Final Project Tips: 1. in this project Goodwill is called "intangibles" and amortized over a period of time ( if this amount is 240,000 over 10 years, at 12/31/x3 worksheet intangible will be (240,000...

Problem
    
        CONSOLIDATION WORKSHEET PROBLEM                                Colker
        Prepare the corresponding consolidating worksheets based on the following facts.
        Companies involved: Parent and Sub.
        Date of acquisition:            Jan. 1,    20X3
        Date of the worksheets you must prepare: December 31,                        20X4
                            "    20X5
                            "    20X6
        Percentage of common shares of S owned by P                                80%
        Price paid by P                                $ 1,800,000
        At the time of acquisition these were some values concerning S:
        Common stock                                $ 300,000
        Aditional paid-in capital                                $ 300,000
        Retained earnings                                $ 198,000
                        Years                FMV-BV
        Inventories                <1                $ 240,000
        Other current assets                <1                $ 90,000
        Plant & equipment, remaining life:                8                $ 600,000
        Land                                $ 420,000
        Long term liabilities; remaining life:                10                $ 90,000
        Intangibles amortization:                10
        Intercompany transactions:
                            20X3    20X4    20X5    20X6
        Upstream inventory sales                    -    $ 45,000    $ 38,250    $ 40,928
        % in ending inventory                    -    8.00%    9.60%    11.52%
        Gross profit rate on sales                    -    40.00%    48.00%    57.60%
        Upstream building sale, Dec. 31
        Sold for                        $ 600,000
        Book value at time of sale                        $ 216,000
        Remaining life:                10
        % of S bonds purchased by P, Jan. 1                            30%
        Price paid                            $ 272,768
        BV at that date                            $ 278,415
        Remaining life:                5
        Maturity value of acquired bonds                            $ 270,000
        Required:
        1. Complete the worksheets for 20X4-6.
Author:
Excess of FMV of Sub's assets and liabilities over their BV when Parent acquired Sub.
Author:
When P acquired S, the fair value (i.e., present value) of these liabilities was less than their book value.
Wksheets
    
                    CONSOLIDATION WORKSHEET PROBLEM
        CONSOLIDATION WORKING PAPERS -- YEAR ENDED DECEMBER 31,                20X3    Colker
            Parent    Subsidiary    Adjusts. and Elims.        Cons.
        Income Statement
        Sales    6,000,000    3,000,000            9,000,000        Reconciliation: Investment to S's Equity                                        BONDS
        Income from S    291,115        291,115    -    -                                        Issuer's Facts:            Acquirer's Facts:
        Cost of goods sold    (4,200,000)    (1,710,000)    240,000        (6,150,000)        Investment, 12/31        20X3            1,941,529                        Acquired Jan.    20X5
        Operating expenses    (900,000)    (450,000)    175,200        (1,525,200)        Removal of unamortized differential:                                            % acquired    30%
        Interest Expense        (60,906)            (60,906)                    Initial    Amortiz.                Face value    900,000        Face value    270,000
        Non-contr. interest income            72,779        (72,779)        Inventories            (192,000)    192,000    -            Stated Rate    7.25%        Stated Rate    7.25%
        Net income    1,191,115    779,094            1,191,115        Other current assets            (72,000)    72,000    -            Effective Rate    6.50%        Effective Rate    7.00%
                                    Plant & equipment            (480,000)    60,000    (420,000)            Interest Pmts.    65,250        Interest Pmts.    19,575
        Retained Earnings                            Land            (336,000)    -    (336,000)            Bonds Life    10        Bonds Life    5
        Retained earnings--P, 1/1/X3    2,100,000                2,100,000        L. T. liabilities            (72,000)    7,200    (64,800)
        Retained earnings--S, 1/1/X3        198,000    198,000                Intangibles            (9,600)    960    (8,640)            At issuance:            At bond purchase:
        Net income    1,191,115    779,094            1,191,115        Unamortized differential                    (829,440)            PV of Principal    $479,453        PV of Principal    $192,506
        Dividends    (285,868)    (186,982)        186,982    (285,868)                            1,112,089            PV of Interest    $469,071        PV of Interest    $80,261
        Retained earnings--12/31/X3    3,005,247    790,111            3,005,247                                        Bond price    $948,525        Bond...