The current FASB ASC topics on Business Combinations (805) and Consolidation (810) rep- resent a distinct departure from past consolidated reporting for subsidiary assets, liabilities, in- come, and noncontrolling interests. The acquisition method, which focuses on acquisition-date fair values, replaces the previous purchase method and its emphasis on cost accumulation and allocation. However, the acquisition method is applied prospectively, leaving intact long- lasting financial statement effects from past applications of the purchase method for business combinations occurring prior to January 1, 2009.
Under the purchase method, the parent recognized the fair values of acquired subsidiary as- sets and liabilities, but only to the extent of its percentage ownership interest. In the presence of a noncontrolling interest, subsidiary assets and liabilities were measured partially at fair value and partially at the subsidiary’s carryover (book) value. This dual valuation for sub- sidiary assets and liabilities was viewed as being consistent with the cost principle. Because only the parent’s percentage was purchased in the combination, only that percentage was ad- justed to fair value. Therefore, the valuation principle for the noncontrolling interest under the purchase method was simply its share of the subsidiary’s book value.
To illustrate the accounting for a business combination using the purchase method, assume that Ramsey Company purchased 80 percent of the outstanding shares of Santana Company for $1,435,000 cash on January 1, 2008. Exhibit 4.13 shows Santana’s acquisition date balance sheet and Ramsey’s cost allocation using the purchase method. Note that the parent allocates only its cost to the subsidiary’s assets based on their fair values. Because the parent purchased only 80 percent of the subsidiary’s shares, only 80 percent of the subsidiary’s net assets are valued at the parent’s cost. The 20 percent held by the noncontrolling interest is not part of the exchange transaction, and therefore no new basis of accountability arises. Thus, 20 percent of the net assets remains at the subsidiary’s former book value (carryover basis), and 80 percent of the net assets is valued at cost to the parent.
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LO11
Understand the principles of the legacy purchase method in accounting for a noncontrolling interest.
EXHIBIT 4.13
Subsidiary Accounts and Cost Allocation–Date of 80 Percent Acquisition by Parent
SANTANA COMPANY
Account Balances for Consolidation—Purchase Method January 1, 2008
80% Write-Up in Book Value Fair Value Difference Consolidation Current assets . . . . $ 239,000 $ 239,000 $ –0– $ –0–
Land . . . . 575,000 610,000 35,000 28,000
Equipment (7-year life) . . . 1,886,000 1,956,000 70,000 56,000
Patent (8-year life) . . . . –0– 20,000 20,000 16,000
Liabilities . . . . (1,050,000) (1,050,000) –0– –0–
Net assets . . . . $ 1,650,000 $1,775,000 $ 125,000 $100,000 Common Stock . . . . (900,000)
Retained Earnings . . . . (750,000)
Allocation of Ramsey’s Cost—Purchase Method
Purchase price for 80% of Santana Company . . . . $1,435,000 Book value acquired (80% ⫻$1,650,000) . . . . 1,320,000
Excess of parent’s cost over 80% of subsidiary book value . . . 115,000
to land (80% ⫻$35,000) . . . . $28,000 to equipment (80% ⫻70,000) . . . . 56,000
to patent (80% ⫻20,000) . . . . 16,000 100,000 to goodwill . . . . $ 15,000 hoy36628_ch04_139-194.qxd 1/23/10 11:08 AM Page 168
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Consolidated Financial Statements and Outside Ownership 169
For example, Santana’s land account will appear on Ramsey’s acquisition-date consolidated balance sheet at $603,000. This amount can be computed in either of two mathematically equivalent ways as follows:
Fair value ⫻parent’s ownership percentage ⫽$610,000 ⫻80% ⫽ . . . $488,000
⫹Book value ⫻noncontrolling interest percentage ⫽$575,000 ⫻20% ⫽ . . . 115,000 Consolidated value for subsidiary land . . . $603,000 Book value of subsidiary land . . . $575,000
⫹(Fair value ⫺book value) ⫻parent’s ownership percentage ⫽$35,000 ⫻80% ⫽ . . 28,000 Consolidated value for subsidiary land . . . $603,000 The subsidiary’s book value is consolidated in total whereas any cost in excess of book value is assumed to be a parent company expenditure appropriately allocated based on fair values. By comparison, the acquisition method recognizes 100 percent of the fair values of the subsidiary’s assets and liabilities regardless of the controlling interest’s own- ership percentage. Thus the acquisition method would show a full $610,000 fair value for the land.
