Ism chap004

Chapter 04 - Consolidated Financial Statements and Outside Ownership

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CHAPTER 4

CONSOLIDATED FINANCIAL STATEMENTS AND OUTSIDE OWNERSHIP

Chapter Outline

I. Outside ownership may be present within any business combination.

A. Complete ownership of a subsidiary is not a prerequisite for consolidation—only enough voting shares need be owned so that the acquiring company has the ability to control the decision-making process of the acquired company.

B. Any ownership interest in a subsidiary company by a party unrelated to the acquiring company is termed a noncontrolling interest.

II. Valuation of subsidiary assets and liabilities poses a challenge when a noncontrolling interest is present.

A. The accounting emphasis is placed on the entire entity that results from the business combination when control has been obtained. The parent company that controls its subsidiary must consolidate 100% of subsidiary assets, liabilities, revenues, and expense are consolidated even when its ownership is less than 100%.

B. The consolidated valuation basis for a newly acquired subsidiary is the acquisition-date fair value of the company (most frequently determined by the consideration transferred and the fair value of the noncontrolling interest); specific subsidiary assets and liabilities are measured at their acquisition-date fair values.

C. The noncontrolling interest balance is reported in the parent’s consolidated financial statements as a component of stockholders' equity.

III. Consolidations involving a noncontrolling interest—subsequent to the date of acquisition

A. Four noncontrolling interest figures are determined for reporting purposes

1. Beginning of year balance sheet amount

2. Net income attributable to noncontrolling interest

3. Dividends declared by subsidiary during the period attributable to the noncontrolling interest

4. End of year balance sheet amount

B. Noncontrolling interest balances are accumulated in a separate column in the consolidation worksheet

1. The beginning of year figure is entered on the worksheet as a component of Entries S and A

2. The net income attributable to the noncontrolling interest is established by a columnar entry that simultaneously reports the balance in both the consolidated income statement and the noncontrolling interest column

3. Dividends declared to these outside owners are reflected by extending the subsidiary's Dividends declared balance (after eliminating intra-entity transfers) into the noncontrolling interest column as a reduction

4. The end of year noncontrolling interest total is the summation of the three items above and is reported in stockholders' equity.



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IV. Step acquisitions

A. An acquiring company may make several different purchases of a subsidiary's stock in order to gain control

B. Upon attaining control, all of the parent’s previous investments in the subsidiary are adjusted to fair value and a gain or loss recognized as appropriate

C. Upon attaining control, the valuation basis for the subsidiary is established at its total fair value (the sum of the fair values of the controlling and noncontrolling interests)

D. Post-control subsidiary stock acquisitions by the parent are considered transactions with current owners of the consolidated entity. Thus such post-control stock acquisitions neither result in gains or losses nor provide a basis for subsidiary asset remeasurement to fair value. The difference between the sale proceeds and the carrying value of the shares sold (equity method) is recorded as an adjustment to the parent’s additional paid in capital.

V. Sales of subsidiary stock

A. The proper book value must be established within the parent's Investment account so that the sales transaction can be correctly recorded

B. The investment balance is adjusted as if the equity method had been applied during the entire period of ownership

C. If only a portion of the shares are being sold, the book value of the investment account is reduced using either a FIFO or a weighted-average cost flow assumption

D. If the parent maintains control, any difference between the proceeds of the sale and the equity-adjusted book value of the share sold is recognized as an adjustment to additional paid-in capital.

E. If the parent loses control with the sale of the subsidiary shares, the difference between the proceeds of the sale and the equity-adjusted book value of the share sold is recognized as a gain or loss.

F. Any interest retained by the parent company should be accounted for by either consolidation, the equity method, or the fair value method depending on the influence remaining after the sale.

Answer to Discussion Question:

Do you think the FASB made the correct decision in requiring consolidated financial

statements to recognize all subsidiary’s assets and liabilities at fair value regardless of the percentage ownership acquired by the parent? As the quotes from the five accounting professionals illustrate, the decision to require the revaluation of 100% of a newly controlled subsidiary’s assets and liabilities—regardless of percentage ownership—was not without some controversy. Students can use the quotes to discuss cost-benefit issues, relevance of capturing the underlying economics, use of hypothetical transactions in financial reporting, potential for abuse, etc. The requirement to value all acquisition date subsidiary assets at 100% fair value thus provides a useful vehicle for the class to discuss the many issues surrounding standard setters’ decisions.



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Answer to Discussion Question:

DOES GAAP UNDERVALUE POST-CONTROL STOCK ACQUISITIONS?

From the Berkshire Hathaway 2012 annual 10-K report:

We have owned a controlling interest in Marmon Holdings, Inc. (“Marmon”) since 2008. In the fourth quarter of 2012, pursuant to the terms of the 2008 Marmon acquisition agreement, we acquired an additional 10% of the outstanding shares of Marmon held by noncontrolling interests for aggregate

consideration of approximately $1.4 billion. Approximately $800 million of the consideration was paid in the fourth quarter of 2012, and the remainder is payable in March 2013. In the fourth quarter of 2010, we acquired 16.6% of Marmon’s outstanding common stock for approximately $1.5 billion. As

a result of these acquisitions, our ownership interest in Marmon has increased to approximately 90%.

These purchases were accounted for as acquisitions of noncontrolling interests. The differences between the consideration paid or payable and the carrying amounts of the noncontrolling interests acquired were recorded as reductions in Berkshire’s shareholders equity of approximately $700

million in 2012 and $614 million in 2010. We are contractually required to acquire substantially all of the remaining noncontrolling interests of Marmon no later than March 31, 2014, for an amount that will be based on Marmon’s future operating results.

On the date control is established, the new subsidiary’s valuation basis is established. Subsequent acquisitions of any remaining portions of the noncontrolling interests do not establish a new valuation basis for the subsidiary. In the Berkshire case, the new valuation basis for Marmon was established in 2008 when its 64% control was acquired. Berkshire then increases Marmon’s consolidated carrying amount as Marmon earns income, not by subsequent purchases of Marmon’s noncontrolling shares. Berkshire’s payments for its post-control equity acquisitions (16% and 10%) were in excess of Marmon’s proportionate carrying amounts. Because these transactions were with owners (not outside parties), no gain or loss is recorded. Berkshire reduces its paid-in capital the for excess of the purchase price over the carrying amount. The accounting is similar to retirement of stock for a payment in excess of the company’s proportionate carrying amount. Mr.Buffett may be correct that the current market value of Marmon is $4.6 bilion more that its carrying amount. However, GAAP does not, in general, record unrealized increases in a firm’s market value as increases in reported asset amounts.



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Answers to Questions

1. "Noncontrolling interest" refers to an equity interest that is held in a member of a business combination by an unrelated (outside) party.

2. Acquisition method = $220,000 (fair value) 3. A control premium is the portion of an acquisition price (above currently traded market

values) paid by a parent company to induce shareholders to sell a sufficient number of shares to obtain control. The extra payment typically becomes part of the goodwill acquired in the acquisition attributable to the parent company.

4. Current accounting standards require the noncontrolling interest to appear in the stockholders' equity section. The noncontrolling interest's share of the subsidiary’s net income is shown as an allocated component of consolidated net income.

5. The ending noncontrolling interest is determined on a consolidation worksheet by adding the four components found in the noncontrolling interest column: (1) the beginning balance of the subsidiary’s book value, (2) the noncontrolling interest share of the adusted acquisition-date excess fair over book value allocation, (3) its share of current year net income, (4) less dividends declared to these outside owners.

6. Allsports should remove the pre-acquisition revenues and expenses from the consolidated totals. These amounts were earned (incurred) prior to ownership by Allsports and therefore should are not earnings for the current parent company owners.

7. Following the second acquisition, consolidation is appropriate. Once Tree gains control, the 10% previous ownership is included at fair value as part of the total consideration transferred by Tree in the acquisition.

8. When a company sells a portion of an investment, it must remove the carrying value of that portion from its investment account. The carrying value is based upon application of the equity method. Thus, if either the initial value method or the partial equity method has been used, Duke must first restate the account to the equity method before recording the sales transaction. The same method is applied to the operations of the current period occurring prior to the time of sale.

9. Unless control is surrendered, the acquisition method views the sale of subsidiary's stock as a transaction with its owners. Thus, no gain or loss is recognized. The difference between the sale proceeds and the carrying value of the shares sold (equity method) is accounted for as an adjustment to the parent’s additional paid in capital.

10. The accounting method choice for the remaining shares depends upon the current relationship between the two firms. If Duke retains control, consolidation is still required. However, if the parent now can only significantly influence the decision-making process, the equity method is applied. A third possibility is Duke may have lost the power to exercise even significant influence. The fair value method then is appropriate.



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Answers to Problems

1. C

2. A At the date control is obtained, the parent consolidates subsidiary assets at

fair value ($549,000 in this case) regardless of the parent’s percentage

ownership.

3. D In consolidating the subsidiary's figures, all intra-entity balances must be eliminated in their entirety for external reporting purposes. Even though the subsidiary is less than fully owned, the parent nonetheless controls it.

4. C An asset acquired in a business combination is initially valued at 100%

acquisition-date fair value and subsequently amortized its useful life.

