On December 31, 2013, Pilot Corp purchases 90% of Sand Corp's outstanding voting common stock directly from

Sand Corp's stockholders for

$5.200.000cash plus 100.000 shares of Pilot Corp $10 par common stock with market value of $5.000.000. Additional costs of combination are $200.000,
pays in cash. Pilot expense $200.000 costs in recording the investment.

Investment cost (acquisition 90%):

Cash 5,200,000.00
Common stock 1,000,000.00 100,000 shares
10.00 Par value
Add PIC 4,000,000.00 5,000,000.00 market value
Total investment cost (acquisition 90%) 10,200,000.00

Investment expense 200,000.00 --> reduce retained earnings (saldo laba)

Preacquisition Book and Fair Value Balance Sheets.

Pilot Corporation Sand Corporation

Per Books Fair Values Per Books Fair Values

Assets:
Cash 6,600,000.00 6,600,000.00 200,000.00 200,000.00
Receivables - net 700,000.00 700,000.00 300,000.00 300,000.00
Inventories 900,000.00 1,200,000.00 500,000.00 600,000.00
Other Current Assets 600,000.00 800,000.00 400,000.00 400,000.00
Land 1,200,000.00 11,200,000.00 600,000.00 800,000.00
Building - net 8,000,000.00 15,000,000.00 4,000,000.00 5,000,000.00
Equipment - net 7,000,000.00 9,000,000.00 2,000,000.00 1,700,000.00
Total Assets 25,000,000.00 44,500,000.00 8,000,000.00 9,000,000.00
 Liabilities & Equity:
Accounts Payable 2,000,000.00 2,000,000.00 700,000.00 700,000.00
Notes Payable 3,700,000.00 3,500,000.00 1,400,000.00 1,300,000.00
Common stock, $10 par 10,000,000.00 4,000,000.00
Additional Paid in Capital 5,000,000.00 1,000,000.00
Retained Earnings 4,300,000.00 900,000.00
Total Liabilities & Equity 25,000,000.00 8,000,000.00

- -

Journal:
1 Investment in Sand 10,200,000.00
Common stock 1,000,000.00
Add PIC 4,000,000.00
Cash 5,200,000.00 -
(Record acquisition of 90%)

2 Investment expense (-SE) 200,000.00

Cash 200,000.00
(Record investment expense)

Allocation the excess of investment cost (fair value) over the book value:

Fair value (purchase price) of 90% 10,200,000.00

Implied fair value of Sand 11,333,333.33 --> 100% interest
Book value of Sand's net assets (5,900,000.00)
Total excess of fair value over book value 5,433,333.33

Allocation to identifiable assets & liabilities

 Per Books Fair Values Excess Allocated
Cash 200,000.00 200,000.00 -
Receivables - net 300,000.00 300,000.00 -
Inventories 500,000.00 600,000.00 100,000.00 undervalued
Other Current Assets 400,000.00 400,000.00 -
Land 600,000.00 800,000.00 200,000.00 undervalued
Building - net 4,000,000.00 5,000,000.00 1,000,000.00 undervalued
Equipment - net 2,000,000.00 1,700,000.00 (300,000.00) overvalued
Accounts Payable 700,000.00 700,000.00 -
Notes Payable 1,400,000.00 1,300,000.00 100,000.00 overvalued
Total Allocation to identifiable net assets 1,100,000.00
Allocated to goodwill 4,333,333.33
Total excess of fair value over book value 5,433,333.33

PILOT CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET WORKING PAPERS
31-Dec-13
Adjustment & Elimination
Pilot Corp. Sand Corp.
Debit Kredit

