Scribd
Upload
14 views

Assignment

The document contains information about the accounting treatment for different scenarios of acquiring a subsidiary, including: 1) Working paper entries to eliminate the book values of the subsidiary and recognize goodwill for different fair values of non-controlling interest (NCI). 2) Calculations of allocated excess, full goodwill, partial goodwill, and goodwill attributable to parent and NCI. 3) Information on the acquisition of a subsidiary, including the fair value of net assets, allocated excess, gain on additional shares acquired, full and partial goodwill amounts.

Uploaded by

Lovenia M. Ferrer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
14 views

Assignment

The document contains information about the accounting treatment for different scenarios of acquiring a subsidiary, including: 1) Working paper entries to eliminate the book values of the subsidiary and recognize goodwill for different fair values of non-controlling interest (NCI). 2) Calculations of allocated excess, full goodwill, partial goodwill, and goodwill attributable to parent and NCI. 3) Information on the acquisition of a subsidiary, including the fair value of net assets, allocated excess, gain on additional shares acquired, full and partial goodwill amounts.

Uploaded by

Lovenia M. Ferrer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 8

ASSIGNMENT DOA - > 100%

A. If the fair value of NCI is assessed to be P345,000


1. Prepare the working paper elimination entries.

Common Stock – S Company 150,000


Additional Paid-in Capital – S Company 300,000
Retained Earnings – S Company 900,000
Investment in S Company 1,080,000
Non-Controlling Interest 270,000
To eliminate the book values of S’s Stockholder’s Equity

Property and Equipment 150,000


Long-Term Liability 60,000
Current Assets 75,000
Investment in S Company 108,000
Non-Controlling Interest 27,000
To update the book values of assets and liability of S Company

Goodwill 285,000
Investment in S Company 237,000
Non-Controlling Interest 48,000
To recognize goodwill

2. How much is the allocated excess?


Consideration Paid 1,425,000
FV of NCINAS 345,000
Total Value of Sub. 1,770,000
Less:
BV NA of Sub. (1,350,000)
Allocated Excess 420,000

3. How much is the full goodwill?


Consideration Paid 1,425,000
FV of NCINAS 345,000
Total Value of Sub. 1,770,000
Less:
FV NA of Sub. (1,485,000)
Full Goodwill 285,000
4. How much is the partial goodwill?
Consideration Paid 1,425,000
Less:
80% of FV NA of Sub. (1,188,000)
Partial Goodwill 237,000

5. How much of the total goodwill (income from acquisition) attributable to Parent?
Partial Goodwill - 237,000

6. How much of the total goodwill (income from acquisition) is attributable to NCI?
FV of NCI 345,000
Less:
20% of FV NA of Sub. (297,000)
Total GW to NCI 48,000
B. If the fair value of NCI is assessed to be P295,000
1. Prepare the working paper elimination entries.

Common Stock – S Company 150,000


Additional Paid-in Capital – S Company 300,000
Retained Earnings – S Company 900,000
Investment in S Company 1,080,000
Non-Controlling Interest 270,000
To eliminate the book values of S’s Stockholder’s Equity

Property and Equipment 150,000


Long-Term Liability 60,000
Current Assets 75,000
Investment in S Company 108,000
Non-Controlling Interest 27,000
To update the book values of assets and liability of S Company

Goodwill 237,000
Investment in S Company 237,000
To recognize goodwill

2. How much is the allocated excess?


Consideration Paid 1,425,000
PSB of NCINAS 297,000 (FV 295,000 < PSB 297,000)
Total Value of Sub. 1,722,000
Less:
BV NA of Sub. (1,350,000)
Allocated Excess 372,000

3. How much of the total goodwill (income from acquisition) attributable to Parent?
Consideration Paid 1,425,000
Less:
80% of FV NA of Sub. (1,188,000)
Partial Goodwill 237,000
4. How much of the total goodwill (income from acquisition) is attributable to NCI?
PSB of NCI 297,000
Less:
20% of FV NA of Sub. (297,000)
Total GW to NCI 0
C. If there is no available fair value of NCI
1. Prepare the working paper elimination entries.

Common Stock – S Company 150,000


Additional Paid-in Capital – S Company 300,000
Retained Earnings – S Company 900,000
Investment in S Company 1,080,000
Non-Controlling Interest 270,000
To eliminate the book values of S’s Stockholder’s Equity

Property and Equipment 150,000


Long-Term Liability 60,000
Current Assets 75,000
Investment in S Company 108,000
Non-Controlling Interest 27,000
To update the book values of assets and liability of S Company

Goodwill 296,250
Investment in S Company 237,000
Non-Controlling Interest 59,250
To recognize goodwill

2. How much is the allocated excess?


Consideration Paid 1,425,000
Implied FV of NCI 356,250 (Implied 356,250 > PSB 297,000)
Total Value of Sub. 1,781,250
Less:
BV NA of Sub. (1,350,000)
Allocated Excess 431,250

3. How much is the full goodwill?


FV of Subsidiary 1,781,250
(1,425,000/80%)
FV NA of Sub. (1,485,000)
Full Goodwill 296,250

4. How much is the partial goodwill?


Consideration Paid 1,425,000
Less:
80% of FV NA of Sub. (1,188,000)
Partial Goodwill 237,000
5. How much of the total goodwill (income from acquisition) attributable to Parent?
Partial Goodwill - 237,000

6. How much of the total goodwill (income from acquisition) is attributable to NCI?

Implied FV of NCI 356,250 (Implied 356,250 > PSB 297,000)


[(1,425,000/80%) x 20%]
Less:
20% of FV NA of Sub. (297,000)
Total GW to NCI 59,250
ASSIGNMENT STEP ACQUISITION
1. How much is the amount of Fair value net assets of the subsidiary?

FV of identifiable assets acquired 7,300,000


FV of identifiable liabilities assumed (2,600,000)
FV NA of Subsidiary 4,700,000

2. How much is the allocated excess?

Consideration Transferred 3,780,000


FV of NCI 950,000
PHEI [(3,780,000/70%) x 10%] 540,000
Total Value of Subsidiary 5,270,000
Less: BV NA of Subsidiary (3,300,000)
Allocated Excess 1,970,000

3. How much is the amount of gain or (loss) recognized due to additional shares acquired?

PHEI 540,000
Less: BV at the point control is achieved (500,000)
Gain recognized 40,000

4. How much is the amount of goodwill under full fair value basis or full goodwill?

Consideration Transferred 3,780,000


FV of NCI 950,000
PHEI [(3,780,000/70%) x 10%] 540,000
Total Value of Subsidiary 5,270,000
Less: BV NA of Subsidiary (3,300,000)
Allocated Excess 1,970,000
Less: Over/undervaluation of A and L (1,400,000)
(4,700,000-3,300,000)
Full Goodwill 570,000

5. How much is the amount of goodwill under proportionate share basis of partial goodwill?

Consideration Transferred 3,780,000


PHEI [(3,780,000/70%) x 10%] 540,000
Fair Value of Subsidiary 4,320,000
Less: BV of Subsidiary (2,640,000) (3,300,000 x 80%)
Allocated Excess 1,680,000
Less: Over/undervaluation of A and L (1,120,000) (1,400,000 x 80%)
Partial Goodwill 560,000

You might also like