Patent fair value at January 1, 2014 ..................................................... $45,000 Amortization for 2 years (10 year remaining life) ............................. (9,000)

Patent reported amount December 31, 2015 ..................................... $36,000

5. C 6. B Combined revenues ................................................................................. $1,100,000

Combined expenses................................................................................. (700,000) Excess acquisition-date fair value amortization .............................. (15,000)

Consolidated net income ........................................................................ $385,000 Less: noncontrolling interest share ($85,000 × 40%) ...................... (34,000) Consolidated net income to Chamberlain Corporation .................. $351,000

7. C Consideration transferred by Pride...................................................... $540,000

Noncontrolling interest fair value ......................................................... 60,000 Star acquisition-date fair value ............................................................. $600,000 Star book value .......................................................................................... 420,000

Excess fair over book value ................................................................... $180,000

Amort. to equipment (8 year remaining life) ............................... $ 80,000 $10,000 to customer list (4 year remaining life) .......................... 100,000 25,000

$35,000

Combined revenues ................................................................................. $783,000 Combined expenses............................................................ $545,000 Excess fair value amortization ......................................... 35,000 580,000

Consolidated net income ........................................................................ $203,000

8. A Under the equity method, consolidated RE = parent’s RE. 9. B



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10. A Amie, Inc. fair value at July 1, 2015:

30% previously owned fair value (30,000 shares × $5) .................. $150,000 60% new shares acquired (60,000 shares × $6) ................................ 360,000

10% NCI fair value (10,000 shares × $5) .............................................. 50,000 Acquisition-date fair value...................................................................... $560,000

Net assets' fair value ................................................................................ 500,000 Goodwill ...................................................................................................... $60,000

11. C

12. B Fair value of 30% noncontrolling interest on April 1....................... $165,000 30% of net income for remainder of year ($240,000 × 30%) .......... 72,000 Noncontrolling interest December 31.................................................. $237,000

13. C Proceeds of $80,000 less $64,000 (⅓ × $192,000) book value = $16,000

Control is maintained so excess proceeds go to APIC. 14. B Combined revenues ................................................................................. $1,300,000

Combined expenses................................................................................. (800,000) Trademark amortization .......................................................................... (6,000)

Patented technology amortization ....................................................... (8,000) Consolidated net income ....................................................................... $486,000

15. C Subsidiary net income ($100,000 – $14,000 excess amortizations) .................................. $86,000

Noncontrolling interest percentage ..................................................... 40% Net income attributable to noncontrolling interest.......................... $34,400

Fair value of noncontrolling interest at acquisition date ............... $200,000

40% change in previous year Solar book value................................ ($530,000 – $400,000) × 40% ............................................................ 52,000

40% of excess fair value amortization—year one ............................ (5,600) Net income attributable to noncontrolling interest (above) .......... 34,400 Noncontrolling interest at end of year ................................................ $280,800

16. A West trademark balance.......................................................................... $260,000

Solar trademark balance ......................................................................... 200,000 Acquisition-date fair value allocation .................................................. 60,000 Excess fair value amortization for two years .................................... (12,000)

Consolidated trademarks........................................................................ $508,000



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17. A Acquisition-date fair value ($60,000 ÷ 80%) ....................................... $75,000 Strand's book value ................................................................................. (50,000)

Fair value in excess of book value ...................................................... $25,000

Excess assigned to inventory (60%) ................................... $15,000

Excess assigned to goodwill (40%) ..................................... $10,000 Park current assets .................................................................................. $70,000 Strand current assets .............................................................................. 20,000

Excess inventory fair value .................................................................... 15,000 Consolidated current assets .................................................................. $105,000

18. D Park noncurrent assets ........................................................................... $90,000 Strand noncurrent assets ....................................................................... 40,000

Excess fair value to goodwill ................................................................. 10,000 Consolidated noncurrent assets .......................................................... $140,000

19. B Add the two book values and include 10% (the $6,000 current portion) of the

loan taken out by Park to acquire Strand.

20. B Add the two book values and include 90% (the $54,000 noncurrent portion) of

the loan taken out by Park to acquire Strand. 21. C Park stockholders' equity ....................................................................... $80,000

Noncontrolling interest at fair value (20% × $75,000) ..................... 15,000 Total stockholders' equity ...................................................................... $95,000

22. (15 minutes) (Compute consolidated net income and noncontrolling interest)

2014 2015 a. Harrison net income ............................................................. $220,000 $260,000

Starr net income .................................................................... 70,000 90,000 Acquisition-date excess fair value amortization .......... (8,000) (8,000) Consolidated net income .................................................... $282,000 $342,000

b. Starr fair value............................................................................................ $1,200,000

Fair value of consideration transferred .............................................. 1,125,000 Noncontrolling interest fair value ......................................................... $75,000

Noncontrolling interest fair value January 1, 2014 (above) ............ $75,000 2014 income to NCI ([$70,000 – $8,000] × 10%)..................................... 6,200

2014 dividends to NCI ............................................................................. (3,000) Noncontrolling interest reported value December 31, 2014 ..... 78,200 2015 net income attributable to NCI ([$90,000 – $8,000] × 10%)....... 8,200

2015 dividends to NCI ............................................................................. (3,000) Noncontrolling interest reported value December 31, 2015 $83,400



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23. (30 minutes) (Consolidated balances, allocation of consolidated net income to controlling and noncontrolling interest, calculation of noncontrolling interest).

a. Stayer’s technology processes:

Acquisition-date fair value (20 year remaining life) $1,000,000 2015 amortization (50,000) Technology processes 12/31/15 $ 950,000

b. Stayer’s building:

Acquisition-date fair value (10 year remaining life) $345,000 2015 depreciation (34,500) Building 12/31/15 $310,500

-or- $175,500 + $150,000 – $15,000 = $310,500

c. Controlling interest in consolidated net income: Net income–Johnsonville $650,000 Net income–Stayer adjusted for excess fair value

amortization (see part d below) 285,000 Consolidated net income 935,000 Less: net income attributable to noncontrolling

interest (see part d below) (57,000) Net income attributable to Johnsonville Co. $878,000

-OR-

Johnsonville’s separate net income $650,000 Stayer’s reported net income 350,000

Excess fair value amortization: Technology processes (50,000) Building ($345,000 – $195,000) ÷ 10 years (15,000)

Stayer’s adjusted net income 285,000 Johnsonville’s ownership percentage 80% 228,000

Net income attributable to Johnsonville Co. $878,000 d. Net income attributable to noncontrolling interest:

Stayer’s reported net income 350,000 Excess fair value amortization:

Technology processes (50,000) Building ($345,000 – $195,000) ÷ 10 years (15,000) Stayer’s adjusted net income 285,000

Noncontrolling interest percentage 20% Net income attributable to noncontrolling interest $57,000



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23. (continued) e. Noncontrolling interest:

Acquisition-date balance 1/1/15 Total Stayer fair value ($3,000,000 ÷ 80%) $3,750,000

Noncontrolling interest percentage 20% Noncontrolling interest acquisition-date fair value $750,000 Net income attributable to noncontrolling interest 57,000

Noncontrolling interest share of Stayer dividends (20% × $50,000) (10,000) Noncontrolling interest 12/31/15 $ 797,000

24. (40 minutes) (Several valuation and income determination questions for a business combination involving a noncontrolling interest.)

a. Business combinations are recorded generally at the fair value of the

consideration transferred by the acquiring firm plus the acquisition-date fair value of the noncontrolling interest.

Patterson’s consideration transferred ($31.25 × 80,000 shares) ........... $2,500,000

Noncontrolling interest fair value ($30.00 × 20,000 shares) .................... 600,000 Soriano’s total fair value January 1 ........................................................... $3,100,000

b. Each identifiable asset acquired and liability assumed in a business combination

is initially reported at its acquisition-date fair value.

c. In periods subsequent to acquisition, the subsidiary’s assets and liabilities are reported at their book values adjusted for acquisition-date fair value allocations

and for subsequent amortization and depreciation on those allocations. Except for certain financial items, the subsidiary’s assets and liabilities are not

continually adjusted for changing fair values.

d. Soriano’s total fair value January 1 ........................................................... $3,100,000 Soriano’s net assets book value................................................................. 1,290,000

Excess acquisition-date fair value over book value .............................. $1,810,000 Adjustments from book to fair values .......................................................

Buildings and equipment .............................................. (250,000)

Trademarks ....................................................................... 200,000 Patented technology ...................................................... 1,060,000

Unpatented technology ................................................. 600,000 1,610,000 Goodwill ...................................................................................................... $ 200,000

e. Combined revenues ....................................................................................... $4,400,000

Combined expenses....................................................................................... (2,350,000) Building and equipment excess depreciation......................................... 50,000 Trademark excess amortization .................................................................. (20,000)

Patented technology amortization ............................................................. (265,000) Unpatented technology amortization ........................................................ (200,000)

Consolidated net income .............................................................................. $1,615,000



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24. (continued)

To noncontrolling interest: Soriano’s revenues................................................................................... $1,400,000

Soriano’s expenses .................................................................................. (600,000) Total excess amortization expenses (above) .................................... (435,000) Soriano’s adjusted net income.............................................................. $ 365,000

Noncontrolling interest percentage ownership ................................ 20% Net income attributable to noncontrolling interest.......................... $ 73,000

To controlling interest: Consolidated net income ........................................................................ $1,615,000

Net income attributable to noncontrolling interest.......................... (73,000) Net income attributable to Patterson................................................... $1,542,000

-OR-

Patterson’s revenues ............................................................................... $3,000,000 Patterson’s expenses .............................................................................. 1,750,000

Patterson’s separate net income .......................................................... $1,250,000 Patterson’s share of Soriano’s adjusted net income (80% × $365,000) ............................................................................ 292,000

Consolidated net income attributable to Patterson......................... $1,542,000

f. Fair value of noncontrolling interest January 1...................................... $ 600,000 Net income attributable to noncontrolling interest................................ 73,000 Dividends (20% × $30,000)............................................................................ (6,000)

Noncontrolling interest December 31........................................................ $ 667,000

g. If Soriano’s acquisition-date total fair value was $2,250,000, then a bargain

purchase has occurred.