Assets:
Cash 1,200,000.00 200,000.00
Receivables - net 700,000.00 300,000.00
Inventories 900,000.00 500,000.00 100,000.00
Other Current Assets 600,000.00 400,000.00
Land 1,200,000.00 600,000.00 200,000.00
Building - net 8,000,000.00 4,000,000.00 1,000,000.00
Equipment - net 7,000,000.00 2,000,000.00 300,000.00
 Investment in Sand 10,200,000.00 - 10,200,000.00
Goodwill - - 4,333,333.33
Unamortized excess - - 5,433,333.33 5,433,333.33
Total Assets 29,800,000.00 8,000,000.00

Liabilities & Equity:

Accounts Payable 2,000,000.00 700,000.00
Notes Payable 3,700,000.00 1,400,000.00 100,000.00
Common stock - Pilot 11,000,000.00
Additional Paid in Capital - Pilot 9,000,000.00
Retained Earnings - Pilot 4,100,000.00
Common stock - Sand 4,000,000.00 4,000,000.00
Additional Paid in Capital - Sand 1,000,000.00 1,000,000.00
Retained Earnings - Sand 900,000.00 900,000.00
29,800,000.00 8,000,000.00
Noncontrolling interest - 10% - - - 1,133,333.33
Total Liabilities & Equity 29,800,000.00 8,000,000.00 17,066,666.67 17,066,666.67

Elimination Journal:
1 Unamortized excess 5,433,333.33
Common stock - Sand 4,000,000.00
Additional Paid in Capital - Sand 1,000,000.00
Retained Earnings - Sand 900,000.00
Investment in Sand 10,200,000.00
Noncontrolling interest - 10% (+SE) 1,133,333.33 -
(Record eliminate reciprocal subsidiary )

2 Goodwill 4,333,333.33
Inventories 100,000.00
Land 200,000.00
Buildings - net 1,000,000.00
Notes Payable 100,000.00
Equipment 300,000.00
Unamortized excess 5,433,333.33 -
(Allocate the unamortized excess to identifiable assets libilities, & goodwill)

PILOT CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET
31-Dec-13

Assets:
Cash 1,400,000.00
Receivables - net 1,000,000.00
Inventories 1,500,000.00
Other Current Assets 1,000,000.00
Land 2,000,000.00
Building - net 13,000,000.00
Equipment - net 8,700,000.00
Goodwill 4,333,333.33
Total Assets 32,933,333.33

Liabilities & Equity:

Accounts Payable 2,700,000.00
Notes Payable 5,000,000.00
Common stock - Pilot 11,000,000.00
Additional Paid in Capital - Pilot 9,000,000.00
Retained Earnings - Pilot 4,100,000.00
 31,800,000.00
Noncontrolling interest - 10% 1,133,333.33
Total Liabilities & Equity 32,933,333.33

Transaction after Acquisition fo 2014:

Income for 2014:
1. Sand's net income 800,000.00
2. Pilot's income excluding income from Sand 2,523,500.00

Dividends paid in 2014:

Sand 300,000.00
Pilot 1,500,000.00

Pilot's Retained earnings in 2014 5,895,000.00

Amortization of excess:
Unamortized Excess Amortization Unamortized Excess
31-Dec-13 31-Dec-14
1. Undervalued inventories - sold in 2014 100,000.00 100,000.00 -
2. Undervalued land - still held by Sand, no amortization 200,000.00 - 200,000.00
3. Undervalued buildings - useful life 40 years from January 1, 2014 1,000,000.00 25,000.00 975,000.00
4. Overvalued equipment - useful life 5 years from January 1, 2014 (300,000.00) (60,000.00) (240,000.00)
5. Overvalued notes payable - retired in 2014 100,000.00 100,000.00 -
6. Goddwill - no amortization 4,333,333.33 - 4,333,333.33
5,433,333.33 165,000.00 5,268,333.33

Adjustment Entries
 Adjustment entries of Parent Corp. while 2014
Equity Method Metode Biaya
Adjustment entries for Sand's net income
Investment in Sand 720,000.00 Piutang deviden AP 80,000.00
Income from Sand 720,000.00 Saldo laba IP 80,000.00
(To record equity in income of Sand --> 800.000 x 90%)

