8/17/2019 Ch03 Beams12ge SM
1/22
CHAPTER 3
AN INTRODUCTION TO CONSOLIDATED FINANCIAL STATEMENTS
Answers to Questions
1 A corporation becomes a subsidiary wen anoter corporation eiter direct!y or indirect!y ac"uires acontro!!in# $inancia! interest %#enera!!y o&er '( percent) o$ its outstandin# &otin# stoc*+
2 Amounts assi#ned to identi$iab!e assets and !iabi!ities in e,cess o$ recorded amounts on te boo*s o$ tesubsidiary are not recorded separate!y by te parent+ Instead- te parent records te $air &a!ue.purcase price o$ te interest ac"uired in an in&estment account+ Te assi#nment to identi$iab!e asset and !iabi!ityaccounts is made trou# wor*in# paper entries wen te parent and subsidiary $inancia! statements areconso!idated+
3 Te !and wou!d be sown in te conso!idated ba!ance seet at /0((-(((- its $air &a!ue- assumin# tat te purcase price o$ te subsidiary is #reater tan te boo* &a!ue o$ te subsidiary1s net assets+ I$ te parentad ac"uired an 2( percent interest and te imp!ied $air &a!ue o$ te subsidiary was #reater tan te boo* &a!ue o$ te subsidiary1s net assets- te !and wou!d sti!! appear in te conso!idated ba!ance seet at
/0((-(((+ Under 3AA4- te noncontro!!in# interest is a!so reported based on $air &a!ues at te ac"uisitiondate+
4 4arent and subsidiaries sou!d maintain separate accountin# record because !e#a!!y tey are separateentities+ 5owe&er- in parent6subsidiary re!ationsip- te parent as a contro! o&er te subsidiary+ Tustere is on!y one economic entity because a!! resources are under contro! o$ a sin#!e mana#ement- wic iste mana#ement o$ parent+ Tere$ore- te separate accountin# record sou!d be conso!idated $or reportin# purposes+
5 A noncontro!!in# interest is te e"uity interest in a subsidiary tat is owned by stoc*o!ders outside o$ tea$$i!iation structure+ In oter words- it is te e"uity interest in a subsidiary %recorded at $air &a!ue) tat isnot e!d by te parent or subsidiaries o$ te parent+
6 Under 3AA4- a subsidiary wi!! not be conso!idated i$ contro! does not rest wit te ma7ority owner- suc
as in te case o$ a subsidiary in reor#ani8ation or ban*ruptcy- or wen te subsidiary operates under se&ere$orei#n e,can#e restrictions or oter #o&ernmenta!!y imposed uncertainties+ Oter conditions $or notconso!idatin# a subsidiary are9 %0) $ormation o$ 7oint &entures- %:) te ac"uisition o$ an asset or #roup o$ assets tat does not constitute a business- %;) combination between entities under common contro! and % or =oter assets+> In&estments in unconso!idated subsidiaries are sown in conso!idated ba!ance seets asin&estments or oter assets+ Tey are accounted $or under te e"uity metod i$ te parent can e,ercisesi#ni$icant in$!uence o&er te subsidiary? oterwise- tey are accounted $or by te $air &a!ue . cost metod+
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
2/22
3-2 An Introduction to Consolidated Financial Statements
11 Parent’s books: Reciprocal accounts on subsidiary’s books:In&estment in subsidiary Capita! stoc* and retained earnin#sSa!es Cost o$ 3oods So!dAccounts recei&ab!e Accounts payab!eInterest income Interest e,penseDi&idends recei&ab!e Di&idends payab!e
Ad&ance to subsidiary Ad&ance $rom parent
12 Reciproca! accounts are e!iminated in te process o$ preparin# conso!idated $inancia! statements in order to sow te $inancia! position and resu!ts o$ operations o$ te tota! economic entity tat is under tecontro! o$ a sin#!e mana#ement team+ Sa!es by a parent to a subsidiary are interna! transactions $rom te&iewpoint o$ te economic entity and te same is true o$ interest income and interest e,pense and rentincome and rent e,pense arisin# $rom intercompany transactions+ Simi!ar!y- recei&ab!es $rom and payab!esto a$$i!iates do not represent assets and !iabi!ities o$ te economic entity $or wic conso!idated $inancia!statements are prepared+