To complete the illustration of the purchase method, assume that Ramsey and Santana submit December 31, 2011, financial statements as shown in the first two columns of Exhibit 4.14. Ramsey then prepares the following worksheet entries.
Consolidation Entry S
Common Stock (Santana) . . . . 900,000 Retained Earnings, 1/1/11 (Santana) . . . . 800,000
Investment in Santana Company (80%) . . . . 1,360,000 Noncontrolling Interest in Santana Company, 1/1/11 (20%) . . . . 340,000 To eliminate beginning stockholders’ equity accounts of subsidiary along
with book value portion of investment (equal to 80 percent ownership).
Noncontrolling interest of 20 percent is also recognized.
Consolidation Entry I
Subsidiary income . . . . 158,000
Investment in Santana Company . . . . 158,000 To eliminate current year equity income recorded by Ramsey in connection
with its ownership of Santana. The subsidiary’s revenue and expense accounts are left intact and included in consolidated figures.
Consolidation Entry A
Land . . . . 28,000 Equipment . . . . 32,000 Patent . . . . 10,000 Goodwill . . . . 15,000
Investment in Santana Company . . . . 85,000 To allocate the excess of Ramsey’s cost over Santana’s book value based on
fair values net of 3 years amortization. Note that under the purchase method none of this excess allocation is attributed to the noncontrolling interest.
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170 Chapter 4
EXHIBIT 4.14 Consolidated Worksheet with a Noncontrolling Interest—Legacy Purchase Method RAMSEY AND SUBSIDIARY SANTANA COMPANY
Consolidated Worksheet—Purchase Method December 31, 2011
Noncontrolling
Ramsey Santana Adjustments & Eliminations Interest Consolidated
Revenues (2,525,000) (1,000,000) (3,525,000)
Operating expenses 2,183,000 790,000 (E) 10,000 2,983,000
Subsidiary income (158,000) –0– (I) 158,000 (42,000) 42,000
Net income (500,000) (210,000) (500,000)
Retained earnings 1/1 (2,000,000) (800,000) (S) 800,000 (2,000,000)
Net income (500,000) (210,000) (500,000)
Dividends declared 200,000 25,000 (D) 20,000 5,000 200,000
Retained earnings 12/31 (2,300,000) (985,000) (2,300,000)
Current assets 967,000 827,000 1,794,000
Investment in Santana 1,583,000 (D) 20,000 (S)1,360,000 –0–
(equity method) (A) 85,000
(I) 158,000
Land 1,500,000 575,000 (A) 28,000 2,103,000
Buildings and equipment 3,090,000 1,726,000 (A) 32,000 (E) 8,000 4,840,000
Patent –0– –0– (A) 10,000 (E) 2,000 8,000
Goodwill 200,000 –0– (A) 15,000 215,000
Total assets 7,340,000 3,128,000 8,960,000
Liabilities (1,890,000) (1,243,000) (3,133,000)
Common stock–Ramsey (3,150,000) (3,150,000)
Common stock–Santana (900,000) (S) 900,000
Noncontrolling interest 1/1 (S) 340,000 (340,000)
Noncontrolling interest 12/31 377,000 (377,000)
Retained earnings 12/31 (2,300,000) (985,000) (2,300,000)
Total liabilities and
stockholders’ equity (7,340,000) (3,128,000) 1,973,000 1,973,000 (8,960,000)
Consolidation entries:
(S) Elimination of subsidiary’s stockholders’ equity along with recognition of 1/1 noncontrolling interest.
(A) Allocation of excess cost over book value, unamortized balances as of 1/1.
(I) Elimination of intra-entity income (equity accrual less amortization expenses).
(D) Elimination of intra-entity dividend payments.
(E) Recognition of amortization expenses on excess cost allocations.
Consolidation Entry E
Operating expenses . . . . 10,000
Equipment . . . . 8,000 Patent . . . . 2,000 To recognize excess cost amortization expenses for the current year based
on Ramsey’s percentage ownership of Santana’s acquisition-date fair values.
Consolidation Entry D
Investment in Santana Company . . . . 20,000
Dividends declared . . . . 20,000 This worksheet entry offsets the $20,000 current year intra-entity
dividend paid by Santana to Ramsey.