Adjustment entries for devidend receives from Sand

Cash 270,000.00 Tidak dijurnal
Investment in Sand 270,000.00
(To record devidends received from Sand --> 300.000 x 90%)

Adjustment entries for amortization of the BV differential

Income from Sand 90,000.00 Tidak dijurnal
Investment in Sand 90,000.00
(To record write off of excess allocated to inventory items that were sold in 2014 --> 100.000 x 90%)

Income from Sand 22,500.00 Tidak dijurnal

Investment in Sand 22,500.00
(To record depreciation on excess allocated to undervalued building with a 40 year remaining useful life --> (1.000.000/40) x 90%)

Investment in Sand 54,000.00

Income from Sand 54,000.00
(To record depreciation on excess allocated to overvalued equipment with a 5 year remaining useful life --> (300.000/5) x 90%)

Income from Sand 90,000.00

Investment in Sand 90,000.00
(To record amortize the excess allocated to the overvalued note payable over the remaining life of the note --> 100.000 x 90%)
 Calculate the accounts of Pilot and Sand that exchange in 2014:
Equity Method
a. Pilot Corp
1. Income from Sand
90% of Sand's reported net income 720,000.00 Investment in Sand
(+) Pilot's 90% share of amortization on overvalued ((300.000/5)*90%) 54,000.00 --> Amortised of excess - Equipment
(-) Amortization of Pilot's share of excess allocated to: Amortised of excess - Inventories
Inventories (sold in 2014) (100.000*90%) (90,000.00) Amortised of excess - Buildings
Land - Amortised of excess - Notes payable
Buildings ((1.000.000/40)*90%) (22,500.00) Income from Sand
Notes payable (retired in 2014) (100.000*90%) (90,000.00)
Total Amortization of Pilot's share of excess allocated (202,500.00)
Income from Sand 571,500.00

2. Investment in Sand
Initial cost - December 31, 2013 10,200,000.00
90% of Sand's reported net income 720,000.00
90% of Sand's dividends (270,000.00)
Amortization of the BV differential (148,500.00)
Investment in Sand - December 31, 2014 10,501,500.00 Investment in Sand

3. Pilot's net income

Pilot's income from its own operations 2,523,500.00 Investment in Sand
(+) Income from Sand 571,500.00 Pilot's income
Pilot's net income 3,095,000.00

b Sand Corp
Journal Elimination
Equity Method Metode Biaya
Unamortized excess ### Saldo laba AP -
Common stock - Sand ### Kenaikan saldo laba IP -
Additional Paid in Capital - Sand ###
Retained Earnings - Sand Modal saham AP -
Investment in Sand Agio saham AP -
Noncontrolling interest - 10% (+SE) Saldo laba AP #VALUE!
Selisih lebih NB diatas HP #VALUE!
Investasi saham AP -

Berikut Laporan Posisi Keuangan Pilot & Sand per 31 Desember 2014

PILOT CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET WORKING PAPERS
31-Dec-14
Adjustment & Elimination
Pilot Corp. Sand Corp.
Debit Kredit

Assets:
Cash 1,200,000.00 200,000.00
Receivables - net 700,000.00 300,000.00
Piutang Deviden - -
Inventories 900,000.00 500,000.00 -
Other Current Assets 600,000.00 400,000.00
Land 1,200,000.00 600,000.00 -
Building - net 8,000,000.00 4,000,000.00 11,000,000.00
Equipment - net 7,000,000.00 2,000,000.00 -
Investment in Sand 20,400,000.00 - -
Goodwill - - 11,000,000.00
Unamortized excess - - - -
Total Assets 40,000,000.00 8,000,000.00

Liabilities & Equity:

