+1-415-670-9189
info@expertsmind.com
Consolidation in subsequent years-noncontrolling interest
Course:- Accounting Basics
Reference No.:- EM131079381




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Accounting Basics

Topic:  Consolidation in subsequent years, noncontrolling interest

LO 2

(All dollar amount are in thousands)

Panerai acquired 65% of Stefanel's voting stock for $31,550 in cash on January 1, 2015, when Stefanel's book value was $5,000.  The fair value of the noncontrolling interest at the date of acquisition was $11,450, and all of Stefanel's assets and liabilities were reported at fair value, except for the following items:

Date of Acquisition Book Value

Date of Acquisition Fair Value

Remaining Life at Date of Acquisition

Plant & equipment, net

$20,000

$4,000

16 years

Identifiable intangible: leaseholds

0

$18,000

6 years

The leaseholds meet GAAP requirements for capitalization.  All depreciation and amortization is straight-line.  There is no impairment of plant & equipment or identifiable intangibles in 2015, 2016, or 2017.  Total impairment of goodwill arising from this acquisition for the years 2015 and 2016 is $2,000.  Goodwill impairment for 2017 is $2,500.

You are preparing the consolidated financial statements for 2017 (third year since acquisition).  The trial balances of Panerai and Stefanel at December 31, 2017 appear in the consolidation working paper below.  Panerai uses the complete equity method to report its investment on its own books.

Panerai

Dr (Cr)

Stefanel

Dr (Cr)

Dr

Cr

Consol.

Dr (Cr)

Current Assets

$26,000

$7,000



Plant & equipment, net

140,000

90,000



Identifiable intangible assets

--

--



Investment in Stefandel

30,970

--



Goodwill

--

--



Total liabilities

(148,690)

(81,700)



Capital stock

(5,000)

(2,000)



Retained earnings, beginning

(25,260)

(6,000)



Accumulated other comprehensive loss (income), beginning

(850)

500



Noncontrolling interest

--

--



Sales revenue

(150,000)

(50,000)



AFS investments (gains)/losses (OCI)

(275)

200



Equity in income of Stefanel

(2,025)

--



Equity in OCL of Stefanel

130

--



Cost of goods sold

120,000

30,000



Operating expenses

15,000

12,000



Noncontrolling interest in income





Noncontrolling interest in OCI





Total

$0

$0



Required:

a.   Calculate the total goodwill originally recognized for this acquisition, and its allocation to the controlling interest and the noncontrolling interest.

b.   Calculate 2017 quity in net income of Stefanel, reported on Panerai's book, and noncontrolling interest in consolidated net income, reported on the 2017 consolidated income statement.

c.   Using the CERON method, prepare the entries needed for the consolidation working paper.

d.   Prepare and complete the consolidation working paper needed to consolidate the trial balances of Panerai and Stefanel at December 31, 2017.  Be sure to label your adjusting/elimination entries with the appropriate letter (CERON).

e.   Present, in good form, the consolidated statement of income and comprehensive income for 2017.

General Instructions:

Items a. through e. above must be prepared in Excel and cells that are the result of calculations must be defined by a formula.  Do not simply use Excel as a typewriter.  Failure to follow these instructions will result in the assignment not being graded.  Please have a total for each column at the bottom of the column.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
Compute the total amount of goodwill of International Co. based on the price paid by Melissa Co. Prepare all journal entries in Melissa's accounting records relating to the i
1.On January 1, 2013, the Excel Delivery Company purchased a delivery van for $33,000. At the end of its five year service life, it is estimated that the van will be worth $3,
Accounting for manufacturing overhead. Consider the following selected cost data for the Pittsburgh Forging Company for 2008. Budgeted manufacturing overhead costs $7,500,000
Explain the tax advantage of allocating too much to the building and too little to the land and was Western's allocation ethical? If so, state why. If not, why not? Identify w
In addition Y and Z follow Federal provisions with respect to the determination of taxable income for the corporation. Y recognizes S status, but Z does not. Based on the fo
Savers are taxed on the nominal interest payments they receive rather than the real interest payments. Suppose the federal government shifts from taxing nominal interest pay
DeLong Corporation was organized on January 1, 2017. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no-par common stock
Critically evaluate the need for an effective budgeting system, highlighting the problems that may arise in the design and implementation of such a system. (in 400 words)