Collective fair values of Soriano’s net assets ......................................... $2,900,000

Soriano’s total fair value January 1 ........................................................... $2,250,000 Bargain purchase ............................................................................................ $ 650,000

The acquisition method requires that the subsidiary assets acquired and

liabilities assumed be recognized at their acquisition date fair values regardless

of the assessed fair value. Therefore, none of Soriano’s identifiable assets and liabilities would change as a result of the assessed fair value. When a bargain

purchase occurs, however, no goodwill is recognized.



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25. (30 minutes) Step acquisition.

a. Investment in Sellinger 445,000 Cash 415,000

Additional paid-in capital 30,000

Acquisition-date fair value ($1,141,000 ÷ .7) $1,630,000 Sellinger net income 2014 340,000

Excess fair value amortization 2014 (40,000) Sellinger dividends 2014 (150,000) Acquisition-date adjusted subsidiary value 12/31/14 1,780,000

Percent acquired 1/1/15 0.25 Acquisition-date based value of newly acquired shares $ 445,000

Acquisition price for 25% interest 415,000 Credit to Palka’s APIC $ 30,000

b. Initial value for 70% acquisition $1,141,000 70% of adjusted 2014 subsidiary net income

($340,000 – $40,000) 210,000 70% of subsidiary dividends 2014 (105,000) Adjusted fair value of newly acquired shares 445,000

95% of adjusted subsidiary 2015 net income ($440,000 – $40,000) 380,000

95% of subsidiary dividends 2015 (171,000) Investment in Sellinger 12/31/15 $1,900,000



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26. (20 Minutes) (Determine consolidated income balances, includes a mid-year acquisition)

a. Acquisition-date total fair value ............................. $594,000

Book value of net assets........................................... (400,000) Fair value in excess of book value ........................ $194,000

Excess fair value assigned to specific Remaining Annual excess

accounts based on fair value life amortizations Patent .................................................................. 140,000 5 years $28,000

Land .................................................................. 10,000 Buildings ................................................................ 30,000 10 years 3,000 Goodwill ................................................................. 14,000

Total .................................................................. -0- $31,000

Consolidated figures following January 1 acquisition date: Combined revenues ...................................................................................... $1,500,000 Combined expenses....................................................................................... (1,031,000)

Consolidated net income .............................................................................. 469,000 Net income to noncontrolling interest ([200,000 – 31,000] × 30%) ........ (50,700)

Net income attributable to Parker, Inc....................................................... $ 418,300

b. Consolidated figures following April 1 acquisition date:

Combined revenues (1) .................................................................................. $1,350,000 Combined expenses (2) ................................................................................. (923,250)

Consolidated net income ............................................................................. $ 426,750 Net income attributable to noncontrolling interest (3) .......................... (38,025) Net income attributable to Parker, Inc....................................................... $ 388,725

(1) $900,000 Parker revenues plus $450,000 of post-acquisition Sawyer revenues

(2) $600,000 Parker expenses plus $300,000 of post-acquisition Sawyer expenses plus $23,250 amortization expenses for 9 months

(3) ($200,000 – 31,000) adjusted subsidiary net income × 30% × ¾ year



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27. (15 minutes) Consolidated figures with noncontrolling interest

Fair value of company (given) $60,000 Book value (10,000)

Fair value in excess of book value 50,000 to machine ($50,000 – $10,000) 40,000 ÷ 10 = $4,000 per year to process trade secret $10,000 ÷ 4 = 2,500 per year

$6,500 per year

Consolidated figures:

Net income attributable to noncontrolling interest

= 40% ($50,000 revenues less $26,500 expenses) = $9,400

End-of-year noncontrolling interest:

Beginning balance (40% $60,000) $24,000

Net income allocation (from above) 9,400

Dividend reduction (40% $5,000) (2,000)

End-of-year noncontrolling interest $31,400

Machine (net) = $45,000 ($9,000 book value plus $40,000 excess allocation

less $4,000 excess depreciation for one year).

Process trade secret (net) = $10,000 – $2,500 = $7,500



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28. (45 minutes) Noncontrolling interest in the presence of a control premium.

a. Goodwill allocation: Parflex NCI Acquisition-date fair value $344,000 $36,000

Share of identifiable net assets ($324,000 + $18,000) 307,800 34,200 Goodwill allocation $36,200 $1,800

b. Investment in Eagle Initial value $344,000

Change in Eagle’s RE × 90% ($341,000 – $174,000) × 90% 150,300 Excess amortization (3 years) × 90% (5,400)

Investment in Eagle 12/31/15 $488,900

-OR- Investment in Eagle

Initial value $344,000 2013-2014 change in Eagle’s RE × 90%

($278,000 – $174,000) × 90% 93,600 Excess fair value amortization (3,600) Equity income 2015 (below) 79,200

Eagle 2015 dividends × 90% (24,300) Investment in Eagle 12/31/15 $488,900

Equity in Eagle’s earnings: Eagles reported 2015 net income $90,000

Excess equipment amortization (2,000) Adjusted net income $88,000

Parflex ownership share 90% Equity in Eagle’s earnings $79,200



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28. continued

c. December 31, 2015 Parflex Eagle

Adjustments

NCI Consolidated

Sales (862,000) (366,000)

(1,228,000)

Cost of goods sold 515,000 209,000

724,000

Depreciation expense 191,200 67,000 E 2,000

260,200

Equity in Eagle's earnings (79,200) 0 I 79,200

0

Separate company net income (235,000) (90,000)

Consolidated net income

(243,800)

to noncontrolling interest

(8,800) 8,800

to Parflex Corporation

(235,000)

Retained earnings, 1/1 (500,000) (278,000) S 278,000

(500,000)

Net income (above) (235,000) (90,000)

(235,000)

Dividends declared 130,000 27,000

24,300 D 2,700 130,000

Retained earnings, 12/31 (605,000) (341,000)

(605,000)

Cash and receivables 135,000 82,000

217,000

Inventory 255,000 136,000

391,000

Investment in Eagle 488,900 0 D 24,300 385,200 S

-0-

12,600 A1

36,200 A2

79,200 I

Property & equipment (net) 964,000 328,000 A1 14,000 2,000 E

1,304,000

Goodwill

A2 38,000

38,000

Total assets 1,842,900 546,000

1,950,000

Liabilities (722,900) (55,000)

(777,900)

Common stock (515,000) (150,000) S 150,000

(515,000)

NCI 1/1

42,800 S

1,400 A1

1,800 A2 (46,000)

NCI 12/31

(52,100) (52,100)

Retained earnings, 12/31 (605,000) (341,000)

(605,000)

Total liabilities and equities (1,842,900) (546,000) 585,500 585,500

(1,950,000)



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29. (25 Minutes) (Determine consolidated balances for a step acquisition).

a. Amsterdam fair value implied by price paid by Morey $560,000 ÷ 70% = $800,000

b. Revaluation gain: 1/1 equity investment in Amsterdam (book value) $178,000 25% net income for 1st 6 months 8,750

Investment book value at 6/30 186,750 Fair value of investment at 6/30 (25% × $800,000) 200,000

Gain on revaluation to fair value $ 13,250

c. Goodwill at 12/31: Fair value of Amsterdam at 6/30 $800,000

Book value at 6/30 (700,000 + [70,000 ÷ 2]) 735,000 Excess fair value $ 65,000

Allocation to goodwill (no impairment) $ 65,000

d. Noncontrolling interest: 5% fair value balance at 6/30 $40,000

5% subsidiary net income from 6/30 to 12/31 1,750 5% subsidiary dividends (1,000)

Noncontrolling interest 12/31 $40,750



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30. (30 Minutes) (Reporting the sale of a portion of an investment in a subsidiary.) a. Posada records an accrual of $7,950 (see computation below) as "Equity

Income from Sold Shares of Sabathia" for the January 1, 2015 to October 1, 2015 period which will appear in the 2015 consolidated income

statement. The consolidation will continue to include all of Sabathia's accounts but now recognizing a 40% noncontrolling interest.

Sabathia fair value 1/1/13 ............................................... $1,200,000 Sabathia book value ........................................................ (1,130,000) Patent .................................................................................. $70,000

Remaining life of patent ................................................. 5 years Annual amortization ........................................................ $14,000 Posada’s share of Sabathia’s net income accruing to shares sold: Sabathia's net income...................................................... $120,000

Excess patent fair value amortization ......................... (14,000)

Sabathia's adjusted net income .................................... 106,000 Fraction of year held ........................................................ 9/12

Sabathia’s adjusted net income for 9 months .......... 79,500 Percentage owned by Posada ....................................... 70%

Posada’s share of Sabathia’s 9 month net income 55,650

Shares sold—1,000 out of 7,000 .................................. 1/7 Posada’s income for shares sold ................................ $7,950

b. As long as control is maintained, the acquisition method considers transactions in the stock of a subsidiary, whether purchases or sales, as

transactions in the equity of the consolidated entity.