13 Te stoc*o!ders1 e"uity o$ a parent under te e"uity metod is te same as te conso!idated stoc*o!ders1e"uity o$ a parent and its subsidiaries e,cept $or te noncontro!!in# interest+
14 No+ Te amounts tat appear in te parent1s statement o$ retained earnin#s under te e"uity metod and
te amounts tat appear in te conso!idated statement o$ retained earnin#s are identica!- assumin# tat tenoncontro!!in# interest is inc!uded as a separate component o$ stoc*o!ders1 e"uity+
15 Income attributab!e to noncontro!!in# interest is not an e,pense- but rater it is an a!!ocation o$ te tota!income to te conso!idated entity between contro!!in# and noncontro!!in# stoc*o!ders+ From te&iewpoint o$ te contro!!in# interest %te stoc*o!ders o$ te parent)- income attributab!e to noncontro!!in#interest as te same e$$ect on conso!idated net income as an e,pense+ Tis is because conso!idated netincome is income to a!! stoc*o!ders+ A!ternati&e!y- you can &iew tota! conso!idated net income as bein#a!!ocated to te contro!!in# and noncontro!!in# interests+
16 Te computation o$ noncontro!!in# interest is comparab!e to te computation o$ retained earnin#s+ It iscomputed9
Noncontro!!in# interest be#innin# o$ te period
Add9 Income attributab!e to noncontro!!in#interest
Deduct9 Noncontro!!in# interest di&idends %)Deduct9 Noncontro!!in# interest o$ amorti8ation o$e,cess o$ $air &a!ue o&er boo* &a!ue
Add9 Noncontro!!in# interest o$ amorti8ation o$ e,cess o$ boo* &a!ue o&er $air &a!ue
%)
Noncontro!!in# interest end o$ te period
17 It is acceptab!e to conso!idate te annua! $inancia! statements o$ a parent and a subsidiary wit di$$erent$isca! periods- pro&ided tat te dates o$ c!osin# are not more tan tree monts apart+ Any si#ni$icantde&e!opments tat occur in te inter&enin# tree6mont period sou!d be disc!osed in notes to te$inancia! statements+ In te situation described- it is acceptab!e to conso!idate te $inancia! statements o$ te subsidiary wit an October ;0 c!osin# date wit te $inancia! statements o$ te parent wit aDecember ;0 c!osin# date+
18 Te ac"uisition o$ sares $rom noncontro!!in# stoc*o!ders is not a business combination+ It must beaccounted $or as a treasury stoc* transaction i$ te ac"uirer is te contro!!in# interest+ It is not possib!e- byde$inition- to ac"uire a contro!!in# interest $rom noncontro!!in# stoc*o!ders+
SOLUTIONS TO EXERCISES
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
3/22
Chapter 3 3-3
Solution E3-1 Solution E3-2
1 b 1 d2 c 2 b3 d 3 d4 d 4 d
5 a 5 a6 b7 c
Solution E3-3 [AICPA adapted]
1 c Advance to Hill $75,000 + receivable from Ward $200,000 $275,000
2 a !ero, "ood#ill a% an indeterminate life and i% not amorti&ed'
3 a Po# acco(nt% for )ap (%in" te e*(it metod, terefore,con%olidated retained earnin"% i% e*(al to Po#% retained earnin"%, or
$2,-.0,000'
- d /n te con%olidated balance %eet, intercompan receivable% %o(ld be &ero'
Solution E3-4 (in thousands)
1 Implied fair val(e of )an $1,00 3 406 $-,000e%%8 9oo: val(e of )an 1,006;ood#ill at ?an(ar =, 20== $ 2.0>ood#ill at @ecember 1=, 20== >ood#ill from con%olidation $ 2.0)ince "ood#ill i% not amorti&ed
2 Consolidated net income
Pin% reported net income $=,40e%%8 Correction to income from )an for depreciation on e
8/17/2019 Ch03 Beams12ge SM
4/22
3-4 An Introduction to Consolidated Financial Statements
2' oncontrollin" intere%t at ?an(ar = $00,000$2,000,000 < 106
Add8 noncontrollin" intere%t %are $00,000 < 106 $=.0,000e%%8 @ividend% declared $100,000 < 106 $40,000oncontrollin" intere%t at @ecember 1= $40,000
