Cash $ 400 $ 400

Accounts receivablenet 700 700

Inventories (sold in 2011) 1,000 1,200
Other current assets 200 200
Land 900 1,700
Buildingsnet (10-year remaining life) 1,500 2,000
Equipmentnet (7-year remaining life) 1,200 500
Total assets $5,900 $6,700
Accounts payable $ 800 $ 800
Other current liabilities 200 200
Bonds payable (due January 1, 2016) 1,000 1,100
Capital stock, $10 par 3,000
Retained earnings 900
Total equities $5,900

400
700
1,000
200
900
1,500
1,200
5,900
800
200
1,000
3,000
900
5,900

###
###
1,200
###
1,700
2,000
500
6,700
###
###
1,100

3,900
1,170
1,680
510

4,600
1,380
###
300

1,200,000
360,000
30,000

(200)
(800)
(500)
700
(800)
(100)

(60)
(240)
(150)
210
(30)

(210)

360,000
(60,000)
(15,000)
36,000
321,000

(1,680,000)
180,000
(321,000)

60
240
150
(210)
(30)

P 3-5
Prepare a consolidated balance sheet one year after acquisition
Adjusted trial balances for Pal and Sor Corporations at December 31, 2011, are as follows (in thous
Pal Sor
Eliminasi
Debits
pal
sor
d
k
Konsolidasi
Current assets $ 480 $ 200
480
200
Plant assetsnet 1,000 600
1000
600
Investment in Sor 840
840
0
Cost of sales 600 600
600
600
Other expenses 200 100
200
100
Dividends 100
100
0
$3,220 $1,500
3220
1500
(continued)
Pal Sor
Credits
Liabilities $ 900 $ 420
900
420
Capital stock 600 100
600
100
Retained earnings 680 180
680
180
Sales 1,000 800
1000
800
Income from Sor 40
40
0
$3,220 $1,500
3220
1500

Pal purchased all the stock of Sor for $800,000 cash on January 1, 2011, when Sors stockholders
equity consisted of $100,000 capital stock and $180,000 retained earnings. Sors assets
and liabilities were fairly valued except for inventory that was undervalued by $40,000 and sold
in 2011, and plant assets that were undervalued by $80,000 and had a remaining useful life of fou
years from the date of the acquisition.
REQUIRED: Prepare a consolidated balance sheet for Pal Corporation and Subsidiary at December 3
cost
book value
Excess
Allocation
inventory
plant asset
Goodwill

Pal Sor
Debits
Sales 1,000 800
Income from Sor 40

Cost of sales 600 600

800
280
520
40 sold 2011
80 4 years
400
520

pal

Eliminasi
d
k

sor
1000
40

800
0

600

600

40

Konsolidasi
1800
0

1200

Other expenses 200 100

R/E
AWAL
Add net Income
Dividends 100

Current assets $ 480 $ 200

Plant assetsnet 1,000 600
Investment in Sor 840
Goodwill

200
240

100
100

60

360
240

680
240
100
820

180
100
0

180

680
240
100
820

480
1000
840

200
600
0

80

20
840

400
2320

Liabilities $ 900 $ 420

Capital stock 600 100
R/E

900
600
820
2320

420
100

income form
investmen ini
c/s
r/e
goodwil
inventories
plant
invesetment in

40
40
100
180
400
40
80
800

1320
600
820
2740

100

860

680
1660
0
400
2740

860

re as follows (in thousands):

onsolidasi

n Sors stockholders
ors assets
y $40,000 and sold
ning useful life of four

sidiary at December 31, 2011.

P 3-6
Consolidated balance sheet workpapers with goodwill and dividen
Per Corporation paid $900,000 cash for 90 percent of Sim Corpora
2011, when Sim had $600,000 capital stock and $200,000 retaine
assets and liabilities were equal to fair values. During 2011, Sim re
declared $20,000 in dividends on December 31. Balance sheets fo
are as follows (in thousands):
Per Sim
Assets
Cash $ 84 $ 40
Receivablesnet 100 260
Inventories 700 100
Land 300 400
Equipmentnet 1,200 200
Investment in Sim 918
$3,302 $1,000
Equities
Accounts payable $ 820 $ 160
Dividends payable 120 20
Capital stock 2,000 600
Retained earnings 362 220
$3,302 $1,000
R E Q U I R E D : Prepare consolidated balance sheet workpapers f
December 31, 2011.

