Assignment
Instructions:
1. Enter your name in the green space above.
2. Students are required to complete the problem using this Excel workbook template. Complete each part of the problem (separate tabs) within the space provided identified by the green cells. Do not insert or delete any cells, rows or columns. The spreadsheet is protected to prevent unintended modifications to the file.
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On January 1, 2012, Leeroy, Inc, accquired a 60 percent interest in the common stock of Barney, Inc. for $372,000. Barney's book value on that date consisted of common stock of $100,000 and retained earnings of $220,000. Also, the acquisition date fair value of the 40% noncontrolling interest was $248,000. The subsidiary held patents (with a 10-year remaining life) that were undervalued within the company's accounting records by $70,000 and an unrecorded customer list (15-year remaining life) assessed at a $45,000 fair value. Any remaining excess acquisition date fair value was assigned to goodwill. Since acquisition, Leeroy has applied the equity method to its Investment in Barney account and no good will impairment has occurred. Inta-entity inventory sales between the two companies have been made as follows:
2012: Leeroy sold Barney $150,000 of inventory at an original cost of $120,000. $50,000 of this transfer remains on Barney's books at year end.
2013: Leeroy sold Barney $160,000 of inventory at an original cost of $112,000. $40,000 of this transfer remains on Barney's books at year end.
The individuial financial statements for these two companies for the year ended December 31, 2013 is as follows:
|
Leeroy
|
Barney
|
|
Sales
|
$ 700,000
|
$ 335,000
|
|
Cost of goods sold
|
(460,000)
|
(205,000)
|
|
Operating expenses
|
(188,000)
|
(70,000)
|
|
Income from subsidiary
|
28,000
|
-
|
|
Net income
|
80,000
|
60,000
|
|
|
|
|
Retained earnings, 1/1/2013
|
$ 695,000
|
$ 280,000
|
|
Net income (above)
|
80,000
|
60,000
|
|
Dividends paid
|
(45,000)
|
(15,000)
|
|
Retained earnings, 12/31/2013
|
730,000
|
325,000
|
|
|
|
|
Cash and receivables
|
$ 248,000
|
$ 148,000
|
|
Inventory
|
233,000
|
129,000
|
|
Investment in subsidiary
|
411,000
|
-
|
|
Buildings (net)
|
308,000
|
202,000
|
|
Equipment (net)
|
220,000
|
86,000
|
|
Patents (net)
|
-
|
20,000
|
|
Total assets
|
1,420,000
|
585,000
|
|
|
|
|
Liabilities
|
$ 390,000
|
$ 160,000
|
|
Common stock
|
300,000
|
100,000
|
|
Retain earnings, 12/31/2013
|
730,000
|
325,000
|
|
Total liabilities and stockholders' equity
|
1,420,000
|
585,000
|
1 Prepare a schedule to determine goodwill and allocation to controlling and noncontrolling interests at the acquisition date.
2 Prepare a schedule to determine the amortization and allocation amounts and allocation to controlling and noncontrolling interests.
3 Prepare a consolidation worksheet as of December 31, 2013.