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Consolidated Financial Statements and Outside Ownership 171
The noncontrolling interest in Santana balance totals $377,000 at the end of the year. This valuation represents 20 percent of the subsidiary’s year-end book value (common stock plus ending retained earnings) or 20% ⫻($900,000 ⫹$985,000). This $377,000 total can also be seen on the worksheet with supporting details as follows:
Noncontrolling interest at 1/1/11 (20% of $1,700,000 beginning
book value—common stock plus 1/1/11 retained earnings) . . . $340,000 Noncontrolling interest in subsidiary’s income
(20% ⫻$210,000 subsidiary income) . . . 42,000 Dividends paid to noncontrolling interest (20% of $25,000 total) . . . (5,000) Noncontrolling interest at 12/31/11 . . . $377,000 Note that the noncontrolling interest’s share of subsidiary income does not take into account any of the excess cost amortizations. This treatment is consistent with the noncontrolling interest valuation at subsidiary book value.
Criticisms of the Purchase Method in the Presence of a Noncontrolling Interest Several criticisms were leveled at past practice for consolidated financial reporting in the pres- ence of a noncontrolling interest. These include:
• Dual valuation of subsidiary balance sheet accounts.
• The “mezzanine” categorization of the noncontrolling interest in consolidated balance sheets.
• The valuation basis for the noncontrolling interest.
• Accounting for the parent’s transactions in the ownership shares of its subsidiary.
We briefly discuss each of these criticisms below.
As shown in the Ramsey and Santana example above, the purchase method employed a mixed-attribute model to consolidate subsidiary assets whenever a noncontrolling interest was present. By recognizing the fair value of subsidiary assets only to the extent of the parent’s ownership percentage, these assets were consolidated in part at fair value, and in part at the subsidiary’s book value. Many considered this dual valuation in the presence of a noncontrol- ling interest as hindering the relevance of the resulting consolidated balances. Moreover, because book values tended to understate asset valuation, financial ratios such as return-on- assets were also overstated. The problem was compounded in step acquisitions when several purchase cost allocations were combined at various amounts through time.
Another criticism of past practice was the fact that most parent companies reported their noncontrolling interests between the liability and stockholder’s equity sections in an area re- ferred to as the “mezzanine.” The 2005 FASB Exposure Draft, “Business Combinations and Consolidated Financial Statements, Including Accounting and Reporting of Noncontrolling Interests in Subsidiaries,” argued for inclusion in equity (pages viii and ix):
This proposed Statement would result in greater consistency with the Board’s conceptual frame- work because it would require noncontrolling interests to be accounted for and reported as equity, separately from the parent shareholders’ equity. In current practice, noncontrolling interests in the equity of subsidiaries are reported most commonly as “mezzanine” items between liabilities and equity in the consolidated financial statements of the parent, but also as liabilities or as equity.
The display of noncontrolling interests as liabilities has no conceptual support because noncon- trolling interests do not meet the definition of liabilities as defined in paragraph 35 of FASB Concepts Statement No. 6, Elements of Financial Statements. Not one of the entities involved—
the parent, the subsidiary, or the consolidated entity—is obligated to transfer assets or provide services to the owners that hold equity interests in the subsidiary. Also, Concepts Statement 6 defines three elements of a statement of financial position: assets, liabilities, and equity (or net assets). The display of noncontrolling interests as mezzanine items would require that a new element—noncontrolling interests in consolidated subsidiaries—be created specifically for con- solidated financial statements. The Board believes that no compelling reason exists to create such a new element. A view of consolidated financial statements as those of a single economic entity supports classification as equity because noncontrolling shareholders, partners, or other equity holders in subsidiaries are owners of a residual interest in a component of the consolidated entity.
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Current GAAP requires that the noncontrolling interest be reported separately in the stock- holders’ equity section of the consolidated balance sheet.
Under the purchase method, the noncontrolling interest was valued at its percentage of the subsidiary’s book value. To provide a consistent measurement attribute for the subsidiary, the acquisition method requires accounting for the noncontrolling interest at its acquisition-date fair value. Thus, the managers of the parent company are accountable for the entire fair values of their acquisitions.
