At the acquisition date sams total fair value including the

Reference no: EM13576688

Father, Inc., buys 80 percent of the outstanding common stock of Sam Corporation on January 1, 2013, for $760,960 cash. At the acquisition date, Sam's total fair value, including the noncontrolling interest, was assessed at $951,200 although Sam's book value was only $619,000. Also, several individual items on Sam's financial records had fair values that differed from their book values as follows:

		Book Value		Fair Value
Land	$	67,400	$	290,400
Buildings and equipment (10-year remaining life)		335,000		299,000
Copyright (20-year life)		197,000		323,000
Notes payable (due in 8 years)		(165,000)		(145,800)

For internal reporting purposes, Father, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2013, for both companies.

		Father			Sam
Revenues	$	(1,465,280	)	$	(636,600	)
Cost of goods sold		788,000			417,000
Depreciation expense		308,000			13,000
Amortization expense		0			9,850
Interest expense		50,200			6,750
Equity in income of Sam		(147,920	)		0

Net income	$	(467,000	)	$	(190,000	)

Retained earnings, 1/1/13	$	(1,402,500	)	$	(459,000	)
Net income (above)		(467,000	)		(190,000	)
Dividends paid		260,000			65,000

Retained earnings, 12/31/13	$	(1,609,500	)	$	(584,000	)

Current assets	$	939,620		$	494,450
Investment in Sam		856,880			0
Land		309,000			67,400
Buildings and equipment (net)		976,000			322,000
Copyright		0			187,150

Total assets	$	3,081,500		$	1,071,000

Accounts payable	$	(200,000	)	$	(162,000	)
Notes payable		(522,000	)		(165,000	)
Common stock		(300,000	)		(100,000	)
Additional paid-in capital		(450,000	)		(60,000	)
Retained earnings (above)		(1,609,500	)		(584,000	)

Total liabilities and equities	$	(3,081,500	)	$	(1,071,000	)

Note: Parentheses indicate a credit balance.

Using the acquisition method, prepare the worksheet to consolidate these two companies. (Leave no cells blank - be certain to enter "0" wherever required. Enter consolidation entries for noncontrolling interest in Sam Corporation in the order of (S) Elimination of subsidiary's stockholders' equity and (A) Allocation of subsidiary total fair value in excess of book value. Enter consolidation entries for Investment in Sam in the order of (S) Elimination of subsidiary's stockholders' equity (I) Elimination of intra-entity income and (A) Allocation of subsidiary total fair value in excess of book value. Input all amounts as positive values except for the credit balances which should be entered with the minus sign.)

FATHER INC., AND SAM CORPORATION Consolidated Worksheet For Year Ending December 31, 2013
					Consolidation Entries		Noncontrolling	Consolidated
Accounts	Father		Sam		Debit	Credit	Interest	Totals
Revenues	$	(1,465,280)	$	(636,600)
Cost of goods sold		788,000		417,000
Depreciation expense		308,000		13,000
Amortization expense		0		9,850
Interest expense		50,200		6,750
Equity in income of Sam		(147,920)		0

Separate company net income	$	(467,000)	$	(190,000)

Consolidated net income
Noncontrolling interest in Sam's income

Controlling interest in CNI

Retained earnings 1/1	$	(1,402,500)	$	(459,000)
Net income (above)		(467,000)		(190,000)
Dividends paid		260,000		65,000

Retained earnings 12/31	$	(1,609,500)	$	(584,000)

Current assets		939,620		494,450
Investment in Sam		856,880		0


Land	$	309,000	$	67,400
Buildings and equipment (net)		976,000		322,000
Copyright		0		187,150

Total assets	$	3,081,500	$	1,071,000


Accounts payable	$	(200,000)	$	(162,000)
Notes payable		(522,000)		(165,000)
NCI in Sam 1/1


NCI in Sam 12/31

Common stock		(300,000)		(100,000)
Additional paid-in capital		(450,000)		(60,000)
Retained earnings 12/31 (above)		(1,609,500)		(584,000)

Total liabilities and equities	$	(3,081,500)	$	(1,071,000)

Reference no: EM13576688

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