Cec:8Inve%tment in att Inc' at ?an(ar = $=,-00,000Add8 controllin" intere%t %are $00,000 < 706 $-20,000e%%8 dividend% declared $100,000 < 706 $2=0,000Inve%tment in att Inc' at @ecember 1= $=,=0,000
oncontrollin" intere%t at @ecember 1= $40,000$=,=0,000 < 10 3 706
Solution E3-6 (in thousands)
='Co%t of ac*(irin" Patricia D% %toc:% [$-5 < =0,000] $-50,000 Implied fair val(e [$-0,000 + $20,000 + $.0,000 + $1.0,000 $2.0,000 B$-0,000]>ood#ill $ 70,000
2'?o(rnal entrie% to record p(%Bdo#n val(e8Inventorie% +A6 10
Plant a%%et% +A6 50Acco(nt% paable B6 =0>ood#ill +A6 70Eetained earnin"% B);6 200
Acco(nt% receivable BA6 =0P(%Bdo#n capital +);6 150
P(%Bdo#n capital in te balance %eet of Patricia D i% $150,000
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
5/22
Chapter 3 3-5
Solution E3-
=' )oo%ec: Co td net income $2-0,000Percenta"e of o#ner%ip .0Income allocated to controllin" intere%t $=42,000
2' Controllin" %are of net income i% e*(al to parent% net income'
F(m Co td %eparate net income $150,000Income from )oo%ec: Co td $=42,000
Controllin" %are of net income $5-2,000
Solution E3-! (in thousands)
1 Capital stock
Ge capital %toc: appearin" in te con%olidated balance %eet at@ecember 1=, 20== i% $7,200, te capital %toc: of Pob,te parentcompan'
2 Goodwill at December 31, 2011
Inve%tment co%t at ?an(ar 2, 20== .0 intere%t6 $2,.00Implied total fair val(e of )of $2,.00 3 .06 $1,5009oo: val(e of )of=006 2,-006;
8/17/2019 Ch03 Beams12ge SM
6/22
3-6 An Introduction to Consolidated Financial Statements
oncontrollin" intere%t at boo: val(eAdd8 20 >ood#illoncontrollin" intere%t @ecember 1=
$ 5=2 220$ 712
5 Dividends payable at December 31, 2011
@ividend% paable to %toc:older% of Pob $ 10@ividend% paable to noncontrollin" %toc:older% $=00 × 206 20
@ividend% paable to %toc:older% o(t%ide teCon%olidated entit $ 1.0
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
7/22
Chapter 3 3-7
Solution E3-" (in thousands)
#as Co$%o$ation and Su&sidia$'
Partial 9alance )eetat @ecember 1=, 20==
Stockholders e!"ity#Capital %toc:, $=0 par $=,200Additional paidBin capital 200Eetained earnin"% 20 ;*(it of controllin" %toc:older% =,0oncontrollin" intere%t =- Gotal %toc:older% e*(it $=,.2-
S"pporting comp"tations
Comp(tation of con%olidated retained earnin"%8Pa%% @ecember 1=, 20=0 retained earnin"% $ =-0Add8 Pa%% reported income for 20== 220
e%%8 Pa%% dividend% =006Con%olidated retained earnin"% @ecember 1=, 20== $ 20
Comp"tation o$ noncontrolling interest at December 31, 2011
)al% @ecember 1=, 20=0 %toc:older% e*(it $.00Income le%% dividend% for 20== $.0 B $06 20)al% @ecember 1=, 20== %toc:older% e*(it .20oncontrollin" intere%t percenta"e 20oncontrollin" intere%t @ecember 1=, 20== $=-
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
8/22
3-8 An Introduction to Consolidated Financial Statements
Solution E3-1
#* Co$%o$ation and Su&sidia$'
Con%olidated Income )tatementfor te ear ended @ecember 1=, 20=1 in to(%and%6
)ale% $.,-00Co%t of "ood% %old -,-00 >ro%% profit -,000@ed(ct8 /peratin" e
8/17/2019 Ch03 Beams12ge SM
9/22
Chapter 3 3-9
SOLUTIONS TO #RO+LE,S
Solution #3-1
1 #n Co$%o$ation and Su&sidia$'
Con%olidated 9alance )eet
at @ecember 1=, 20==in to(%and%6
(ssets
Ca% $=2. + $726 $ 200Acco(nt% receivable $=.0 + $=1 B $206 24Inventorie% $572 + $22-6 74;*(ipment B net $=,520 + $7006 2,220
Gotal a%%et% $1,5=2
)iabilities and Stockholders %!"ity
)iabilities#
Acco(nt% paable $=0 + $=12 B $206 $ 272
Stockholders e!"ity#Common %toc:, $=0 par =,.-0Eetained earnin"% =,200
oncontrollin" intere%t $00 + $-006 × 20 200
Gotal liabilitie% and %toc:older% e*(it $1,5=2
2 Consolidated net income $or 2012
Pen% %eparate income $ .0Add8 Income from )(t .0 < $10,0006 2..
