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PT Polindo acquired 90% ownership of PT Shipper's shares worth IDR414,000,000 on January 2, 20X1. At...

PT Polindo acquired 90% ownership of PT Shipper's shares worth IDR414,000,000 on January 2, 20X1. At the acquisition date, PT Shipper reported common stock and retained earnings amounting to Rp250,000,000 and Rp100,000,000, respectively. The fair value of non-controlling interests amounting to Rp46,000,000. At the acquisition date, the book value and fair value of PT Shipper's assets and liabilities are the same except for the following accounts:
Book Value Fair Value
Inventory 80.000.000 70.000.000
Land 45.000.000 145.000.000
Bonds Payable 50.000.000 70.000.000

At the acquisition date, the remaining maturities of the bonds are 4 years. Amortization of the difference in fair value and book value of the bonds in 20X1 amounted to Rp.5,000,000. PT Shipper's inventory balance as of January 1, 20X1 sold out in full for the year 20X1. Based on the review results at the end of 20X1, there was an impairment loss of goodwill amounting to Rp20,000,000. Information on financial position and reports on results of operations for 20X1 are listed in the attached working paper.

Please :

1. Calculating the differential, including any goodwill at the acquisition date

2. Make a journal of investments in subsidiaries using the equity method by the Parent Company.

3. Make basic calculations and elimination entries based on changes in book value of equity.


4. Make calculations and journal elimination of differential.


5. Calculate consolidated profit or loss for the non-controlling parties and controlling parties.

Solutions

Expert Solution

1. Computation of differential at the acquisation date

Amount received = 414,000,000

(-) Common stock= 225,000,000

(-)retained earning= 9,000,000

(-) reduction in value of inventory= 10,000,000

(+) increase in the value of land=100,000,000

(+)increase in the value of bonds payable after adjusting amortization= 15,000,000

Goodwill = 204,000,000

(-) Amortization of goodwill= 20,000,000

Adjusted goodwill= 184,000,000

2. Journal entries in the book of subsidiery

Purchase consideration a/c......................Dr. 414,000,000

To Business Purchased 230,000,000

To Goodwill 184,000,000

3. elimination entries based on changes in book value of equity

PT Polindo a/c............................................Dr. 175,000,000

To Inventory 80,000,000

To land 45,000,000

To Bonds Payable 50,000,000

4. Journal elimination of differential

Goodwill a/c.................................................Dr. 184,000,000

To Bank account 184,000,000

5. Consolidated Profit and Loss for the non-controlling parties

Fair value of non-controlling interest= 46,000,000

(-) Impairement Loss= 20,000,000

(+) Increase in book value of land =100,000,000

(+) Increase in value of bonds=15,000,000

(-) Decrease in the value of inventory=10,000,000

Total consolidated profit/loss= 131,000,000

ekkarill92 answered 1 year ago
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