Assets
Cash $ 84 $ 40
Receivablesnet 100 260
Inventories 700 100
Land 300 400
Equipmentnet 1,200 200
Investment in Sim 918
Goodwill
$3,302 $1,000
Equities
Accounts payable $ 820 $ 160
Dividends payable 120 20
Capital stock 2,000 600
Retained earnings 362 220
NCI

onsolidasi
Cost
900000
Kepemilikan penuh
Cost
Excess
goodwill

84
100
700
300
1,200
918

40
260
100
400
200
-

3,302

1,000

820
120
2,000
362

160
20
600
220

3,302

1,000

90%
1,000,000
800,000
200,000

Net income sim

40,000

Dividen

20,000

oodwill and dividends

ent of Sim Corporations common stock on January 1,
d $200,000 retained earnings. The book values of Sims
During 2011, Sim reported net income of $40,000 and
. Balance sheets for Per and Sim at December 31, 2011,

sheet workpapers for Per Corporation and Subsidiary for

200

consolidasi
124
18
342
800
700
1,400
918
200
3,566

18
600
220
1,038

102
1,038

980
122
2,000
362
102
3,566

360,400

110
90

Combined Income and Retained Earnings

Statements for the Year Ended December 31
Sales $800 $200
Income from Saf 27.6
Cost of sales (500) (100)
Other expenses (194) (52)
Non Controlling Interest Shar
Net income 133.6 48
Add: Retained earnings January 1 360 68
Deduct: Dividends (100) (32)
Retained earnings December 31 $393.6 $ 84
Balance Sheet at December 31
Cash $ 106 $ 30
Accounts receivablenet 172 40
Dividends receivable from Saf 12
Inventories 190 20
Note receivable from Pan 10
Land 130 60
Buildingsnet 340 160
Equipmentnet 260 100
Investment in Saf 363.6
Patent
Total assets $1,573.6 $420
Accounts payable $ 170 $ 20
Note payable to Saf 10
Dividends payable 16
Capital stock, $10 par 1,000 300
Retained earnings 393.6 84
Non Controlling interest
Total equities $1,573.6 $420

S
800
27.6
-500
-194

200
0
-100
-52

133.6
360
-100
393.6

48
68
-32
84

106
172
12
190
0
130
340
260
363.6

30
40
0
20
10
60
160
100
0

1573.6
170
10
0
1000
393.6

420
20
0
16
300
84

1573.6

420

Eliminasi
D
K

Consolidated

27.6
11.2
9.2

32

12
10

112

363.6
11.2

10
12
300
68
550

121.2
550

1000
0
-600
-257.2
-9.2
133.6
360
-100
393.6

136
212
0
210
0
190
500
360
0
100.8
1708.8
190
0
4
1000
393.6
121.2
1708.8

Combined Income and Retained Earnings

Statements for the Year Ended December 31
Sales $ 800 $700
Income from Sol 60.2
Gain on equipment 10
Cost of sales (300) (400)
Depreciation expense (155) (60)
Other expenses (160) (140)
NCI Share
Net income 255.2 100
Add: Retained earnings January 1 300 100
Deduct: Dividends (200) (50)
Retained earnings December 31 $ 355.2 $150
Balance Sheet at December 31
Cash $ 96 $ 60
Accounts receivablenet 100 70
Dividends receivable 14
Inventories 150 100
Other current assets 70 30
Land 50 100
Buildingsnet 140 160
Equipmentnet 570 330
Investment in Sol 515.2
Goodwill
Total assets $1,705.2 $850
Accounts payable $ 200 $ 85
Dividends payable 100 20
Other liabilities 50 95
Capital stock, $10 par 1,000 500
Retained earnings 355.2 150
NCI
Total equities $1,705.2 $850