Posada’s investment book value 10/1/15 1/1/15 balance (given—equity method) ...................... $1,085,000 Recognition of 1/1/15–10/1/15 period:

Income accrual ($120,000 × 70% × ¾) .................. 63,000 Dividends ($40,000 × 70% × ¾) ............................... (21,000) Amortization ($14,000 × 70% × ¾) .......................... (7,350)

Pre-sale investment book value—10/1/15 .................. $1,119,650 Computation of income effect—sale transaction 10/1/15 book value (above) ............................................ $1,119,650 Portion of investment sold (1,000/7,000 shares) ..... 1/7 Book value of investment sold ..................................... $ 159,950

Proceeds ............................................................................ 191,000 Credit to Posada’s additional paid-in capital ........... $ 31,050

c. Because Posada continues to hold 6,000 shares of Sabathia, control is still

maintained and consolidated financial statements would be appropriate

with a noncontrolling interest of 40 percent.



Education.

31. (35 Minutes) (Consolidation entries and the effect of different investment methods)

a. From the original fair value allocation, $30,000 is assigned based on the

fair value of the patent. With a 5-year remaining life, excess amortization

will be $6,000 per year.

Because the equity method is in use, no Entry *C is required. Entry S Common stock (Bandmor) ................................ 300,000 Retained earnings, 1/1/15 (Bandmor) ............. 268,000 Investment in Bandmor (70%) .................... 397,600 Noncontrolling interest in Bandmor, 1/1/15 170,400 (To eliminate stockholders' equity accounts of subsidiary and

recognize outside ownership. Retained earnings figure includes 2013 and 2014 net income and dividends.)

Entry A Patent ...................................................................... 18,000 Goodwill .................................................................. 190,000 Investment in Bandmor ................................ 145,600 Noncontrolling interest in Bandmor (30%) 62,400 (To recognize unamortized portions of acquisition-date fair value

allocations. No control premium, so goodwill is allocated proportionately. Patent has undergone two years amortization)

Entry I Equity in Bandmor earnings ............................. 72,800 Investment in Bandmor ................................ 72,800 (To eliminate intra-entity income balance. Equity accrual of $72,800

[70% × ($110,000 – 6,000 amortization)] has been recorded) Entry D Investment in Bandmor ...................................... 42,000 Dividends declared ........................................ 42,000 (To eliminate current intra-entity dividend transfers—70% of $60,000) Entry E Amortization expense .......................................... 6,000 Patent ................................................................. 6,000 (To recognize amortization for current year)

Entry P Accounts payable ................................................ 22,000 Accounts receivable ...................................... 22,000 (To eliminate intra-entity payable/receivable balance)



Education.

31. (continued) b. If the initial value method had been applied, the parent would have

recorded only the subsidiary dividends declared as income rather than an equity accrual. Therefore, Entry *C is needed to adjust the parent's

beginning retained earnings for 2015 to the equity method. During 2013 and 2014, the subsidiary earned a total net income of $171,000 but declared dividends of only $83,000. The parent's share of the difference is

$61,600 (70% of $88,000 [$171,000 - $83,000]). In addition, the parent’s 70% share of excess amortization expense for two years must also be included

($8,400 = 2 years × $6,000 per year × 70%). The net amount to be recognized is $53,200 ($61,600 - $8,400).

ENTRY *C

Investment in Bandmor ...................................... 53,200 Retained earnings, 1/1/15 ............................ 53,200 c. If the partial equity method had been applied, only the excess amortization

expenses for the previous two years would have been omitted from the parent's retained earnings. As shown above, that figure is $8,400 (2 years

× $6,000 per year × 70%). ENTRY *C

Retained earnings, 1/1/15 .................................. 8,400 Investment in Bandmor ................................ 8,400 d. Net income attributable to noncontrolling interest—2015

[($110,000 – 6,000) × 30%] ................................. $31,200 Noncontrolling interest (NCI) fair value January 1, 2013 $210,000 Adjustments to original basis: 2013 NI to noncontrolling interest ........................ $20,700

Dividends to NCI.............................................. (11,700) 9,000

2014 NI to noncontrolling interest ........................ $27,000 Dividends to NCI.............................................. (13,200) 13,800

2015 Net income to noncontrolling interest ...... $31,200 Dividends to NCI.............................................. (18,000) 13,200

Noncontrolling interest in Bandmor 12/31/15...... $246,000 –OR–

Worksheet adjustment S ................................................................ $170,400 Worksheet adjustment A................................................................ 62,400

2015 net income attributable to noncontrolling interest ....... 31,200 2015 dividends to noncontrolling interest ............................... (18,000) Noncontrolling interest in Bandmor 12/31/15........................... $246,000



Education.

32. (45 Minutes) (Asks about several consolidated balances and consolidation process. Includes the different accounting methods to record investment.)

a. Schedule 1—Fair Value Allocation and Excess Amortizations

Consideration transferred by Miller .......... $664,000 Noncontrolling interest fair value ............... 166,000

Taylor’s fair value............................................ $830,000 Taylor’s book value ........................................ (600,000)

Fair value in excess of book value ............ 230,000

Excess fair value assigned to specific Remaining Annual excess accounts based on fair value life amortizations

Excess fair value assigned to buildings 80,000 20 years $4,000

Goodwill ............................................................ $150,000 indefinite -0- Total .............................................................. $4,000

b. $150,000 (see schedule 1 above)

c. Entry (S)

Common stock (Taylor) ............................................ 300,000 Additional paid-in capital (Taylor) ......................... 90,000

Retained earnings (Taylor) ...................................... 210,000 Investment in Taylor Company (80%) ............ 480,000

Noncontrolling interest in Taylor (20%) ......... 120,000

Entry (A)—no control premium

Buildings ...................................................................... 80,000 Goodwill ........................................................................ 150,000

Investment in Taylor Company (80%) ............ 184,000 Noncontrolling interest in Taylor (20%) ......... 46,000

d. (1) Equity method

Income accrual (80%) ................................................. $56,000

Excess amortization expense .................................. (3,200) Investment income ............................................... $52,800 (2) Partial equity method

Income accrual (80%) ................................................. $56,000 (3) Initial value method

Dividends received (80%) ......................................... $8,000



Education.

32. (continued)

e. (1) Equity method

Initial fair value paid .................................................... $664,000

Income accrual 2013–2015 ($260,000 × 80%) ...... 208,000 Dividends 2013–2015 ($45,000 × 80%) .................. (36,000) Excess amortizations 2013–2015 ($3,200 × 3) ..... (9,600)

Investment in Taylor—12/31/15 ......................... $826,400

(2) Partial Equity Method

Investment in Taylor—12/31/15 = $836,000 (initial value paid plus income accrual of $208,000 less dividends of $36,000 [no excess

amortizations]) (3) Initial Value Method

Investment in Taylor—12/31/15 = $664,000 (original value paid)

f. Using the acquisition method, the allocation will be the total difference ($80,000) between the buildings' book value and fair value. Based on a 20

year remaining life, annual excess amortization is $4,000.

Miller book value—buildings .............................................. $800,000 Taylor book value—buildings ............................................. 300,000 Allocation ................................................................................. 80,000

Excess amortizations for 2013–2014 ($4,000 × 2) ......... (8,000) Consolidated buildings account .................................. $1,172,000

g. Acquisition-date fair value allocated to goodwill (see schedule 1 above) ................................................. $150,000

h. If the parent has been applying the equity method, the stockholders'

equity accounts on its books will already represent consolidated totals. The common stock and additional paid-in capital figures to be reported are the parent balances only. As to retained earnings, the equity method will

properly record all subsidiary net income and amortization so that the parent balance is also a reflection of the consolidated total.



Education.

33. (20 Minutes) (A variety of consolidated balances-midyear acquisition) Consideration transferred by Karson

(cash and contingent consideration) .......... $1,360,000 Noncontrolling interest fair value .................... 340,000

Reilly’ fair value (given) ....................................... $1,700,000 Book value of Reilly.............................................. (1,450,000)* Fair value in excess of book value ................... $250,000


accounts based on fair value life amortizations

Trademarks ........................................................ 150,000 5 years $30,000 Goodwill .............................................................. $100,000 indefinite -0- Total .................................................................. $30,000

*Reilly book value, January 1

(Common stock + APIC + RE) ......................... $1,400,000 Increase in book value: Net income (revenues less cost of

goods sold and expenses) ..................... $120,000 Dividends ....................................................... (20,000)

Change during year ..................................... $100,000 Change during first 6 months of year...... 50,000 Reilly book value, July 1 (acquisition date) ...... $1,450,000 CONSOLIDATION TOTALS:

Sales (1) $1,050,000

Cost of goods sold (2) 540,000

Operating expenses (3) 265,000

Consolidated net income $245,000

Net income attributable to noncontrolling interest (4) $9,000

(1) $800,000 Karson revenues plus $250,000 (post-acquisition subsidiary revenue)

(2) $400,000 Karson COGS plus $140,000 (post-acquisition subsidiary COGS)

(3) $200,000 Karson operating expenses plus $50,000 (post-acquisition subsidiary operating expenses) plus ½ year excess amortization of $15,000

(4) 20% of post-acquisition subsidiary net income less excess fair value amortization [20% × ½ year × (120,000 – 30,000)] = $9,000

Retained earnings, 1/1 = $1,400,000 (the parent’s balance because the

subsidiary was acquired during the current year)

Trademarks = $935,000 (add the two book values and the excess fair value allocation after taking one-half year excess amortization)

Goodwill = $100,000 (the original allocation)



Education.

