Scribd
Upload
516 views3 pages

p8-1 Tugas GSLC

Pelzer Company acquired shares of Sarko Company stock over three years through open market purchases. By January 1, 2015 Pelzer owned 80% of Sarko. A schedule compares the investment costs to Sarko's book value of equity acquired, showing a difference of $570,000 which is recorded as goodwill. Elimination entries are needed to prepare a consolidated workpaper as of December 31, 2015, including eliminating the investment account and recording Pelzer's share of changes in Sarko's retained earnings over the periods of acquisition.

Uploaded by

elaine aurelia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
516 views3 pages

p8-1 Tugas GSLC

Pelzer Company acquired shares of Sarko Company stock over three years through open market purchases. By January 1, 2015 Pelzer owned 80% of Sarko. A schedule compares the investment costs to Sarko's book value of equity acquired, showing a difference of $570,000 which is recorded as goodwill. Elimination entries are needed to prepare a consolidated workpaper as of December 31, 2015, including eliminating the investment account and recording Pelzer's share of changes in Sarko's retained earnings over the periods of acquisition.

Uploaded by

elaine aurelia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Elaine Aurelia

2101652486

Problem 8-1
Sarko Company had 300,000 shares of $10 par value commen stock outstanding at all times and retained earning bala
Retained Earnings
January 1, 2013 $260,000
January 1, 2014 $540,000
January 1, 2015 $630,000
January 1, 2016 $820,000
Pelzer Company acquired Sarko Company stock through open-market purchases as follows :
Date % Acquired Shares Cost
1/1/2013 10% 30000 $365,000
1/1/2014 25% 75000 $960,000
1/1/2015 45% 135000 $1,890,000
80%
Sarko Company declared no dividens during this period. The fair values of Sarko Company's asset and liabilities wer
to their book values throughout this period (2013 through 2015). Pelzer Company uses the cost method.

Required :
A. Prepare a schedule to compare investment cost with the book value of equity acquired.
Computation Allocation Schedule
Parent NCI TOTAL
80% 20% 100%
Purchase Price:
1/1/13 purchases (30,000 x $14) 420,000
1/1/14 purchases (75,000 x $14) 1,050,000
1/1/15 purchases (135,000 x $14) 1,890,000
Purchase Price and implied value 3,360,000 840,000 4,200,000
Less : Book value of equity acquired
Common Stock 2,400,000 600,000 3,000,000
Retained Earnings 504,000 126,000 630,000
Difference 456,000 114,000 570,000
Goodwill (456,000) (114,000) (570,000)
Balance 0 0 0

B. Prepare elimination entries for the preparation of a consolidated statements workpaper on December 31, 2015

Common stock 3,000,000


Retained Earning 630,000
Difference 570,000
Investment in Sarko company 3,360,000
NCI 840,000

Goodwill 570,000
Difference 570,000

Investment in Sarko Company 59,500


Retained Earning 1/1 - P Company 59,500

Change in Retained Earnings, 1/1/13 $ 37,000 (630,000-5400,00)*10%


Change in Retained Earnings, 1/1/14 $ 22,500 (630,000-540,000)*25%
$ 59,500
nd retained earning balances as indicated here :

Cost/Share
$12.17
$12.80
$14.00

sset and liabilities were approximately equal


t method.

December 31, 2015

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy