Consolidated Statement of Financial Position
As of January 1, 20x1
ABC Co. XYZ, Inc. WPE Consolidated
Assets
Cash 41,000 67,750 108,750
Accounts Receivable 75,000 22,000 97,000
Inventory 97,000 10,400 8,000 115,400
Investment in Subsidiary (at cost) 75,000 -75,000 --
Equipment 200,000 50,000 10,000 260,000
Accumulated Depreciation (60,000) (20,000) -2,000 (82,000)
TOTAL ASSETS 428,000 130,150 (59,000) 499,150
Liabilities and Equity
Accounts Payable 43,000 30,000 73,000
Bonds Payable 30,000 30,000
Total Liabilities 73,000 30,000 - 103,000
Share capital 170,000 50,000 - 50,000 170,000
Share premium 65,000 65,000
Retained Earnings 120,000 50,150 -24,000 146,150
NCI 15,000 15,000
Total Equity 355,000 100,150 - 59,000 396,150
TOTAL LIAB & EQUITY 428,000 130,150 - 59,000 499,150
Journal Entries
PARENT'S BOOK
JANUARY 1, 20X1 Investment in Subsidiary 75,000.00
Cash 75,000.00
SUBSIDIARY'S BOOK WORKING PAPER ENTRI
JANUARY 1, 20X1 ***NO ENTRY 1.) Adjust BV to FV
Inventory
Equipment
2.) Eliminate Share capital of Subs
Share capital, XYZ, Inc.
Retained Earnings
3.) Recognize goodwill
Goodwill
4.) Amortization of Excess FV
COGS
Depreciation Expense
5.) Impairment of Goodwill
***no impairment
6.)Eliminate Dividend Income
***no dividend declared
7.) Close NCINIS to NCINAS
NCINIS
8.) Eliminate intercompany sale
Sales (downstream)
Sales (upstream)
9.) Eliminate Intercompany receivable
***no receivable/payable
10.)Recognize Realized profit from be
***no RPBI because conso
11.) To eliminate UPEI during the year
COGS
ORKING PAPER ENTRIES
just BV to FV
Inventory 8,000
Equipment 10,000
Accumulated Dep'n 2,000
Investment in Subs 12,800
NCI 3,200
minate Share capital of Subs
Share capital, XYZ, Inc. 50,000
Retained Earnings 24,000
Investment in Subs 59,200
NCI 14,800
cognize goodwill Computation of goodwill
Goodwill 3,000 Consideration transferred
Investment in Subs 3,000 NCI
Total Aggregate
Fair Value of Net Assets
BVNA, XYZ (50,000 + 24,000)
FV adjustments
mortization of Excess FV Goodwill
8,000
Inventory 8,000
Depreciation Expense 2,000
Equipment 2,000 (10,000-2,000= 8,000 / 4 years)
pairment of Goodwill
***no impairment Computation of Retained Earnings, XYZ
XYZ Retained Earnings, Jan 1
minate Dividend Income Add: Net Income
***no dividend declared Less: Dividends declared (SQUEEZED)
XYZ Retained Earnings, Dec 31
ose NCINIS to NCINAS
NCINIS 3,070
NCINAS 3,070 Parent's income, ABC Co.
Subsidiary's income, XYZ Inc.
Dividend-P
Dividend-S
Amortization-Inventory (thru sale)
Amortization-Equipment (thru Dep'n)
Impairment-Goodwill
UPEI - DS
UPEI - Ups
RPBI - DS
RPBI - Ups
Realized Gain in Fixed Asset (DS)
Realized Gain in Fixed Asset (US)
UG/UL (DOWNSTREAM)
UG/UL (UPSTREAM)
ADJUSTED NET INCOME
minate intercompany sale
Sales (downstream) 20,000
COGS 20,000 40% on selling price=12,000/60%
Sales (upstream) 12,000
COGS 12,000 25% above its cost = 12,000 * 125%
minate Intercompany receivable/payable
***no receivable/payable
ecognize Realized profit from beginning inventory (RPBI)
***no RPBI because consolidation is in its first year
o eliminate UPEI during the year
2,800
Inventory 2,800
75,000
18,000
93,000
74,000
16,000 90,000
3,000
24,000
26,150
red (SQUEEZED) -
50,150
CNI-CI CNI-NCI CNI
(80%) (20%)
70,000 70,000
20,920 5,230 26,150
- - -
- - -
(6,400) (1,600) (8,000)
(1,600) (400) (2,000)
- - -
(2,000.00) - (2,000.00)
(640.00) (160.00) (800.00)
- - -
- - -
- - -
- - -
- - -
- - -
80,280.00 3,070.00 83,350.00
Sales, DS 100% 20,000 quarter remains in XYZ
Cost 60% 12,000
GP 40% 8,000 UPEI = 8,000 x 1/4 = 2,000
Sales, Ups 125% 12,000 4,000 of 12,000 remains or 1/3
Cost 100% 9,600
GP 25% 2,400 UPEI = 2,400 x 1/3 = 800