34. (25 Minutes) (A variety of consolidated questions and balances)

a. Nascent applies the initial value method because the original price of

$414,000 is still in the Investment in Sea-Breeze account. In addition, the Investment Income account is equal to 60 percent of the dividends

declared by the subsidiary during the year.

b. Consideration transferred in acquisition.. $414,000 Noncontrolling interest fair value ............... 276,000

Sea-Breeze fair value 1/1/12 ......................... $690,000 Sea-Breeze book value 1/1/12 550,000

Excess fair value over book value $140,000



Buildings ..................................................... 60,000 6 years $10,000 Equipment ................................................... (20,000) 4 years (5,000)

Patent ........................................................... 100,000 10 years 10,000 Total ............................................................ -0- $15,000

c. If the equity method had been applied, the Investment Income account

would show the basic equity accrual less amortization: 60% of (the subsidiary's net income of $90,000 less $15,000 excess fair value

amortization) = $45,000.

d. The initial value method recognizes neither the increase in the subsidiary's book value nor the excess amortization expenses for prior

years. At the acquisition date, the subsidiary’s book value was $550,000 as indicated by the assets less liabilities. At the beginning of the current

year, the book value of the subsidiary is $780,000 as indicated by beginning stockholders' equity balances.

Increase in book value during prior years

($780,000 – $550,000) .................................................................. $230,000 Less excess amortization ................................................................ (45,000)

Net increase in book value ............................................................... $185,000 Ownership ............................................................................................ 60% Increase required in parent's retained earnings, 1/1 /15 .......... $111,000

Parent's retained earnings, 1/1/15 as reported .......................... 700,000 Parent’s share of consolidated retained earnings, 1/1 /15........ $811,000

e. Consolidated net income and allocation

Revenues (add book values) $900,000 Expenses (add book values and excess amortization) (635,000)

Consolidated net Income $265,000 Net income attributable to noncontrolling interest

($90,000 – 15,000) × 40% 30,000 Net income attributable to Nascent, Inc. $235,000



Education.

34. (continued)

f. Consolidated buildings, 1/1/12 (subsidiary):

Book value ...................................................................................... $300,000 Acquisition-date fair-value allocation .................................... 60,000

Consolidation figure .................................................................... $360,000 g. Consolidated buildings, 12/31/15: Parent's book value ..................................................................... $700,000

Subsidiary's book value ............................................................. 200,000 Original allocation ........................................................................ 60,000

Amortization ($10,000 × 4 years) ............................................. (40,000) Consolidated balance ................................................................. $920,000



Education.

35. (Acquisition Method Consolidated Balances) Adjustments

December 31, 2015 Paloma San Marco & Eliminations NCI Consolidated

Revenues (1,843,000) (675,000) (2,518,000)

Cost of goods sold 1,100,000 322,000 1,422,000

Depreciation expense 125,000 120,000 245,000

Amortization expense 275,000 11,000 (E) 80,000 366,000

Interest expense 27,500 7,000 34,500

Equity in San Marco Income (121,500) (I)121,500 -0-


Consolidated net income (450,500)

To noncontrolling interest (13,500) (13,500)

To Paloma Company (437,000)

Retained Earnings 1/1 (2,625,000) (395,000) (S)395,000 (2,625,000)

Net Income (437,000) (215,000) (437,000)

Dividends declared 350,000 25,000 (D) 22,500 2,500 350,000

Retained Earnings 12/31 (2,712,000) (585,000) (2,712,000)

Current Assets 1,204,000 430,000 1,634,000

Investment in San Marco 1,854,000 (D) 22,500 (S)769,500

(A)985,500 -0-

(I) 121,500

Customer base -0- -0- (A)720,000 (E) 80,000 640,000

Buildings and Equipment 931,000 863,000 1,794,000

Copyrights 950,000 107,000 1,057,000

Goodwill (A)375,000 375,000

Total Assets 4,939,000 1,400,000 5,500,000

Accounts Payable (485,000) (200,000) (685,000)

Notes Payable (542,000) (155,000) (697,000)

NCI in San Marco (S) 85,500

(A)109,500 (195,000)

(206,000) (206,000)

Common Stock (900,000) (400,000) (S)400,000 (900,000)

Additional Paid-In Capital (300,000) (60,000) (S) 60,000 (300,000)

Retained Earnings 12/31 (2,712,000) (585,000) (2,712,000)

Total Liab. and SE (4,939,000) (1,400,000) 2,174,000 2,174,000 (5,500,000)



Education.

35. (Continued) Controlling Noncontrolling

Interest Interest Fair value at acquisition date $1,710,000 $190,000

Relative fair values of identifiable net assets 90% and 10% of $1,525,000 (acquisition date recorded fair value plus customer base) 1,372,500 152,500

Goodwill $337,500 $37,500 b. If the acquisition-date fair value of the noncontrolling interest was $167,500, both

goodwill (NCI portion) and the noncontrolling interest balance would be reduced

equally by $22,500 as follows:

Fair value of San Marco Company (1,710,000 + 167,500) $1,877,500 Carrying amount acquired 725,000 Excess fair value 1,152,500

to customer base 800,000 to goodwill $352,500

Noncontrolling interest balance beginning of year* $(172,500) Net income attributable to noncontrolling interest (13,500)

Dividends declared to noncontrolling interest 2,500 Noncontrolling interest end of year $(183,500)

* NCI at beginning of year

Common stock-subsidiary $400,000 APIC-subsidiary 60,000 Retained earnings-subsidiary 1/1 395,000

Total $855,000 Noncontrolling interest percentage 10% Noncontrolling share of subsidiary book value 85,500 Noncontrolling share of 1/1 customer base excess 72,000 Noncontrolling share of goodwill (below) 15,000

Noncontrolling interest 1/1 $172,500

Controlling Noncontrolling

Interest Interest Fair value at acquisition date $1,710,000 $167,500

Relative fair values of identifiable net assets 90% and 10% of $1,525,000 (acquisition date recorded fair value plus customer base) 1,372,500 152,500

Goodwill $ 337,500 $15,000



Education.

36. (60 Minutes) (Consolidation worksheet and income statement with parent using initial value method. Also consolidated balances with a control

premium paid by parent.)

a. Fair Value Allocation and Amortization Consideration transferred by Holtz .................. $576,000 Noncontrolling interest fair value ..................... 144,000

Devine total fair value 1/1/14 .............................. $720,000 Devine book value 1/1/14 .................................... (326,500)

Fair value in excess of book value .................. $393,500


accounts based on fair value: life amortizations

Building.............................................................. 85,500 5 years $17,100 Trademark ....................................................... 64,000 10 years 6,400

Goodwill............................................................. $244,000 indefinite -0- $23,500

Explanation of Consolidation Entries Found on Worksheet

Entry *C: Convert the parent’s 1/1/15 retained earnings balance from the

initial value method to the accrual basis. Change in subsidiary RE from 1/1/14 to 1/1/15 ........ $70,000 Excess amortization for 2014 ..................................... 23,500 Adjusted subsidiary RE increase............................... $46,500 Percentage ownership by parent ............................... 80% *C conversion entry ..................................................... $37,200

Entry S: Eliminates stockholders' equity accounts of subsidiary while

recognizing noncontrolling interest balance (20%) as of the beginning of

the current year.

Entry A: Recognizes acquisition-date fair value allocations less one year of amortization for building and trademark and increases beginning balance

of the noncontrolling interest for its share.

Entry I: Eliminates Intra-entity dividends declared by subsidiary and recorded as income by parent.

Entry E: Recognizes amortization expense for current year.

Columnar entry—Recognizes net income attributable to noncontrolling

interest [($97,000 – $23,500) × 20%].


4-28 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

36. a. (continued) HOLTZ CORPORATION AND DEVINE, INC. Consolidation Worksheet

For Year Ending December 31, 2015 Holtz Devine Consolidation Entries Noncontrolling Consolidated Accounts Corporation Inc. Debit Credit Interest Totals

Sales (641,000) (399,000) (1,040,000) Cost of goods sold 198,000 176,000 374,000 Operating expenses 273,000 126,000 (E) 23,500 422,500 Dividend income (16,000) ___ _-0- (I) 16,000 -0- Separate company net income (186,000) (97,000) Consolidated net income (243,500) NI attributable to noncontrolling interest (14,700) 14,700 NI attributable to Holtz Corp. (228,800) Retained earnings, 1/1 (762,000) (296,500) (S) 296,500 (*C) 37,200 (799,200) Net income (above) (186,000) (97,000) (228,800) Dividends declared 70,000 20,000 (I) 16,000 4,000 70,000 Retained earnings, 12/31 (878,000) (373,500) (958,000) Current assets 121,000 120,500 241,500 Investment in Devine 576,000 -0- (*C) 37,200 (S)317,200 -0- (A)296,000 Buildings and equipment (net) 887,000 335,000 (A) 68,400 (E) 17,100 1,273,300 Trademarks 149,000 236,000 (A) 57,600 (E) 6,400 436,200 Goodwill -0- -0- (A)244,000 244,000 Total assets 1,733,000 691,500 2,195,000 Liabilities (535,000) (218,000) (753,000) Common stock (320,000) (100,000) (S)100,000 (320,000) Retained earnings, 12/31 (above) (878,000) (373,500) (958,000) NCI in Devine, 1/1 (S) 79,300 (A) 74,000 (153,300) NCI in Devine, 12/31 (164,000) (164,000) Total liabilities and equities (1,733,000) (691,500) 843,200 843,200 (2,195,000)



Education.

36. (continued) b. HOLTZ CORPORATION AND DEVINE, INC.

