P2-5

Prepare an allocation schedule; compute income and the investment balance

1. Schedule to allocate fair value-book value differentials

Investment in Son
Book value of the interest acquired (30% X $3.900.000 equity of Son)
Total excess of cost over book value acquired

Allocation of excess
Fair Value - Book Value X
Inventories $ 1,200,000 $ 1,000,000
Land $ 1,700,000 $ 900,000
Buildings-net $ 2,000,000 $ 1,500,000
Equipment-net $ 500,000 $ 1,200,000
Bonds payable $ 1,100,000 $ 1,000,000
Total assigned to identifiable net assets
Reminder assigned to goodwill
Total excess of cost over book value acquired

2. Income from Son for 2016

Equity in income ($1.200.000 X 30%) $ 360,000
Less : Amortization on of differentials
Inventories (sold in 2016) $ (60,000)
Buildings-net ($150.000/10 years) $ (15,000)
Equipment-net ($210.000/7 years) $ 30,000
Bonds payable ($30.000/5 years) $ 6,000
Income from Son $ 321,000

3. Investment in Son balance December 31, 2016

Investment cost $ 1,680,000
Add : Income from Son $ 321,000
Less : Dividens ($600.000 X 30%) $ (180,000)
Investment in Son December 31 $ 1,821,000

Check :
Underlying equity ($4.500.000 X 30%) $ 1,350,000
Unamortized excess :
Land $ 240,000
Buildings-net ($150.000-$15.000) $ 135,000
Equipment-net ($210.000-30.000) $ (180,000)
Bonds payable ($30.000-$6.000) $ (24,000)
Goodwill $ 300,000
Investment in Son account $ 1,821,000
$ 1,680,000
$ (1,170,000)
$ 510,000

% Interest acquired = Amount Assigned

30% $ 60,000
30% $ 240,000
30% $ 150,000
30% $ (210,000)
30% $ (30,000)
$ 210,000
$ 300,000
$ 510,000
P2-6
Interim Acquisition

1. Schedule to allocate fair value-book value differentials

Investment in Javier CA
Book value of the interest acquired (30% X $1.200.000 equity of Javier CA)
Total excess of cost over book value acquired

Allocation of excess
Fair Value X
Inventories $ 100,000
Equipment-net $ 300,000
Total assigned to identifiable net assets
Reminder assigned to goodwill
Total excess of cost over book value acquired

Income from Javier CA for 2015

Equity in income ($100.000 X 30%) $ 30,000
Less : Amortization on of differentials
Inventories $ (30,000)
Equipment-net ($300.000/6 years) $ 15,000
Income from Javier CA $ 15,000

2. Journal entries for Wero CA in 2014

March 31
Investment in Javier CA $ 450,000
Cash $ 450,000
To record acquisiton of 30% of interest

March 31
Cash $ 15,000
Investment in Javier CA $ 15,000
Penerimaan deviden

December 31
Investment in Javier CA $ 30,000
Income from Javier CA $ 30,000
To record equity in Javier CA'income
($100.000 X 30%)

December 31
Income from Javier CA $ 30,000
 Investment in Javier CA $ 30,000
Pencatatan kelebihan persediaan

December 31
Income from Javier CA $ 90,000
Investment in Javier CA $ 90,000
Pencatatan amortisasi equipment

3. Investment in Javier CA balance December 31, 2014

Investment cost $ 450,000
Add : Income from Javier CA $ 15,000
Less : Dividens ($50.000 X 30%) $ (15,000)
Investment in Javier CA December 31 $ 450,000

Check :
Underlying equity ($1.250.000 X 30%) $ 375,000
Unamortized excess :
Inventories $ (30,000)
Equipment-net ($90.000-$15.000) $ 75,000
Goodwill $ 30,000
Investment in Javier CA account $ 450,000
$ 450,000
$ (360,000)
$ 90,000

% Interest acquired = Amount Assigned

30% $ (30,000)
30% $ 90,000
$ 60,000
$ 30,000
$ 90,000