Finally, past practice varied when the parent company sold or bought subsidiary shares while nonetheless maintaining control. In some cases, gains or losses were recognized on these transactions and in other cases they were treated as equity transactions. Current GAAP requires a consistent treatment for these economically similar events. Thus, all transactions by a parent in a subsidiary’s ownership shares will be accounted for as equity transactions, as long as the parent maintains control.
Summary 1. A parent company need not acquire 100 percent of a subsidiary’s stock to form a business combina- tion. Only control over the decision-making process is necessary, a level that has historically been achieved by obtaining a majority of the voting shares. Ownership of any subsidiary stock that is re- tained by outside, unrelated parties is collectively referred to as a noncontrolling interest.
2. A consolidation takes on an added degree of complexity when a noncontrolling interest is present.
The noncontrolling interest represents a group of subsidiary owners and their equity is recognized by the parent in its consolidated financial statements.
3. The valuation principle for the noncontrolling interest is acquisition-date fair value. The fair value of the noncontrolling interest is added to the consideration transferred by the parent to determine the acquisition-date fair value of the subsidiary. This fair value is then allocated to the subsidiary’s assets acquired and liabilities assumed based on their individual fair values. At the acquisition date, each of the subsidiary’s assets and liabilities is included in consolidation at its individual fair value regardless of the degree of parent ownership. Any remaining excess fair value beyond the total assigned to the net assets is recognized as goodwill.
4. Consolidated goodwill is allocated across the controlling and noncontrolling interests based on the excess of their respective acquisition-date fair values less their percentage share of the identifiable subsidiary net asset fair value. The goodwill allocation, therefore, does not necessarily correspond proportionately to the ownership interest of the parent and the noncontrolling interest.
5. This fair value is then adjusted through time for subsidiary income (less excess fair-value amortiza- tion) and subsidiary dividends.
6. Four noncontrolling interest figures appear in the annual consolidation process. First, a beginning-of- the-year balance is recognized on the worksheet (through Entry S) followed by the noncontrolling interest’s share of the unamortized excess acquisition-date fair values of the subsidiary’s assets and liabilities (including a separate amount for goodwill if appropriate). Next, the noncontrolling interest share of the subsidiary’s income for the period (recorded by a columnar entry) is recognized. Sub- sidiary dividends paid to these unrelated owners are entered as a reduction of the noncontrolling interest. The final balance for the year is found as a summation of the Noncontrolling Interest column and is presented on the consolidated balance sheet, within the Stockholders’ Equity section.
7. When a midyear business acquisition occurs, consolidated revenues and expenses should not include the subsidiary’s current year preacquisition revenues and expenses. Only postacquisition subsidiary revenues and expenses are consolidated.
8. A parent can obtain control of a subsidiary by means of several separate purchases occurring over time, a process often referred to as a step acquisition. Once control is achieved, the acquisition method requires that the parent adjust to fair value all prior investments in the acquired firm and rec- ognize any gain or loss. The fair values of these prior investments, along with the consideration trans- ferred in the current investment that gave the parent control, and the noncontrolling interest fair value all comprise the total fair value of the acquired company.
9. When a parent sells some of its ownership shares of a subsidiary, it must establish an appropriate investment account balance to ensure an accurate accounting. If the equity method has not been used, the parent’s investment balance is adjusted to recognize any income or amortization previously omitted. The resulting balance is then compared to the amount received for the stock to arrive at either an adjustment to additional paid-in capital (control maintained) or a gain or loss (control lost).
Any shares still held will subsequently be reported through either consolidation, the equity method, or the fair-value method, depending on the influence retained by the parent.
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Consolidated Financial Statements and Outside Ownership 173
(Estimated Time: 60 to 75 Minutes) On January 1, 2009, Father Company acquired an 80 percent interest in Sun Company for $425,000. The acquisition-date fair value of the 20 percent noncontrolling interest’s ownership shares was $102,500. Also as of that date, Sun reported total stockholders’ equity of $400,000:
$100,000 in common stock and $300,000 in retained earnings. In setting the acquisition price, Father appraised four accounts at values different from the balances reported within Sun’s financial records.
