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Department of Accounting FEUI

Tutorial of Advanced Financial Accounting1

Post Mid Term Quiz

1. Problem 1

PT Margapala purchased 60% of PT Megas common stock on January 2, 2008 forRp 300,000,000.

At that date, the noncontrolling interest had a fair value of Rp 200,000,000 and PT Mega reported commonstock, APIC, and retained earnings of Rp 300,000,000, Rp 50,000,000 and 150,000,000 respectively.

PT Margapala and PT Mega regularly purchase inventory from each other. During 2008, PT Mega

sold inventory costing Rp 30,000,000 to PT Margapala for Rp 40,000,000 and PT Margapala resold 60% of

the inventory in 2008 and 40% in 2009. Also in 2008, PT Margapala sold inventory costing Rp 20,000,000

to PT Mega for Rp 25,000,000. PT Mega resold 70% of the inventory in 2008 and 70% in 2009.

On January 2, 2009, PT Margapala sold equipement to PT Mega for Rp 55,000,000. PT Margapala

had purchased the equipment for Rp 100,000,000 on January 1, 2004. It was depreciated on a straight linebasis with an expected life of 8 years and no anticipated scrap value. The equipment total expected life is

unchanges as a result of the intercompany transfer.

PT Megas net income for 2008 and 2009 amounted to Rp 75,000,000 and Rp 90,000,000

respectively. PT Mega declared dividend amounted to Rp 30,000,000 in 2009. No dividend declared in

2008.PT Margapala used basic equity method to account its investment in PT Mega.

a. Prepare all eliminating entries (include basic eliminating entries) required to prepare consolidated

financial statement for the year ended December 31,2009.

b. If PT Margapala separate income (exclude income from investment in PT Mega) for 2009 is Rp

150,000,000. Compute the consolidated net income for the year 2009.

2. Problem 2

PT Paiman purchased 70% ownership of PT Atuna on January 1, 2011 at underlyin book value. AT

that date, the fair value of NCI was equal 30% of PT Atunas book value.

On December 31, 2006, PT Atuna sold Rp 800 million par value 14% 8 years bonds at 101. At that

date, PT Paiman purchased Rp 600 million par value of the bonds directly from PT Atuna and the remainder

is purchased by non-affiliates. The bonds pay interest annually on December 31.

On January 1, 2006, PT Atuna issued Rp 1 billion par value of 8% bonds at 96. The bonds mature in

5 years and pay interest semiannually on January 1 and July 1. On January 1, 2007, PT Paiman purchased

Rp 200 million par value of PT Atunas bonds from non -affiliates at 98.

Assume both companies use straight line method to amortize premium or discount.

a.

Prepare eliminating entries at December 31, 2008 to remove the effects of intercompany transfer of

bonds.

b. Present the computation of gain or loss on constructive retirement and the computation of the

balance of each account in the eliminating entries.

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Department of Accounting FEUI

Tutorial of Advanced Financial Accounting1

Post Mid Term Quiz

3. Problem 3

Emerald Corporation acquired 9,000 shares of the common stock and 1,600 shares of the 8 percentpreferred stock of Pert Company on December 31, 20X4, at underlying book value. At that date, the fair

value of the noncontrolling interest in Perts common stock was equal to 40 percent of the book value of its

common stock. Pert reported the following balance sheet amounts on January 1, 20X5:

Cash $ 30,000 Accounts Payable $ 20,000

Accounts Receivable 70,000 Bonds Payable 100,000

Inventory 120,000 Preferred Stock 200,000

Buildings & Equipment 600,000 Common Stock 150,000Less: Accumulated Depreciation (150,000) Retained Earnings 200,000

Total Assets $670,000 Total Liabilities & Equities $670,000

Perts preferred stock is $100 par value, and its common stock is $10 par value. The preferred

dividends are cumulative and are two years in arrears on January 1, 20X5. Pert reports net income of

$34,000 for 20X5 and pays no dividends.

a.

Record the consolidation elimination entries needed to prepare a consolidated balance sheet on

January 1, 20X5.

b. Assuming that Emerald reported income from its separate operations of $80,000 in 20X5, compute

the amount of consolidated net income and the amount of income to be assigned to the controlling

shareholders in the 20X5 consolidated income statement.

4. Problem 4

On April 1 20X1, PT Parent purchased 80% ownership of PT Subsidiarys common stock for Rp

4,240,000,000.00. PT Subsidiarys equity components as of January 1 are Common Stock as much as Rp

3,000,000,000.00 and Retained Earnings of Rp 2,000,000,000.00. PT Subsidiary paid Rp 500,000,000.00

dividend on May 1. Income statements of both corporations are:

PT Parent PT Subsidiary

JanMar AprDec

Revenues 3,500,000,000.00 600,000,000.00 1,600,000,000.00

Expenses 2,000,000,000.00 300,000,000.00 900,000,000.00

Income 1,500,000,000.00 300,000,000.00 700,000,000.00

a. Prepare consolidation eliminating entries as of December 31, 20X1.

b. Provide consolidated income statement.

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Department of Accounting FEUI

Tutorial of Advanced Financial Accounting1

Post Mid Term Quiz

5. Problem 5

On 2nd

January 2011, Parent Co., Japanese company acquired 80% shares of PT Subsidiary,Indonesian company, for IDR 5.022.200.000,-. Functional currency of PT Subsidiary is Rupiah. PT

Subsidiarys trial balance as of 31stDecember 2011 and exchange rates along 2011 (IDR/1 JPY) are:

Cash 540,000,000

Account Receivable 756,000,000

Inventory 1,935,000,000

Plant & Equipment 3,735,000,000

Account Payable 729,000,000Capital Stock 3,480,000,000

Retained Earning 2,499,000,000

Sales 1,470,750,000

COGS 885,937,500

Operating Expenses 248,062,500

Depreciation Expense 31,387,500

Income tax exp 15,187,500Dividend 32,175,000

FX Rate

2ndJanuary 122

1stSeptember 130

31stDecember 132

Avarege 127

a.

Determine whether financial statements should be prepared using translation of re-measurement

method!

b. Provide the required worksheet!

c. Provide statement of proof for translation or re-measurement!