Controllin" intere%t %are 4.Add8 oncontrollin" intere%t %are 20 < $10,0006 72Con%olidated net income $=,0-0
Pen% %eparate income $ .0Add8 )(t% net income 10
Con%olidated net income =,0-0e%%8 oncontrollin" intere%t %are 20 < $10,0006 72Controllin" %are of con%olidated net income $ 4.
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
10/22
3-10 An Introduction to Consolidated Financial Statements
Solution #3-2 (in thousands)
1 Sched"le to allocate $air val"e*book val"e di$$erential
Co%t of inve%tment in )et $ 700Implied fair val(e of )et $700 3 706 $=,000
9oo: val(e of )et --06;
8/17/2019 Ch03 Beams12ge SM
11/22
Chapter 3 3-11
Solution #3-3 (in thousands)
)ced(le to allocate e
8/17/2019 Ch03 Beams12ge SM
12/22
3-12 An Introduction to Consolidated Financial Statements
Solution #3-5
#al Co$%o$ation and Su&sidia$'
Con%olidated 9alance )eetat @ecember 1=, 20==
in tho"sands-
(ssetsC(rrent a%%et% $=,10Plant a%%et% 1,120>ood#ill .00
$5,-.0%!"ities
iabilitie% $2,-0Capital %toc: =,200Eetained earnin"% =,-0
$5,-.0
S"pporting comp"tations
)or% net income $=,00 B $=,200 B $2006 $ 200
e%%8 ;
8/17/2019 Ch03 Beams12ge SM
13/22
Chapter 3 3-13
Solution #3-6
=' Preliminar comp(tation%8
air val(e p(rca%e price6 of .0 intere%t ac*(ired $2,0.0,000Implied fair val(e of @avid PC [$2,0.0,000 3 .0] $2,00,000
@avid PC %toc:older% e*(it on ?an(ar = $2,500,000[$=,000,000 + $=,.00,000 + $200,000 B $500,000]
;ood#ill a =00 $ =00
Gotal a%%et% $ 7,7.0 $ 1,-.0 $ .,7.0
Liabilities and
Equity
Acco(nt% paable $ 500 $ .0 c =00 $ -.0
@ividend% paable $ =00 $ 200 b =0 $ =-0
ote% paable $ =,000 $ -00 $ =,-00
Capital %toc: $ 2,000 $ =,000 a =000 $ 2,000
Eetained earnin"% $ -,=.0 $ =,.00 a =.00 $ -,=.0
$ 7,7.0 $ 1,-.0
oncontrollin"intere%t a 5.0 $ 5.0
Gotal liabilitie% and%toc:older%K e*(it $ .,7.0
a' Go eliminate reciprocal %(b%idiar inve%tment and e*(it balance%,e%tabli% noncontrollin" intere%t, and enter "ood#illb'Go eliminate reciprocal dividend% receivable and dividend% paableacco(nt%'c'Go eliminate reciprocal acco(nt%% receivable and acco(nt%% paableacco(nt%'
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
14/22
3-14 An Introduction to Consolidated Financial Statements
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
15/22
Chapter 3 3-15
Solution #3- (in thousands)
+reliminary comp"tations
Co%t of .0 inve%tment ?an(ar 1, 20== $=,=20Implied total fair val(e of )le $=,=20 3 .06 $=,-009oo: val(e of )le =,0006
;ood#ill $ -00
1 Noncontrolling interest share o$ income#
)le% net income $200 × 20 noncontrollin" intere%t $ -0
2 C"rrent assets#
Combined c(rrent a%%et% $.= + $1006 $=,==
e%%8 @ividend% receivable $-0 × .06 126
C(rrent a%%et% $=,0.-
3 Income from )le8 one Inve%tment income i% eliminated in con%olidation'
4 Capital %toc:8 $2,000 Capital %toc: of te parent, Por Corporation'
5 Inve%tment in )le8 one Ge inve%tment acco(nt i% eliminated'
6 ;
8/17/2019 Ch03 Beams12ge SM
16/22
3-16 An Introduction to Consolidated Financial Statements
Solution #3-! [AICPA adapted]