Consolidated Income Statement For Year Ending December 31, 2015

Sales $1,040,000

Cost of goods sold $374,000 Operating expenses 422,500 Total expenses 796,500

Consolidated net income $243,500

To 20% noncontrolling interest $14,700

To Holtz Corporation $228,800 c. Consideration transferred by Holtz for 80% of Devine $576,000

Noncontrolling interest fair value ($4.76 × 20,000 shares) 95,200 Devine fair value $671,200

Fair value of Devine’s underlying net assets 476,000 Goodwill $195,200

If the noncontrolling interest fair value was $4.76 per share at the acquisition date, then goodwill declines to $195,200. The noncontrolling interest total would

also decline from $164,000 to $115,200.

Worksheet entries (S), (A1) and (A2) assuming a $4.76 noncontrolling interest

acquisition-date fair value:

(S) Common stock-Devine 100,000 Retained earnings- Devine 1/1 296,500 Investment in Devine 317,200

Noncontrolling interest 79,300

(A1) Buildings and equipment (net) 68,400 Trademarks 57,600 Investment in Devine 100,800

Noncontrolling interest 25,200

(A2) Goodwill 195,200

Investment in Devine 195,200 Controlling Noncontrolling

Interest Interest Fair value at acquisition date $576,000 $95,200

Relative fair values of identifiable net assets 80% and 20% of $476,000 (acquisition date fair value of net identifiable assets) 380,800 95,200

Goodwill $195,200 -0-



Education.

37. (40 Minutes) (Determine consolidated balances.)

Acquisition-date subsidiary fair value (given) .... $1,003,400 Book value of subsidiary (given) ........................... (690,000)

Fair value in excess of book value ........................ $313,400 Allocations to specific accounts based on difference

between fair value and book value

Land ......................................................................... $225,000 Buildings and equipment ................................... (24,000)

Copyright ................................................................ 94,000 Notes payable ....................................................... 18,400 313,400 Total .............................................................. -0-

Annual excess amortizations:

Buildings and equipment [$(24,000) ÷ 10 years] $(2,400) Copyright ($94,000 ÷ 20 years) 4,700 Notes payable ($18,400 ÷ 8 years) 2,300

Total $4,600

Consolidated Totals:

Revenues = $2,079,880 (add the two book values)

Cost of goods sold = $1,206,000 (add the two book values)

Depreciation expense = $283,200 (add the two book values less $2,400 excess adjustment)

Amortization expense = $10,800 (add the two book values plus $4,700 excess adjustment)

Interest expense = $63,600 (add the two book values plus $2,300 excess

adjustment)

Equity in income of Sierra = -0- (eliminated so that the individual revenues

and expenses of the subsidiary can be included in the consolidated figures)

Consolidated net income = $516,280 (revenues less expenses)

Net income attributable to noncontrolling interest = $44,280 ($226,000 reported subsidiary net income less $4,600 net excess amortization

expense multiplied by 20 percent outside ownership)

Net income to Padre Company = $472,000 ($516,280 consolidated net income less noncontrolling interest share of $44,280)

Retained earnings, 1/1 = $1,275,000 (parent company balance only)

Dividends declared = $260,000 (parent company balance; subsidiary's

declarations to parent are intra-entity, declarations to outside owners decrease noncontrolling interest balance)



Education.

37. (continued)

Retained earnings, 12/31 = $1,487,000 (consolidated balance on 1/1 plus net

income to Padre Co. less Padre’s dividends declared) or simply the parent’s RE because parent employs the equity method.

Current assets = $1,620,860 (add the two book values)

Investment in Sierra = -0- (eliminated so that the individual assets and liabilities of the subsidiary can be included in the consolidated figures)

Land = $650,000 (add the book values plus the $225,000 excess allocation)

Buildings and equipment (net) = $1,162,800 (add the book values less the

$24,000 allocation [asset was overvalued] plus the excess amortization)

Copyright = $205,200 (book value plus $94,000 excess allocation less amortization for the year)

Total assets = $3,638,860

Accounts payable = $469,000 (add book values)

Notes payable = $700,900 (add the book values less $18,400 excess allocation plus amortization)

Noncontrolling interest in subsidiary = $231,960 (20% of fair value as of 1/1

[$200,680] plus net income attributable to noncontrolling interest [$44,280] less dividends declared to outside owners [$13,000])

Common stock = $300,000 (parent company balance)

Additional paid-in capital = 450,000 (parent company balance)

Retained earnings, 12/31 = $1,487,000 (computed above)

Total liabilities and equities = $3,638,860



37. (continued) Acquisition Method Consolidation Entries Noncontrolling Consolidated Accounts Padre Sierra Debit Credit Interest Totals

Revenues .............................................. (1,394,980) (684,900) (2,079,880) Cost of goods sold .............................. 774,000 432,000 1,206,000 Depreciation expense.......................... 274,000 11,600 (E) 2,400 283,200 Amortization expense.......................... -0- 6,100 (E) 4,700 10,800 Interest expense................................... 52,100 9,200 (E) 2,300 63,600

Equity in income of Sierra ................. (177,120) -0- (I) 177,120 -0- Separate company net income........... (472,000) (226,000)

Consolidated net income .................... (516,280) NI to noncontrolling interest ............ (44,280) 44,280 NI to Padre Company ....................... (472,000)

Retained earnings 1/1 ......................... (1,275,000) (530,000) (S) 530,000 (1,275,000) Net income (above) ............................. (472,000) (226,000) (472,000) Dividends declared ............................. 260,000 65,000 (D) 52,000 13,000 260,000 Retained earnings 12/31 ............... (1,487,000) (691,000) (1,487,000)

Current assets ..................................... 856,160 764,700 1,620,860 Investment in Sierra ............................ 927,840 (D) 52,000 (S) 552,000 .......................................................... (I) 177,120 .......................................................... (A) 250,720 -0- Land ...................................................... 360,000 65,000 (A) 225,000 650,000 Buildings and equipment (net) ........... 909,000 275,400 (E) 2,400 (A) 24,000 1,162,800 Copyright ............................................. -0- 115,900 (A) 94,000 (E) 4,700 205,200 Total assets ................................... 3,053,000 1,221,000 3,638,860

Accounts payable ............................... (275,000) (194,000) (469,000) Notes payable ...................................... (541,000) (176,000) (A) 18,400 (E) 2,300 (700,900) NCI in Sierra 1/1 ................................... (S) 138,000 NCI in Sierra 12/31 ............................... (A) 62,680 (200,680) .......................................................... (231,960) (231,960) Common stock .................................... (300,000) (100,000) (S) 100,000 (300,000) Additional paid-in capital .................... (450,000) (60,000) (S) 60,000 (450,000) Retained earnings 12/31.... (above) … (1,487,000) (691,000) (1,487,000) Total liab. and stockholders' equity (3,053,000) (1,221,000) 1,265,920 1,265,920 (3,638,860)



Education.

38. (55 Minutes) (Consolidated worksheet) a. Consideration transferred by Adams $603,000 Noncontrolling interest fair value 67,000

Acquisition-date total fair value $670,000 Book value of Barstow (CS + RE 12/31/13) (460,000) Excess fair value over book value 210,000



Land $30,000 — — Buildings (20,000) 10 years ($2,000) Equipment 40,000 5 years 8,000

Patents 50,000 10 years 5,000 Notes payable 20,000 5 years 4,000

120,000 Goodwill $90,000 indefinite -0- Total $15,000

b. Because investment income is exactly 90 percent of Barstow's reported

earnings, Adams apparently is applying the partial equity method.

c. d. Explanation of Consolidation Entries Found on Worksheet

Entry *C—Converts Adams's financial records from the partial equity method

to the equity method by recognizing amortization for 2014. Total expense was $15,000 but only 90 percent (or $13,500) applied to the parent.

Entry S—Eliminates subsidiary's stockholders' equity while recording

noncontrolling interest balance as of January 1, 2015.

Entry A—Records unamortized allocation balances as of January 1, 2015.

The acquisition method attributes 10 percent of these amounts to the non-controlling interest.

Entry I—Eliminates intra-entity income accrual for 2015.

Entry D—Eliminates intra-entity dividend transfers.

Entry E—Records amortization expense for current year.

Columnar Entry—Recognizes noncontrolling interest's share of consolidated net income as follows:

Net income attributable to noncontrolling interest (Columnar Entry) Barstow reported net income ............................................................... $120,000

Excess amortization expenses 2015.................................................... (15,000) Adjusted net income of Barstow ................................................... $105,000

Noncontrolling interest ownership ..................................................... 10% Net income attributable to noncontrolling interest.................... $ 10,500



38. c. and d. (continued) ADAMS CORPORATION AND BARSTOW, INC. Consolidation Worksheet-Acquisition Method For Year Ending December 31, 2015 Noncontrolling Consolidated

Adams Corp. Barstow Inc. Debit Credit Interest Totals

Revenues (940,000) (280,000) (1,220,000) Cost of goods sold 480,000 90,000 570,000

Depreciation expense 100,000 55,000 (E) 6,000 161,000 Amortization expense (E) 5,000 5,000 Interest expense 40,000 15,000 (E) 4,000 59,000

Investment income (108,000) -0- (I) 108,000 -0- Separate company net income (428,000) (120,000) Consolidated net income (425,000)

NI to noncontrolling interest (10,500) 10,500 NI to Adams Corporation (414,500)

Retained earnings, 1/1 (1,367,000) (340,000) (C*) 13,500 (1,353,500)

(S) 340,000

Net income (428,000) (120,000) (414,500) Dividends declared 110,000 70,000 (D) 63,000 7,000 110,000 Retained earnings, 12/31 (1,685,000) (390,000) (1,658,000)

Current assets 610,000 250,000 860,000 Investment in Barstow 702,000 (D) 63,000 (*C) 13,500 -0- (S) 468,000 (A) 175,500

(I) 108,000 Land 380,000 150,000 (A) 30,000 560,000 Buildings 490,000 250,000 (E) 2,000 (A) 18,000 724,000

Equipment 873,000 150,000 (A) 32,000 (E) 8,000 1,047,000 Patents -0- -0- (A) 45,000 (E) 5,000 40,000 Goodwill -0- -0- (A) 90,000 90,000

Total assets 3,055,000 800,000 3,321,000

Notes payable (860,000) (230,000) (A) 16,000 (E) 4,000 (1,078,000) Common stock (510,000) (180,000) (S) 180,000 (510,000)

Retained earnings, 12/31 (1,685,000) (390,000) (1,658,000) (S) 52,000 Noncontrolling interest (A) 19,500 (71,500)

(75,000) (75,000) Total liabilities and stockholders' equity (3,055,000) (800,000) 934,500 934,500 (3,321,000)



Education.