70%
P

S
800
60.2
10
-300
-155
-160

D
700
0
0
-400
-60
-140

60.2
5
9
25.8

255.2
300
-200
355.2

100
100
-50
150

96
100
14
150
70
50
140
570
515.2

60
70
0
100
30
100
160
330
0

14
21
60

1705.2
200
100
50
1000
355.2

850
85
20
95
500
150

500
100

1705.2

850

824

10
14

Consolidate
1500 Income From Sol
0
Dividen
10
Investment In Sol
-705
-224
-300 NCI Share
-25.8
Dividen
255.2
NCI
300
50
-200 C/s
355.2 R/E
Inventory
156 Building
10
160 Equipment
14
0 Goodwill
5
250
Investment In Sol
100
NCI
150
2
312 COS
7
914
Inventory
515.2
0
60 Depreciation Expense

220.8
824

2102
Building
275
Equipment
106
145 Account payable
1000
Account Receivable
355.2
220.8 Dividend Payable
2102
Dividen Receivable

Total Income
dikurangi amortisasi
60.2
35
25.2

25.8

500
100
5
14
21
60

Cost
Implied
15 BV
10.8 Excess
Alokasi Excess
Inventory
Buliding
Equipment
Goodwill

490
210
5
5
9
2
7
10
10
14
14

otal Income
ikurangi amortisasi

100
14
86
60.2

490000
700000
600000
100000

210000

lokasi Excess

quipment

5000
14000
21000
60000
100000

7
3

5000
2000
7000

Poe
Sales $8,190 $5,600
Income from San 864
Cost of sales (5,460) (4,000)
Other expenses (1,544) (600 )
NCI Share
Net income 2,050 1,000
Add: Beginning retained earnings 1,250 700
Deduct: Dividends (1,000) (500 )
Retained earnings December 31, 2014 $2,300 $1,200
Balance Sheet at December 31, 2014
Cash $ 758 $ 500
Inventory 420 800
Other current assets 600 200
Plant assetsnet 3,000 3,000
Investment in San 3,222
Goodwill
Total assets $8,000 $4,500

Current liabilities $1,700 $1,300

Capital stock 4,000 2,000
Retained earnings 2,300 1,200
NCI
Total equities $8,000 $4,500

San
8,190
864
5,460
1,544

5,600
4,000
600

2,050
1,250
1,000
2,300

1,000
700
500
1,200

758
420
600
3,000
3,222

500
800
200
3,000
-

8,000

4,500

1,700
4,000
2,300

1,300
2,000
1,200

8,000

4,500

K
5600
864
120
96

Consolidated
8,190
5680
3,900
2,144
96
2,050
1,250
500
1,000
2,300

120
100
72
500

3294

100
2000
700
8

366

10060

10060

1,258
1,100
700
6,000
500
9,558

2,900
4,000
2,300
358
9,558

Implied
BV
Goodwill

3,000,000
2,500,000
500,000

1 Sales
cost of sales
Cost of sales
Inventory
Investment In San
NCI
Cost Of Sales

2 Eliminasi Income dan Dividen

864
960
Income from san
Dividen
Investment in San
NCI Share
Dividen
NCI
C/s
R/E
Goodwill
Investment In San
NCI
Current Libilities
Otheer Current Assets

5600
5600
120
120
72
8
80

864
450
414
96
50
46
2000
700
500
2880
320
100
100

P 6-5
Workpaper (downstream sales, two years)
Pal Corporation acquired a 90 percent interest in Sto Corporation on January 1, 2011, for $270,000, at
which time Stos capital stock and retained earnings were $150,000 and $90,000, respectively. The fa
value cost/book value differential is due to a patent with a 10-year amortization period. Financial state
for Pal and Sto for 2012 are as follows (in thousands):
Pal Sto
Combined Income and Retained Earnings Statement
for the Year Ended December 31, 2012
Sales $ 450 $190
450
190
Income from Sto 34.6
34.6
Gain on land 5
5
Cost of sales (200) (100)
-200
-100
Operating expenses (113) (40 )
-113
-40
Net income 176.6 50
176.6
50
Add: Retained earnings January 1 200 120
200
120
Less: Dividends (150) (20 )
-150
-20
Retained earnings, December 31 $ 226.6 $
226.6
150

