest	Consolidated
Income Statement
Net Sales	($5,80,000)	($2,80,000)	-	-	-	($8,60,000)
Cost of Goods Sold	$2,85,000	$1,55,000	-	-	-	$4,40,000
Other Expenses	$1,40,000	$55,000	-	-	-	$1,95,000
Depreciation	$72,000	$30,000	(5)$9,000	-	-	$1,11,000
Subsidiary Loss	($9,000)	-	(2)$9,000	-	-	-
Net Income	($92,000)	($40,000)	-	-	-	-
Consolidated Income	-	-	-	-	-	($1,14,000)
NCI (see income distribution schedule)	-	-	-	-	($3,100)	-
Controlling Interest (see income distribution schedule)	-	-	-	-	-	($1,10,900)
Retained Earnings Statements:	-	-	-	-	-	-
Balance, January 1,2016- Harvard	($4,84,000)	-		(1)$1,08,000	-	($5,83,900)
	-	-	(5)$8,100	-	-	-
Balance, January 1,2016- Bart		($3,20,000)	(3)$2,88,000	(4)$25,000	($56,100)	-
	-	-	(5)($900)	-	-	-
Net Income (from Above)	($92,000)	($40,000)	-	-	($3,100)	($1,10,900)
Dividend Declared	$20,000	$10,000		(2)$9,000	$1,000	$20,000
Balance, December 31, 2016	($5,56,000)	($3,50,000)	-	-	-	-
NCI in Retained Earning December 2016	-	-	-	-	($58,200)	-
Controlling Interest in Retained Earnings, December 2016	-	-	-	-	-	($6,74,800)
Consolidated Balance Sheet:
Cash	$3,30,000	$1,70,000	-	-	-	$5,00,000
Inventory, December 2016	$2,60,000	$3,40,000	-	-	-	$6,00,000
Investment in Bart	$7,20,000	-	(1)$1,08,000	-	-	-
	-	-	-	(3)$6,03,000	-	-
	-	-	-	(4)$2,25,000	-	-
Land	$99,000	$1,50,000	-	-	-	$2,49,000
Buildings and Equipment	$5,70,000	$3,00,000	$1,80,000	(5)$18,000	-	$7,58,000
Goodwill	-	-	(4)$70,000	-	-	$70,000
Current Liabilities	($1,23,000)	($60,000)	-	-	-	($1,83,000)
Bond Payable	-	($2,00,000)	-	-	-	($2,00,000)
Common Stock-Harvard	($8,00,000)	-	-	-	-	($8,00,000)
Paid in capital in excess of Par- Harvard	$5,00,000	-	-	-	-	($5,00,000)
Common Stock- Bart	-	($3,50,000)	(3)$3,15,000	-	($35,000)	-
Retained Earnings-December 31,2016-	($5,56,000)	($3,50,000)	-	-	-	-
Retained Earnings Non Controlling Interest, December 31, 2016	-	-	-	-	($58,200)	-
Retained Earnings Controlling Interest, December 31, 2016	-	-	-	-	-	($6,74,800)
Total NCI	-	-	-	-	$93,200	$93,200
Totals	$0	$0	$9,88,000	$9,88,000	$0	$0

Conclusion

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earnings for controlling interest is $6,74,800 and Non controlling interest is $58,200 .

Answer 7

Chapter 3, Problem 3A.3AP

To determine

Consolidated financial statement and determination and distribution of excess income schedule

Consolidated financial statement are those kind of statement which contain consolidated financial information of subsidiary and holding company. In this elimination is made in controlling part also.

In determination and distribution of excess income schedule Through this price paid for subsidiary equity is compared with predetermine imbalance which is occurred in the consolidated worksheet because of elimination of in the investment account against the underlying subsidiary equity.

To calculate:

Through the information given in the question, prepare consolidation worksheet with the supporting of determination and distribution of excess schedule.

Answer 8

Expert Solution & Answer

Answer to Problem 3A.3AP

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earning for controlling interest is $6,74,800 and Non controlling interest is $58,200

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Harvard company purchased 90% common stock of Bart company for $7,20,000 . On the date Building valued understated $1,80,000 at the time of purchase which has remaining life of 20 years so that will be depreciated by straight line method.

Step 1- Calculation of Goodwill

Value Analysis Schedule	Company Implied Fair Value	Parent Price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary	$8,00,000	$7,20,000	$77,000
Fair value of net assets excluding Goodwill	$7,30,000	$6,57,000	$73,000
Goodwill	$70,000	$63,000	$7,000

Step 2 - Schedule for Determination and Distribution Excess Schedule

Particulars	Company implied fair value	Parent price (90%)	Non Controlling Interest (10%)
Fair value of subsidiary (a)	$8,00,000	$7,20,000	$80,000
Book value of interest acquired:
Common stock	$3,50,000
Retained Earning	$2,00,000
Total Equity	$5,50,000	$5,50,000	$5,50,000
Interest Acquired		(90%)	(10%)
Book Value(b)	$5,50,000	$4,95,000	$55,000
Excess of fair value over book value (a)-(b)=(c)	$2,50,000	$2,25,000	$25,000
Adjustment of identifiable accounts	Adjustment	Life	Amortization per year
Building	$1,80,000	20	$9,000	A 1
Goodwill	$70,000	-	-	A 2
Total	$2,50,000

A represent non controlling interest portion of excess of fair value over book.