Buildings (8-year life) . . . Undervalued by $20,000 Land . . . Undervalued by $50,000 Equipment (5-year life) . . . Undervalued by $12,500 Royalty agreement (20-year life) . . . Not recorded, valued at $30,000 As of December 31, 2013, the trial balances of these two companies are as follows:
Father Sun
Company Company Debits
Current assets . . . $ 605,000 $ 280,000 Investment in Sun Company . . . 425,000 –0–
Land . . . 200,000 300,000 Buildings (net) . . . 640,000 290,000 Equipment (net) . . . 380,000 160,000 Expenses . . . 550,000 190,000 Dividends . . . 90,000 20,000 Total debits . . . $2,890,000 $1,240,000
Credits
Liabilities . . . $ 910,000 $ 300,000 Common stock . . . 480,000 100,000 Retained earnings, 1/1/13 . . . 704,000 480,000 Revenues . . . 780,000 360,000 Dividend income . . . 16,000 –0–
Total credits . . . $2,890,000 $1,240,000 Included in these figures is a $20,000 debt that Sun owes to the parent company. No goodwill impair- ments have occurred since the Sun Company acquisition.
Required
a. Determine consolidated totals for Father Company and Sun Company for the year 2013.
b. Prepare worksheet entries to consolidate the trial balances of Father Company and Sun Company for the year 2013.
c. Assume instead that the acquisition-date fair value of the noncontrolling interest was $112,500. What balances in the December 31, 2013, consolidated statements would change?
SOLUTION
a. The consolidation of Father Company and Sun Company begins with the allocation of the sub- sidiary’s acquisition-date fair value as shown in Exhibit 4.15. Because this consolidation is taking place after several years, the unamortized balances for the various allocations at the start of the cur- rent year also should be determined (see Exhibit 4.16).
Next, the parent’s method of accounting for its subsidiary should be ascertained. The continuing presence of the original $425,000 acquisition price in the investment account indicates that Father is applying the initial value method. This same determination can be made from the Dividend Income account, which equals 80 percent of the subsidiary’s dividends. Thus, Father’s accounting records have ignored the increase in Sun’s book value as well as the excess amortization expenses for the prior periods of ownership. These amounts have to be added to the parent’s January 1, 2013, Retained Earnings account to arrive at a properly consolidated balance.
During the 2009–2012 period of ownership, Sun’s Retained Earnings account increased by
$180,000 ($480,000 ⫺$300,000). Father’s 80 percent interest necessitates an accrual of $144,000 ($180,000 ⫻80%) for these years. In addition, the acquisition-date fair value allocations require the
Comprehensive Illustration PROBLEM
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174 Chapter 4
EXHIBIT 4.15 Excess Fair Value Allocations
FATHER COMPANY AND SUN COMPANY Acquisition-Date Fair-Value Allocation and Amortization
2009–2012
Estimated Annual Excess Allocation Life (years) Amortization Acquisition-date fair value . . . . $527,500
Sun book value (100%) . . . . 400,000 Excess fair value . . . . 127,500 Allocation to specific subsidiary accounts
based on fair value:
Buildings . . . . $ 20,000 8 $ 2,500 Land . . . . 50,000
Equipment . . . . 12,500 5 2,500
Royalty agreement . . . . 30,000 20 1,500
Goodwill . . . . $ 15,000
Annual excess amortization expenses . . . . $ 6,500
Goodwill Allocation to the Controlling and Noncontrolling Interests Controlling Noncontrolling
Interest Interest Total
Fair value at acquisition date . . . . $425,000 $102,500 $527,500 Relative fair value of Sun’s net identifiable
assets (80% and 20%) . . . . 410,000 102,500 512,500 Goodwill . . . . $ 15,000 $ –0– $ 15,000
recognition of $20,800 in excess amortization expenses for this same period ($6,500 ⫻ 80% ⫻ 4 years). Thus, a net increase of $123,200 ($144,000 ⫺$20,800) is needed to correct the parent’s beginning Retained Earnings balance for the year.
Once the adjustment from the initial value method to the equity method is determined, the con- solidated figures for 2013 can be calculated:
Current Assets⫽$865,000. The parent’s book value is added to the subsidiary’s book value. The
$20,000 intra-entity balance is eliminated.
Investment in Sun Company⫽ ⫺0⫺. The intra-entity ownership is eliminated so that the sub- sidiary’s specific assets and liabilities can be consolidated.
Land⫽$550,000. The parent’s book value is added to the subsidiary’s book value plus the $50,000 excess fair value allocation (see Exhibit 4.15).
