Problem Place Company purchased 92% of the common stock of Shaw, Inc. on January 1, 2012,...

Problem
Place Company purchased 92% of the common stock of Shaw, Inc. on January 1, 2012, for $402,800. Trial balances at the end of 2012 for the companies were:

	Place	Shaw
Cash	$80,400	$86,400
Accounts and Notes Receivable	200,600	206,900
Inventory, 1/1	70,400	49,000
Investment in Shaw, Inc.	402,800	—0—
Plant Assets	295,800	197,400
Dividends Declared	34,900	21,700
Purchases	238,100	149,200
Selling Expenses	27,700	20,000
Other Expenses	15,300	12,800
	$1,366,000	$743,400

Accounts and Notes Payable	$97,800	$37,700
Other Liabilities	45,600	15,100
Common Stock, $10 par	149,200	98,900
Other Contributed Captital	278,600	148,900
Retained Earnings, 1/1	227,100	169,800
Sales	547,736	273,000
Dividend Income	19,964	—0—
	$1,366,000	$743,400

Inventory balances on December 31, 2012, were $24,500 for Place and $15,200 for Shaw, Inc. Shaw’s accounts and notes payable contain a $14,700 note payable to Place.

Prepare a workpaper for the preparation of consolidated financial statements on December 31, 2012
The difference between book value of equity acquired and the value implied by the purchase price relates to subsidiary land, which is included in plant assets.
which is included in plant assets. (Round answers to 0 decimal places, e.g. 5,125. List items that increase retained earnings first.)

Expert Solution

A. Dividend Income (80,000 × .80)64,000Dividends Declared – Sivet64,000Common Stock – Sivet925,000*Retained Earnings, 1/1 – Sivet300,000Difference Between Implied and Book Value75,000**Investment in Sivet Company1,040,000Noncontrolling Interest in Equity260,000*[(1,040,000 – 60,000)/.8] – 300,000**60,000/.8 = 75,000Land75,000Difference Between Implied and Book Value75,000B.Noncontrolling Interest:In 1/1/111/1/14 retained earnings 300,000 × .20$60,000In 2014 net income 220,000 × .2044,000In dividends declared 80,000 × .20(16,000)In common stock of Sivet 925,000 × .20185,000In difference between implied and book value 75,000 x .2015,000Total noncontrolling interest$288,0004-3On January 1, 2014, Pioneer Company purchased 80% of the common stock of Shipley Company for $600,000. At that time, Shipley’s stockholders’ equity consisted of the following:Common stock$220,000Other contributed capital90,000Retained earnings320,000

ekkarill92 answered 1 year ago

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