Accounts Payable 2,000,000.00 700,000.00
Notes Payable 3,700,000.00 1,400,000.00 -
Common stock - Pilot 11,000,000.00
Additional Paid in Capital - Pilot 9,000,000.00
Retained Earnings - Pilot 4,100,000.00
Common stock - Sand 4,000,000.00 -
Additional Paid in Capital - Sand 1,000,000.00 -
Retained Earnings - Sand 900,000.00 -
29,800,000.00 8,000,000.00
Noncontrolling interest - 10% - - - -
Total Liabilities & Equity 29,800,000.00 8,000,000.00 22,000,000.00 -

Piutang deviden -
Investasi saham -

Investasi pada Sand -

Saldo Laba -

Induk Perusahaan
Saldo Laba 11,000,000.00
Laba Sand -
Laba Pilot -
11,000,000.00

Invetasi saham 10,200,000.00

Laba Sand -
Piutang deviden -
10,200,000.00

Piutang deviden awal -

Piutang deviden 2014 -
-

Anak Perusahaan
and Corp's stockholders for
of combination are $200.000,
Consolidated
Balance Sheet

1,400,000.00
1,000,000.00
1,500,000.00
1,000,000.00
2,000,000.00
13,000,000.00
8,700,000.00
 -
4,333,333.33
-
32,933,333.33

2,700,000.00
5,000,000.00
11,000,000.00
9,000,000.00
4,100,000.00
-
-
-
31,800,000.00
1,133,333.33
32,933,333.33
rtized Excess
1.000.000/40) x 90%)

300.000/5) x 90%)

> 100.000 x 90%)

ment in Sand 720,000.00
sed of excess - Equipment 54,000.00
sed of excess - Inventories (90,000.00)
sed of excess - Buildings (22,500.00)
sed of excess - Notes payable (90,000.00)
from Sand 976,500.00

ment in Sand #REF!

ment in Sand 2,523,500.00

2,523,500.00
Consolidated
Balance Sheet

1,400,000.00
1,000,000.00

1,400,000.00
1,000,000.00
1,800,000.00
23,000,000.00
 9,000,000.00
20,400,000.00
11,000,000.00
-
70,000,000.00

2,700,000.00
5,100,000.00
11,000,000.00
9,000,000.00
4,100,000.00
4,000,000.00
1,000,000.00
900,000.00
37,800,000.00
-
37,800,000.00
 Ekuitas Biaya (Cost)
1 Jurnal penyesuaian saat AP melaporkan keuntungan
Dr Investasi saham AP xxx Tidak dijurnal
Cr Saldo laba IP xxx

2 Jurnal penyesuaian saat AP melaporkan kerugian

Dr Saldo laba IP xxx Tidak dijurnal
Cr Investasi saham AP xxx

3 Jurnal penyesuaian saat AP melaporkan pendapatan

Dr Investasi saham AP xxx Tidak dijurnal
Cr Pendapatan investasi AP xxx

4 Jurnal penyesuaian saat AP mengumumkan pembagian deviden

Dr Piutang deviden AP xxx Dr Piutang deviden AP xxx
Cr Investasi saham AP xxx Cr Saldo laba IP

5 Jurnal penyesuaian saat AP membayar deviden

Dr Kas/Bank xxx Dr Kas/Bank xxx
Cr Piutang deviden AP xxx Cr Piutang deviden AP

6 Jurnal penyesuaian atas kelebihan alokasi FV terhadap BV

Aset
1. Undervalued (BV < FV)
Dr Pendapatan investasixxx Tidak dijurnal
Cr Investasi saham AP xxx

2. Overvalued (BV > FV)

Dr Investasi saham AP xxx Tidak dijurnal
Cr Pendapatan investasi AP xxx

Liabilitas
1. Undervalued (BV < FV)
Dr Investasi saham AP xxx Tidak dijurnal
Cr Pendapatan investasi AP xxx

2. Overvalued (BV > FV)

Dr Pendapatan investasixxx Tidak dijurnal
Cr Investasi saham AP xxx
t)
n

eviden

xxx

xxx

p BV