39. (25 minutes) (Consolidated balances after a mid-year acquisition) a. Investment account balance indicates the initial value method. Consideration transferred by Gibson ........ $528,000 Noncontrolling interest fair value .............. 352,000

Davis acquisition-date fair value ............... 880,000 Book value of Davis (see below)................. (765,000) Fair value in excess of book value ............ $115,000


accounts based on fair value: life amortizations

Equipment (overvalued) .................... (30,000) 5 years $(6,000) Goodwill ................................................ $145,000 indefinite -0- Total ............................................................. $(6,000)

Amortization for 9 months ..................... $(4,500)

Acquisition-date subsidiary book value: Book value of Davis, 1/1/15 (CS + 1/1 RE) ................. $740,000

Increase in book value-net income (dividends were declared after acquisition) ............................ $100,000 Time prior to purchase (3 months) .............................. × ¼ year 25,000

Book value of Davis, 4/1/15 (acquisition date) ......... $765,000 Consolidated income statement:

Revenues (1) $825,000

Cost of goods sold (2) $405,000 Operating expenses (3) 214,500 619,500

Consolidated net income 205,500 Net income attributable to noncontrolling interest (4) 28,200 Net income to Gibson Company $177,300

(1) $900,000 combined revenues less $75,000 (preacquisition subsidiary revenue)

(2) $440,000 combined COGS less $35,000 (preacquisition subsidiary COGS) (3) $234,000 combined operating expenses less $15,000 (preacquisition

subsidiary operating expenses) less nine month excess overvalued equipment depreciation reduction of $4,500

(4) 40% of post-acquisition subsidiary net income less excess amortization

b. Goodwill = $145,000 (original allocation)

Equipment = $774,500 (add the two book values less $30,000 reduction to fair value plus $4,500 nine months excess

amortization) Common stock = $630,000 (parent company balance only) Buildings = $1,124,000 (add the two book values)

Dividends declared = $80,000 (parent company balance only)



Education.

40. (40 minutes) Determine consolidated balance for a mid-year acquisition. a. Consideration transferred by Truman ............ $720,000

Noncontrolling interest fair value .................... 290,000 Atlanta’s acquisition-date total fair value....... $1,010,000

Book value of Atlanta........................................... (840,000) Fair value in excess of book value ................... $ 170,000


accounts based on fair value life amortizations Patent ................................................................. 100,000 5 years $20,000

Goodwill .............................................................. $ 70,000 indefinite -0- Total .................................................................. $20,000

b. Goodwill allocation with control premium Controlling Noncontrolling Interest Interest

Fair values at acquisition date $720,000 $290,000 Relative fair values of identifiable net assets

70% and 30% of $940,000 (acquisition date

book value plus patent = net asset fair value) 658,000 282,000 Goodwill $ 62,000 $ 8,000

c. Initial value at acquisition date $720,000 Truman’s share of Atlanta’s net income for half year

([$120,000 – 20,000 amortization × ½ year] × 70%) 35,000 Dividends 2015 ($80,000 × ½ year × 70%) (28,000)

Investment account balance 12/31/15 $727,000



Education.

40. (continued) d. Consolidated Worksheet

TRUMAN COMPANY AND SUBSIDIARY ATLANTA COMPANY Consolidation Worksheet

For Year Ending December 31, 2015

Truman Atlanta Adjustments & Eliminations NCI Cons.

Revenues (670,000) (400,000) (S)200,000 (870,000)

Operating Expenses 402,000 280,000 (E) 10,000 (S)140,000 552,000

Net income of subsidiary (35,000) (I) 35,000 -0-


Consolidated net income (318,000)

Net income attributable to NCI (15,000) 15,000

Net income attributable to Truman (303,000)

Retained earnings, 1/1 (823,000) (500,000) (S) 500,000 (823,000)

Net income (above) (303,000) (120,000) (303,000)

Dividends declared 145,000 80,000 (S) 40,000 12,000

(D) 28,000 145,000

Retained earnings 12/31 (981,000) (540,000) (981,000)

Current assets 481,000 390,000 871,000

Investment in Atlanta 727,000 (D) 28,000 (S)588,000 -0-

(I) 35,000

(A1) 70,000

(A2) 62,000

Land 388,000 200,000 588,000

Buildings 701,000 630,000 1,331,000

Patent (A1)100,000 (E) 10,000 90,000

Goodwill (A2) 70,000 70,000

Total assets 2,297,000 1,220,000 2,950,000

Liabilities (816,000) (360,000) (1,176,000)

Common stock (95,000) (300,000) (S) 300,000 (95,000)

Additional paid-in capital (405,000) (20,000) (S) 20,000 (405,000)

Retained earnings 12/31 (981,000) (540,000) (981,000)

Noncontrolling interest 7/1 (A1) 30,000

(A2) 8,000

(S) 252,000 (290,000)

Noncontrolling interest 12/31 (293,000) (293,000)

Total liab. and equity (2,297,000) (1,220,000) 1,263,000 1,263,000 (2,950,000)



Education.

41. (60 minutes) (Consolidated statements for a step acquisition) a. Fair value of Sysinger 1/1/15 (given) $1,750,000

Book value of Sysinger 1/1/15 (CS + APIC + RE) 1,300,000 Excess fair value over book value 450,000

To customer contract (4 year remaining life) 400,000 To goodwill $50,000

b. Equity in earnings of Sysinger 2015 net income (150,000 × 95%) $142,500

Amortization (100,000 × 95%) (95,000) Equity in earnings of Sysinger $47,500

Revaluation of 15% block to fair value Consideration transferred $184,500

2014 net income (100,000 × 15%) 15,000 2014 dividends (30,000 × 15%) (4,500)

Book value at 1/1/15 195,000 Fair value at 1/1/15 262,500 Gain on revaluation $67,500

Investment account balance Fair value at 1/1/15 (15% block) $262,500 Consideration transferred 1/1/15 (80% block) 1,400,000 Equity earnings 2015

Net income (95% × 150,000) 142,500 Customer contract amortization (95,000) 47,500

Dividends (40,000 × 95%) (38,000) Investment in Sysinger 12/31/15 $1,672,000



41. (Continued) c. Allan and Sysinger Consolidation Worksheet

For Year Ending December 31, 2015 Allan Sysinger Consolidation Entries Noncontrolling Consolidated Accounts Company Company Debit Credit Interest Totals

Revenues (931,000) (380,000) (1,311,000) Operating expenses 615,000 230,000 (E)100,000 945,000 Equity earnings of Sysinger (47,500) -0- (I) 47,500 -0-

Gain on revaluation (67,500) -0- (67,500) Separate company net income (431,000) (150,000) Consolidated net income (433,500)

NI attributable to noncontrolling interest (2,500) 2,500 NI attributable to Allan Company (431,000)

Retained earnings, 1/1 (965,000) (600,000) (S) 600,000 (965,000)

Net income (431,000) (150,000) (431,000) Dividends declared 140,000 40,000 (D) 38,000 2,000 140,000 Retained earnings 12/31 (1,256,000) (710,000) (1,256,000)

Current assets 288,000 540,000 828,000 Investment in Sysinger 1,672,000 -0- (D) 38,000 (S)1,235,000 -0- (I) 47,500

(A) 427,500 Property, plant, and equipment 826,000 590,000 1,416,000 Patented technology 850,000 370,000 1,220,000

Customer contract -0- -0- (A) 400,000 (E) 100,000 300,000 Goodwill -0- (A) 50,000 50,000 Total assets 3,636,000 1,500,000 3,814,000

Liabilities (1,300,000) (90,000) (1,390,000) Common stock (900,000) (500,000) (S) 500,000 (900,000) Additional paid-in capital (180,000) (200,000) (S) 200,000 (180,000)

Retained earnings 12/31 (1,256,000) (710,000) (1,256,000) NCI in Sysinger, 1/1 -0- -0- (S) 65,000 (A) 22,500 (87,500)

NCI in Sysinger, 12/31 -0- -0- (88,000) (88,000) Total liab. and stockholders' equity (3,636,000) (1,500,000) 1,935,500 1,935,500 (3,814,000)



Education.

42. (60 minutes) (Step acquisition—control previously acquired.)

a. According to the acquisition method, the valuation basis for a subsidiary is

established on the date control is obtained, in this case January 1, 2014. Subsequent acquisitions are valued consistent with this initial value after adjusting the investment for subsidiary net income and other changes.

Because subsequent acquisitions are considered as transactions in the parent’s

own equity, no gains or losses are recorded. Differences in cash paid and the underlying value are recorded as adjustments to APIC.