Pal Sto
Pal
Sto
Balance Sheet at December 31, 2012
Cash $ 136.4 $ 14
136
14
Accounts receivable 180 100
180
100
Dividends receivable 18
18
0
Inventories 60 36
60
36
Land 100 30
100
30
Buildingsnet 280 80
280
80
Machinerynet 330 140
330
140
Investment in Sto 292.2
292.2
$1,396.6 $400
1396.2
400
Accounts payable $ 200 $ 50
200
50
Dividends payable 30 20
30
20
Other liabilities 140 30
140
30
Capital stock 800 150
800
150
Retained earnings 226.6 150
226.6
150
$1,396.6 $400
1396.6
400
ADDITIONAL INFORMATION
1. Pal sold inventory to Sto for $60,000 during 2011 and $72,000 during 2012; Stos inventories at De
31, 2011 and 2012, included unrealized profits of $10,000 and $12,000, respectively.
2. On July 1, 2011, Pal sold machinery with a book value of $28,000 to Sto for $35,000. The machinery
a useful life of 3.5 years at the time of intercompany sale, and straight-line depreciation is used.
3. During 2012, Pal sold land with a book value of $15,000 to Sto for $20,000.
4. Pals accounts receivable on December 31, 2012, includes $10,000 due from Sto.
5. Pal uses the equity method for its 90 percent interest in Sto.

REQUIRED: Prepare a consolidation workpaper for Pal and Subsidiary for the year ended December 31
2012.

Income Statement Sales

1, 2011, for $270,000, at
Income from Sto
000, respectively. The fair
Gain on land
on period. Financial statementsCost of sales
Operating expense
Consolidated NI
Noncontrolling share
Controlling share of NI

291.6

39.6

Pal
$ 450,000
34.6
5
-200
-113

$ 176,600

Retained Earnings Retained earnings Pal

Retained earnings Sto
Controlling share of NI
Dividends

$ 200,000

Retained earnings December 31

Balance Sheet Cash
Accounts receivable
Dividends receivable
Inventories
Land
Buildings net
Machinery net
Investment in Sto

$ 226,600
$ 136,400
180
18
60
100
280
330
292.2

Patents
Total assets

$1,396,600

Accounts payable
Dividends payable
Other liabilities
Capital stock
Retained earnings
Total equities
Noncontrolling interest Jar
Noncontrolling interest December 31
11

176.6
-150

$ 200,000
30
140
800
226.6
$1,396,600
uary 1

2; Stos inventories at December

$35,000. The machinery had

epreciation is used.

ear ended December 31,

Sto 90%
Adjustments and Eliminations
$ 190,000 a 72,000
f 34,600
e 5,000
-100 c 12,000
a 72,000 b 10,000
-40 h 6,000
d 2,000
k 4,400
$ 50,000

Consolidated Statements
$ 568,000

-230
-157
181
-4.4
$ 176,600
$ 200,000

$ 120,000 g 120,000
50
-20
$ 150,000
$ 14,000
100
36
30
80
140

f 18,000
k 2.000

i 10,000
j 18,000
c 12,000
e 5,000
3000 d 7,000
b 10,000 d 6,000
f 16,600
g 291,600
g 54,000
h 6,000