+reliminary comp"tations )a# )(nInve%tment co%t8
)a# 2,000 %are% × .06 × $2.0 --.,000
)(n ,000 %are% × 706 × $=0 72,000
Implied total fair val(e%8)a# $--.,000 3 .06
50,000)(n $72,0003 706 40,000
9oo: val(e of %toc:older% e*(it)a# 2.0,000)(n -.0,000
;ood#ill6
2.0,000
-.0,000
1 a. /o"rnal entries to acco"nt $or investments
/an"ary 1, 2011 B (c!"isition o$ investmentsInve%tment in )a# .06 --.,000
Ca% --.,000Go record ac*(i%ition of =,00 %are% of )a# common %toc: at $2.0 per %are'
Inve%tment in )(n 706 72,000Ca%
72,000Go record ac*(i%ition of -,200 %are% of )(n common %toc: at $=0 per %are'
b. D"ring 2011 B Dividends $rom s"bsidiariesCa% 5=,200
Inve%tment in )a# .06 5=,200
Go record dividend% received from )a# $-,000 × .06'Ca% 25,200
Inve%tment in )(n 706 25,200
Go record dividend% received from )(n $1,000 × 706'c. December 31, 2011 B Share o$ income or lossInve%tment in )a# .06 ==5,200
Income from )a# ==5,200
Go record inve%tment income from )a# $=--,000 × .06'o%% from )(n 11,00
Inve%tment in )(n 706 11,00
Go record inve%tment lo%% from )(n $-.,000 × 706'
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
17/22
Chapter 3 3-17
Solution #3-! contin(ed6
2 Noncontrolling interest December 31, 2011
)a# )(nCommon %toc: $200,000 $2-0,000Capital in eood#ill < 20$2.0,000 < 20 5,000$-.0,000 < 10 =--,000 oncontrollin" intere%t, @ecember 1= $=2.,000 $22,.00
air val(e e*(al% boo: val(e'
3 Consolidated retained earnings December 31, 2011
Con%olidated retained earnin"% i% reported at $=,2=.,-00, e*(al to teretained earnin"% of Pod Corporation, te parent, at @ecember 1=, 20=='
4 nvestment balance December 31, 2011#
)a# )(nInve%tment co%t ?an(ar = $--.,000 $72,000
Add ded(ct68 Income lo%%6 ==5,200 11,006@ed(ct8 @ividend% received 5=,2006 25,2006 Inve%tment balance% @ecember 1= $5=2,000 $=1,200
Cec:8 Inve%tment balance% %o(ld be e*(al to te (nderlin" boo: val(epl(% "ood#ill
)a# $10,000 × .06 + $2.0,000 < .06 $5=2,000
)(n $14,000 × 706 + $-.0,000 < 706 $=1,200
After con%olidation, te Inve%tment balance% are $0'
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
18/22
3-18 An Introduction to Consolidated Financial Statements
Solution #3-"
+reliminary comp"tations in tho"sands-
Co%t of 40 inve%tment ?an(ar =, 20== $=-,-00Implied total fair val(e of )on $=-,-00 3 406 $=,0009oo: val(e of )on =0,.006
;ood#ill $ 2,000Additional ann(al depreciation on e*(ipment $1,200 3 . ear%6 $ -00
#an Co$%o$ation and Su&sidia$'
Con%olidated 9alance )eet Wor:in" Paper%at @ecember 1=, 20==
in to(%and%6
Pan40)on
AdJ(%tment% and;limination%
Con%olidated9alance )eet
Ca% $ =,200 $ .00 $ 2,000
Eeceivable% B net 2,-00 =,00 -,000@ividend% receivable 10 b 10
Inventor 2,.00 2,-00 5,200
and 2,-00 2,.00 5,200
9(ildin"% B net .,000 -,000 =2,000
;*(ipment B net ,000 1,200 a 2,.00 =2,000
Inve%tment in )on =5,=20 a =5,=20
>ood#ill LLLLLLL LLLLLLLL a 2,000 2,000
Gotal a%%et% $1.,2.0 $ =-,.00 $-2,-00
Acco(nt% paable $ =,200 $ 2,-00 $ 1,00
@ividend% paable 2,000 -00 b 10 2,0-0
Capital %toc: 2.,000 .,000 a .,000 2.,000