EXHIBIT 4.16 Excess Fair Value Allocation Balances
FATHER COMPANY AND SUN COMPANY Unamortized Excess Fair over Book Value Allocation
January 1, 2013, Balances
Excess Excess Original Amortization Balance
Account Allocation 2009–2012 1/1/13
Buildings . . . . $ 20,000 $10,000 $ 10,000 Land . . . . 50,000 –0– 50,000 Equipment . . . . 12,500 10,000 2,500 Royalty agreement . . . . 30,000 6,000 24,000 Goodwill . . . . 15,000 –0– 15,000 Total . . . . $127,500 $26,000 $101,500 hoy36628_ch04_139-194.qxd 1/22/10 8:42 PM Page 174
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Consolidated Financial Statements and Outside Ownership 175 Buildings (net)⫽$937,500. The parent’s book value is added to the subsidiary’s book value plus the
$20,000 fair-value allocation (see Exhibit 4.16) and less five years of amortization (2009 through 2013).
Equipment (net)⫽$540,000. The parent’s book value is added to the subsidiary’s book value. The
$12,500 fair-value allocation has been completely amortized after five years.
Goodwill⫽$15,000. Original acquisition-date value assigned.
Expenses⫽$746,500. The parent’s book value is added to the subsidiary’s book value plus amorti- zation expenses on the fair-value allocations for the year (see Exhibit 4.15).
Dividends Paid⫽$90,000. Only parent company dividends are consolidated. Subsidiary dividends paid to the parent are eliminated; the remainder reduce the Noncontrolling Interest balance.
Royalty Agreement⫽$22,500. The original residual allocation from the acquisition-date fair value is recognized after taking into account five years of amortization (see Exhibit 4.15).
Consolidated Net Income⫽$393,500. The combined total of consolidated revenues and expenses.
Noncontrolling Interest in Subsidiary’s Income⫽$32,700. The outside owners are assigned a 20 per- cent share of the subsidiary’s income less excess fair-value amortizations: 20% ⫻($170,000 ⫺$6,500).
Controlling Interest in Consolidated Net Income⫽$360,800. Consolidated net income less the amount allocated to the noncontrolling interest.
Liabilities⫽$1,190,000. The parent’s book value is added to the subsidiary’s book value. The
$20,000 intra-entity balance is eliminated.
Common Stock⫽$480,000. Only the parent company’s balance is reported.
Retained Earnings, 1/1/13⫽$827,200. Only the parent company’s balance after a $123,200 increase to convert from the initial value method to the equity method.
Retained Earnings 12/31/13⫽$1,098,000. The parent’s adjusted beginning balance of $827,200, plus
$360,800 net income to the controlling interest, less $90,000 dividends paid to the controlling interest.
Revenues⫽$1,140,000. The parent’s book value is added to the subsidiary’s book value.
Dividend Income⫽–0–. The intra-entity dividend receipts are eliminated.
Noncontrolling Interest in Subsidiary, 12/31/13⫽$162,000.
NCI in Sun’s 1/1/13 book value (20% ⫻$580,000) . . . $116,000 NCI in unamortized excess fair-value allocations (20% ⫻$86,500) . . . 17,300 January 1, 2013, NCI in Sun’s fair value . . . 133,300 NCI in Sun’s net income [20% ⫻($360,000 ⫺196,500)] . . . 32,700 NCI dividend share (20% ⫻$20,000) . . . (4,000)
Total noncontrolling interest December 31, 2013 . . . $162,000 b. Six worksheet entries are necessary to produce a consolidation worksheet for Father Company and
Sun Company.
Entry *C
Investment in Sun Company . . . . 123,200
Retained Earnings, 1/1/13 (parent) . . . . 123,200 This increment is required to adjust the parent’s Retained
Earnings from the initial value method to the equity method.
The amount is $144,000 (80 percent of the $180,000 increase in the subsidiary’s book value during previous years) less
$20,800 in excess amortization over this same four-year period ($6,500 ⫻80% ⫻4 years).
Entry S
Common Stock (subsidiary) . . . . 100,000 Retained Earnings, 1/1/13 (subsidiary) . . . . 480,000
Investment in Sun Company (80 percent) . . . . 464,000 Noncontrolling Interest in Sun Company (20 percent) . . . . 116,000 To eliminate beginning stockholders’ equity accounts of the subsidiary
and recognize the beginning balance book value attributed to the outside owners (20 percent).
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