$ 400,000
$ 50,000 i 10,000
20 j 18,000
30
150 g 150,000
150
$ 400,000

176.6
-150
$ 226,600
$ 150,400
270
84
125
360
466

48
$1,503,400
$ 240,000
32
170
800
226.6

g 32,400
k 2,400

34.8
$1,503,400

Pot Corporation acquired all the outstanding stock of Ski Corporation on April 1, 2011, for $15,000,000
when Skis stockholders equity consisted of $5,000,000 capital stock and $2,000,000 retained earnin
The price reflected a $500,000 undervaluation of Skis inventory (sold in 2011) and a $3,500,000
undervaluation of Skis buildings (remaining useful life seven years from April 1, 2011).
During 2012, Ski sold land that cost $1,000,000 to Pot for $1,500,000. Pot resold the land for
$2,200,000 during 2015.
Pot sells inventory items to Ski on a regular basis, as follows (in thousands):
Sales to Ski
Cost to Pot
Percentage
Unsold by Ski
at Year End
Percentage
Unpaid by Ski
at Year End
2011 $ 500 $300 0% 0%
2012 1,000 600 30 50
2013 1,200 720 18 30
2014 1,000 600 25 20
2015 1,500 900 20 20
Ski sold equipment with a book value of $800,000 to Pot on January 3, 2015, for $1,600,000. This
equipment had a remaining useful life of four years at the time of sale.
Pot uses the equity method to account for its investment in Ski. The financial statements for Pot
and Ski are summarized as follows (in thousands):
Pot Ski
Combined Income and Retained Earnings Statement
for the Year Ended December 31, 2015
Sales $26,000 $11,000
Gain on land 700
Gain on equipment 800
Income from Ski 1,380
Cost of sales (15,000) (5,000)
Depreciation expense (3,700) (2,000)
Other expenses (4,280) (2,800 )
Net income 5,100 2,000
Add: Beginning retained earnings 12,375 4,000
Deduct: Dividends (3,000) (1,000 )
Retained earnings December 31 $14,475 $ 5,000
Balance Sheet at December 31, 2015
Cash $ 1,170 $ 500
Accounts receivablenet 2,000 1,500
Inventories 5,000 2,000
Land 4,000 1,000
Buildingsnet 15,000 4,000
Pot Ski

Equipmentnet 10,000 4,000

Investment in Ski 14,405
Total assets $51,575 $13,000
Accounts payable $ 4,100 $ 1,000
Other liabilities 7,000 2,000
Capital stock 26,000 5,000
Retained earnings 14,475 5,000
Total equities $51,575 $13,000

1, 2011, for $15,000,000,

000,000 retained earnings.
1) and a $3,500,000
1, 2011).
old the land for

for $1,600,000. This

statements for Pot

Income Statement Sales

Gain on land
Gain on equipment
Income from Ski
Cost of sales

Pot
Ski
Adjustments and Elimi
$26,000 $11,000 b 1,500
700
800 e 800
1.38
g 1,380
15,000* 5,000*
d 120

Depreciation expense
Other expenses
Consolidated net income

3,700*
4,280*
$ 5,100

Retained Earnings Retained earnings Pot

Retained earnings Ski
Consolidated net income
Dividends
Retained earnings December 31

$12,375
5,100^
3,000*
$14,475

2,000*
2,800*
$ 2,000

i 500

$ 4,000
2,000^
1,000*
$ 5,000

h 4,000

Balance Sheet Cash

Accounts receivable
Inventories
Land
Buildings net
Equipment net
Investment in Ski

$ 1,170
2
5
4
15
10
14.405

$51,575

1.5
2
1
4 h 1,625
4 f 200
a 500
c 100
h 4,000
$13,000

$ 4,100

$ 1,000

Goodwill

Accounts payable
Other liabilities
Capital stock
Retained earnings

$ 500

j 300

7
2
26
5 h 5,000
14,475^ 5,000^
$51,575 $13,000

djustments and ElimiConsolidated Statements

$35,500
a 500
1.2

b 1,500
c 100
f 200

18,520*
6,000*
7,080*
$ 5,100
$12,375

g 1,000

5.1
3,000*
$14,475

j 300
d 120
i 500
e 800
g 380
h 14,625

$ 1,670
3.2
6.88
5
20.125
13.4

4
$54,275
$ 4,800
9
26
14.475
$54,275