Eetained earnin"% 7,0.0 -,000 a -,000 7,0.0
oncontrollin" intere%t LLLLLLL LLLLLLLL LLLLLLL a =,.0 =,.0
Gotal e*(itie% $1.,2.0 $ =-,.00 =7,=0 =7,=0 $-2,-00
a Go eliminate reciprocal inve%tment and e*(it acco(nt%, enter (namorti&ed e
8/17/2019 Ch03 Beams12ge SM
19/22
Chapter 3 3-19
Solution #3-1
1 +"rchase price o$ investment in S"n in tho"sands-
Mnderlin" boo: val(e of inve%tment in )(n8;*(it of )(n ?an(ar =, 20== $ ..0
Add8 ;ood#ill at @ecember 1=, 20=5 2-0
air val(e of )(n ?an(ar =, 20== $=,=20
P(rca%e price of .0 inve%tment at fair val(e$=,=20 < .06 $ .4
2 S"ns stockholders e!"ity on December 31, 201 in tho"sands-
20 noncontrollin" intere%t at fair val(e $2-.20 "ood#ill -.620 noncontrollin" intere%t% e*(it at boo: val(e $200Gotal e*(it oncontrollin" intere%t% e*(it $200320 $=,000
3 +ans investment in S"n acco"nt balance at December 31, 201in to(%and%6Mnderlin" boo: val(e in )(n @ecember 1=, 20=-
$=,000 × .06 $.00
Add8 .0 of >ood#ill @ecember 1=, 20=- 20 i% attrib(table to te noncontrollin" intere%t6 =42
Inve%tment in )(n @ecember 1=, 20=- $442
Alternative %ol(tion8Inve%tment co%t ?an(ar =, 20== $.4Add8 .0 of )(n% increa%e %ince ac*(i%ition
$=,000 B $..06 × .0 4
Inve%tment in )(n @ecember 1=, 20=- $442
4 +ans capital stock and retained earnings December 31, 201
in to(%and%6Capital %toc: $=,00Eetained earnin"% $ =20
Amo(nt% are e*(al to capital %toc: and retained earnin"% %o#n in tecon%olidated balance %eet'
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
20/22
3-20 An Introduction to Consolidated Financial Statements
Solution #3-11
+reliminary comp"tations in tho"sands-
Co%t of 70 inve%tment in )t( $2,.00Implied fair of )t($2,.00 3 706 $-,0009oo: val(e of )t( =006 1,200
;ood#ill =2010 Mnamorti&ed eood#ill LLLLLL LLLLLL a -00 -00
A%%et% $=0,==2 $ -,200 $=2,0-0
Acco(nt% paable $ =,200 $ 120 $ =,520Acco(nt paable to )t( -0 b -0
@ividend% paable =0 -0 c 2. =72
on"Bterm debt 2,-00 -00 2,.00
Capital %toc: -,000 2,000 a 2,000 -,000
Eetained earnin"% 2,1=2 =,--0 a =,--0 2,1=2
oncontrollin" intere%t
$-,=20,000 × 106 LLLLLLL LLLLLLL LLLLLLL a =,21 =,21
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
21/22
Chapter 3 3-21
;*(itie% $=0,==2 $ -,200 -,=.. -,=.. $=2,0-0
Copyri#t @ :(0' 4earson Education Limited
8/17/2019 Ch03 Beams12ge SM
22/22
3-22 An Introduction to Consolidated Financial Statements
Solution #3-12
+reliminary comp"tations in tho"sands-
.0 Inve%tment in )am at co%t ?an(ar =, 20== $ 1,0-0Implied total fair val(e of )am $1,0-0 3 .06 $ 1,.00)am boo: val(e 1,00
;ood#ill 200;*(it fair val(e of )am @ecember 1=, 20=1 $-,-00oncontrollin" intere%t percenta"e 20
oncontrollin" intere%t @ecember 1=, 20=1 $ ..0
6 Controlling share o$ consolidated net income $or 2013
Pen% %eparate income $=,=20Add8 Income from )am 1.-
Controllin" %are of con%olidated net income $=,50-
Pen% net income $=,=20)am% net income -.0Con%olidated net income $=,00e%%8 oncontrollin" intere%t %are $-.0 < 206 4Controllin" intere%t %are $=,50-
Copyri#t @ :(0' 4earson Education Limited