Fair value of Keane Company 1/1/14 ($573,000 ÷ 60%) $955,000 Keane net income 2014 150,000

Excess fair value amortization for copyright (20,000)* Keane dividends 2014 (80,000) Initial fair value adjusted to 1/1/15 $1,005,000

Percent acquired in step acquisition 30% Value assigned to 30% acquisition 301,500

Cash paid for the 30% acquisition 300,000 Credit to APIC from 30% step acquisition $ 1,500

*Fair value of Keane Company 1/1/14 ($573,000 ÷ 60%) $955,000 Book value of Keane Company 1/1/14 (given) 810,000

Excess fair value over book value 145,000 To copyright (6 year remaining life) 120,000 To goodwill $25,000

Entry to record 30% additional investment in Keane:

1/1/15 Investment in Keane 301,500 Cash 300,000

APIC from step acquisition 1,500

b. Investment in Keane Company 1/1/14 $573,000 2014 Equity earnings [60% × (150,000 – 20,000)] 78,000 2014 Dividends from Keane (60% × $80,000) (48,000)

Additional acquisition of 30% interest 301,500 2015 Equity earnings [90% × (180,000 – 20,000)] 144,000

2015 Dividends from Keane (90% × $60,000) (54,000) Investment in Keane Company 12/31/15 $994,500



42. (continued) part c. BRETZ, INC. AND KEANE COMPANY Consolidation Worksheet

Year Ending December 31, 2015

Consolidation Entries Noncontrolling Consolidated Accounts Bretz, Inc. Keane Co. Debit Credit Interest Totals

Revenues (402,000) (300,000) (702,000) Operating expenses 200,000 120,000 (E) 20,000 340,000 Equity in Keane’s income (144,000) (I) 144,000

Separate company net income (346,000) (180,000) Consolidated net income (362,000) NI attributable to noncontrolling interest (16,000) 16,000

NI attributable to Bretz, Inc. (346,000)

Retained earnings, 1/1 (797,000) (500,000) (S) 500,000 (797,000) Net income (above) (346,000) (180,000) (346,000)

Dividends declared 143,000 60,000 (D) 54,000 6,000 143,000 Retained earnings, 12/31 (1,000,000) (620,000) (1,000,000)

Current assets 224,000 190,000 414,000

Investment in Keane Company 994,500 (S) 792,000 0 (D)54,000 (A) 112,500 (I) 144,000

Trademarks 106,000 600,000 706,000 Copyrights 210,000 300,000 (A)100,000 (E) 20,000 590,000

Equipment (net) 380,000 110,000 490,000 Goodwill (A) 25,000 25,000 Total assets 1,914,500 1,200,000 2,225,000

Liabilities (453,000) (200,000) (653,000) Common stock (400,000) (300,000) (S)300,000 (400,000) Additional paid-in capital (60,000) (80,000) (S) 80,000 (60,000)

APIC-step acquisition (1,500) (1,500) Retained earnings,12/31 (1,000,000) (620,000) (1,000,000) Non-controlling interest 1/1 (A) 12,500

(S) 88,000 (100,500) Non-controlling interest 12/31 (110,500) (110,500) Total liabilities and equities (1,914,500) (1,200,000) 1,223,000 1,223,000 (2,225,000)



Education.

ACCOUNTING THEORY RESEARCH CASE: NONCONTROLLING INTEREST

In deliberations prior to the issuance of SFAS 160, “Noncontrolling Interests in Consolidated Financial Statements,” the FASB considered three alternatives for

displaying the noncontrolling interest in the consolidated balance sheet

What were these three alternatives? 1. As a liability 2. As equity

3. In the “mezzanine” area between liabilities and owners’ equity

What criteria did the FASB use to evaluate the desirability of each alternative? The FASB evaluated whether the classifications conformed to current definitions of financial statement elements (assets, liabilities, or equity) as articulated in

FASB Concept Statement No. 6.

In what specific ways did FASB Concept Statement 6 affect the FASB’s evaluation

of these alternatives? From SFAS 160 paragraphs 32-34

If it required that the noncontrolling interest be reported in the mezzanine, the Board would have had to create a new element—noncontrolling interest in subsidiaries—specifically for consolidated

financial statements. The Board concluded that no compelling reason exists to create a new element specifically for consolidated financial

statements to report the interests in a subsidiary held by owners other than the parent. The Board believes that using the existing elements of financial statements along with appropriate labeling and disclosure

provides financial information in the consolidated financial statements that is representationally faithful, understandable, and relevant to the

entity’s owners, creditors, and other resource providers. The Board concluded that a noncontrolling interest in a subsidiary does

not meet the definition of a liability in the Board’s conceptual framework. Paragraph 35 of Concepts Statement 6 defines liabilities as “probable

future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events”

The Board concluded that a noncontrolling interest represents the

residual interest in the net assets of a subsidiary within the consolidated group held by owners other than the parent. The noncontrolling interest, therefore, meets the definition of equity in Concepts Statement 6.

Paragraph 49 of Concepts Statement 6 defines equity (or net assets) as “the residual interest in the assets of an entity that remains after

deducting its liabilities.”



Education.

RESEARCH CASE: COCA-COLA’S ACQUISITION OF COCA-COLA ENTERPRISES

1. How did Coca-Cola allocate the acquisition-date fair value of CCE among the assets acquired and liabilities assumed?

Note 2 (Acquisitions and Divestitures) of Coca-Cola’s 2010 10-K shows the following allocation for the CCE acquisition:

Cash and cash equivalents $ 49 Marketable securities 7 Trade accounts receivable 1,194

Inventories 696 Other current assets 744 Property, plant and equipment 5,385

Bottlers' franchise rights with indefinite lives 5,100 Other intangible assets 1,032 Other noncurrent asse ts 261

Total identifiable assets acquired 14,468

Accounts payable and accrued expenses 1,826 Loans and notes payable 266

Long-term debt 9,345 Pension and other postretirement liabilities 1,313 Other noncurrent liabilities 2,603

Total liabilities assumed 15,353

Net liabilities assumed (885) Goodwill 7,746

Less: Noncontrolling interests 13

Net assets acquired $ 6,848 2. What are employee replacement awards? How did Coca-Cola account for the

replacement award value provided to the former employees of CCE?

Employee replacement award represent various share-based payments to employees that the acquiring firm replaces with new awards based on its shares. The ASC requires that if replacement awards are based on past service, their fair value is included in consideration transferred. If the replacement award are for future service, their value is expensed as incurred. Coca-Cola followed the ASC for its replacement awards (10-K Note 2).

3. How did Coca-Cola account for its 33 percent interest in CCE prior to the acquisition of the 67 percent not already owned by Coca-Cola?

Coca-Cola used the equity method to account for its previous 33 percent investment in CCE (10-K page 53).

4. Upon acquisition of the additional 67 percent interest, how did Coca-Cola account for the change in fair value of its original 33 percent ownership interest?

“We remeasured our equity interest in CCE to fair value upon the close of the transaction. As a result, we recognized a gain of approximately $4,978 million, which was classified in the line item other income (loss) — net in our consolidated statement of income.” (10-K Note 2).



Education.

INSTAPOWER: FASB ASC AND IFRS RESEARCH CASE

1. What is the total consideration transferred by Q-Car to acquire its 90 percent controlling interest in InstaPower?

Cash $60,000,000 Shares of Q-Car stock 27,000,000

Contingency 10,000,000 Total consideration transferred $97,000,000

The shares of Q-Car stock and the contingency are both measured at their

acquisition-date fair values (ASC 805-30-30-7, ASC 805-30-25-5). 2. What values should Q-Car assign to identifiable assets and liabilities as part of the

acquisition accounting?

Cash $ 270,000 Accounts receivable 800,000 Land 2,930,000

Building 19,000,000 Machinery 46,000,000 Trademark 8,000,000

Research and development asset 14,000,000 Accounts payable (1,000,000) Total identifiable net asset fair value $90,000,000 (ASC 805-20-30-1)

3. What is the acquisition-date value assigned to the 10 percent noncontrolling interest?

What are the noncontrolling interest valuation alternatives available under IFRS?

Under U.S. GAAP, the acquisition-date noncontrolling interest is measured at its fair value. In this case, there are no readily available market values for the noncontrolling shares so Q-Car has relied on other valuation techniques to arrive at an estimated fair value of $11,000,000.

IFRS allows two alternative measures for the noncontrolling interest. The first is identical to the U.S. measure. The second alternative uses the noncontrolling interest percentage of the fair value of the subsidiary’s identifiable net assets. In this case, the second alternative provides a value of $9,000,000 ($90,000,000 x 10%).

4. Under U.S. GAAP, what amount should Q-Car recognize as goodwill from the acquisition? What alternative valuations are available for goodwill under IFRS?

Goodwill under U.S. GAAP (ASC 805-30-30-1) and IFRS alternative 1 (IFRS 3 IN 8):

Consideration transferred (above) $ 97,000,000

Acquisition-date noncontrolling interest fair value 11,000,000 Acquisition-date value assigned to subsidiary $108,000,000 Net assets acquired fair value (above) 90,000,000

Goodwill $ 18,000,000

Goodwill under IFRS alternative 2:

Consideration transferred (above) $ 97,000,000

Acquisition-date NCI value assigned (above) 9,000,000 Acquisition-date value assigned to subsidiary $106,000,000 Net assets acquired fair value (above) 90,000,000

Goodwill $ 16,000,000

Data & Analytics

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