Step 3 Calculation of Internally generated net income:

Bart Company income distribution

Particulars	Amount	Particular	Amount
Amortization(Building Depreciation)	$9,000	Internally generated net income	$40,000
		Adjusted income before tax	$31,000
		Non Controlling interest profit share in subsidiary (10%)	$3,100
		Controlling interest share (90%)	$27,900

Harvard Company income distribution

Particular	Amount
Internally generated net income	$83,000
Non Controlling interest profit share in subsidiary	$27,900
Controlling interest share	$1,30,200

Step 4 Consolidated worksheet of Harvard company and Bart Company, for the year ended December 31,2017

Particulars	Financial Statement		Elimination & Adjustments		Non- Controlling Interest	Consolidated
Particulars	Harvard	Bart	Debit	Credit	Non- Controlling Interest	Consolidated
Income Statement
Net Sales	($5,80,000)	($2,80,000)	-	-	-	($8,60,000)
Cost of Goods Sold	$2,85,000	$1,55,000	-	-	-	$4,40,000
Other Expenses	$1,40,000	$55,000	-	-	-	$1,95,000
Depreciation	$72,000	$30,000	(5)$9,000	-	-	$1,11,000
Subsidiary Loss	($9,000)	-	(2)$9,000	-	-	-
Net Income	($92,000)	($40,000)	-	-	-	-
Consolidated Income	-	-	-	-	-	($1,14,000)
NCI (see income distribution schedule)	-	-	-	-	($3,100)	-
Controlling Interest (see income distribution schedule)	-	-	-	-	-	($1,10,900)
Retained Earnings Statements:	-	-	-	-	-	-
Balance, January 1,2016- Harvard	($4,84,000)	-		(1)$1,08,000	-	($5,83,900)
	-	-	(5)$8,100	-	-	-
Balance, January 1,2016- Bart		($3,20,000)	(3)$2,88,000	(4)$25,000	($56,100)	-
	-	-	(5)($900)	-	-	-
Net Income (from Above)	($92,000)	($40,000)	-	-	($3,100)	($1,10,900)
Dividend Declared	$20,000	$10,000		(2)$9,000	$1,000	$20,000
Balance, December 31, 2016	($5,56,000)	($3,50,000)	-	-	-	-
NCI in Retained Earning December 2016	-	-	-	-	($58,200)	-
Controlling Interest in Retained Earnings, December 2016	-	-	-	-	-	($6,74,800)
Consolidated Balance Sheet:
Cash	$3,30,000	$1,70,000	-	-	-	$5,00,000
Inventory, December 2016	$2,60,000	$3,40,000	-	-	-	$6,00,000
Investment in Bart	$7,20,000	-	(1)$1,08,000	-	-	-
	-	-	-	(3)$6,03,000	-	-
	-	-	-	(4)$2,25,000	-	-
Land	$99,000	$1,50,000	-	-	-	$2,49,000
Buildings and Equipment	$5,70,000	$3,00,000	$1,80,000	(5)$18,000	-	$7,58,000
Goodwill	-	-	(4)$70,000	-	-	$70,000
Current Liabilities	($1,23,000)	($60,000)	-	-	-	($1,83,000)
Bond Payable	-	($2,00,000)	-	-	-	($2,00,000)
Common Stock-Harvard	($8,00,000)	-	-	-	-	($8,00,000)
Paid in capital in excess of Par- Harvard	$5,00,000	-	-	-	-	($5,00,000)
Common Stock- Bart	-	($3,50,000)	(3)$3,15,000	-	($35,000)	-
Retained Earnings-December 31,2016-	($5,56,000)	($3,50,000)	-	-	-	-
Retained Earnings Non Controlling Interest, December 31, 2016	-	-	-	-	($58,200)	-
Retained Earnings Controlling Interest, December 31, 2016	-	-	-	-	-	($6,74,800)
Total NCI	-	-	-	-	$93,200	$93,200
Totals	$0	$0	$9,88,000	$9,88,000	$0	$0

Conclusion

Harvard Company purchase Bart Company has fair value of $7,20,000 and goodwill of $70,000 .Retained earnings for controlling interest is $6,74,800 and Non controlling interest is $58,200 .

Answer 12

Ch. 3 - Prob. 1UTI Ch. 3 - Prob. 2UTI Ch. 3 - Prob. 3UTI Ch. 3 - Prob. 4UTI Ch. 3 - Prob. 5UTI Ch. 3 - Prob. 6UTI Ch. 3 - Prob. 7UTI Ch. 3 - Prob. 1E Ch. 3 - Prob. 2E Ch. 3 - Prob. 3.1E

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Answer to Problem 3A.3AP

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