Tania Maharani - C1C019071 - Tugas AKL 3

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The document discusses steps to record the purchase of subsidiaries and preparation of consolidated balance sheets including elimination entries.

To record the purchase of a subsidiary, a journal entry is made debiting the investment account and crediting cash for the purchase price paid.

To prepare a consolidated balance sheet, elimination entries are made to remove the investment account and accounts between the parent and subsidiary. A worksheet is prepared combining asset, liability and equity accounts of the parent and subsidiary.

TUGAS AKL Chapter 3

Nama:TANIA MAHARANI OKTAVIANINGRUM


NPM:C1C019071

EXERCISE 3-1
Prepare in general journal form the workpaper entries to eliminate Prancer Company's
investment in Saltez Company in the preparation of a consolidated balance sheet at the
date of acquisition for each of the following independent cases:

Saltez Company Equity Balance


Cash Percent of Invesment Common Other Contributed Retained
Stock Owned Cost Stock Capital Earnings

a. 100% $351,000 $160,000 $92,000 $43,000


b. 90 232,000 190,000 75,000 (29,000)
c. 80 159,000 180,000 40,000 (4,000)

Any difference between book value of net assets and the value implied by the purchase
price relates to subsidiar property plant and equipment except for case (c). In case (c)
assume that all book values and fair values as the same.
JAWAB :
Common Stock – Saltez $ 160,000
Other Contributed Capital – Saltez $    92,000
a. Retained Earnings – Saltez $    43,000
Property, Plant, and Equipment $    56,000
      Investment in Saltez $ 351,000

Common Stock – Saltez $ 190,000


Other Contributed Capital – Saltez $    75,000
Property, Plant, and Equipment
$    21,778
b ($232,000 / 0.9 - [$190,000 + $75,000 - $29,000])
      Retained Earnings – Saltez $    29,000
      Investment in Saltez $ 232,000
      Non-controlling Interest $    25,778

Common Stock – Saltez $ 180,000


Other Contributed Capital – Saltez $    40,000
      Retained Earnings – Saltez $      4,000
c
      Investment in Saltez $ 159,000
      Gain on Purchase of Business - Prancer** $    13,800
      Non-controlling Interest (0.2) ($198,750) + $3,450 * $    43,200

 The Ordinary gain to Prancer is $159,000 – (0.8) ($216,000) = $13,800


 Non-controlling Interest reflects the non-controlling share of implied value
(0.2 * $198,750, or $39,750), plus the NCI portion of the bargain (0.2 * $17,250)
EXERCISE 3-2
On January 1, 2019, Polo Company purchased 100% of the common stock of Save Company
by issuing 40,000 shares of its (Polo's) $10 par value common stock with a market price of
$17.50 pershare. Polo incurred cash expenses of $20,000 for registering and issuing the
common stock. The stockholders' equity section of the two companies' balance sheets on
December 31, 2018, were:

Polo Save
Common stock, $10 par value $350,000 $320,000
Other contributed capital 590,000 175,000
Retained earnings 380,000 205,000

Required:
A. Prepare the journal entry on the books of Polo Company to record the purchase of
the common stock of Save Company and related expenses.
B. Prepare the elimination entry required for the preparation of a consolidated balance
sheet workpaper on the date of acquisition.
JAWAB :

A. Credit Requirement A Date Accounts Title Jan-01 Investment in Save Company


Common Stock (40,000 shares * $10)
Other Contributed Capital (40,000 shares * $7.5)
Debit $ 7,00,000 $ 4,00,000 $ 3,00,000 Jan-01 $ 20,000
Other Contributed Capital Cash $ 20,000
B. Debit Credit Date Jan-01 Requirement B
Accounts Title Common Stock Other Contributed Capital Investment in Save
Company $ 4,00,000 $ 3,00,000 $ 7,00,000 Jan-01 20,000
Cash Other Contributed Capital $ 20,000

EXERCISE 3-3

On January 2, 2019, Prunce Company acquired 90% of the outstanding common stock of
Sun Company for $192,0 ash. Just before the acquisition, the balance sheets of the two
companies were as follows:

Prunce Sun

Cash $260,000 $ 64,000

Accounts receivable (net) 142,000 23,000

Inventory 117,000 54,000

Plant and equipment (net) 386,000 98,000

Land 63.000 32.000

Total asset $968,000 $271,000

Accounts payable $104,000 $ 47,000

Mortgage payable 72,000 39,000

Common stock, $2 par value 400,000 70,000

Other contributed capital 208,000 20,000

Retained earnings 184.000 95.000

Total equities $968,000 $271,000

The fair values of Sun Company's assets and liabilities are equal to their book values with
the exception of land.

Required:

A. Prepare a journal entry to record the purchase of Sun Company's common stock.
B. Prepare a consolidated balance sheet at the date of acquisition.
JAWAB :

A. Journal Entry

Investment in Sun Company                     $192,000


                 Cash                                                                        $192,000

B. Consolidated Balance Sheet

Particulars Amount
(in $)
Assets

Current Assets

Cash 132,000
Accounts Receivable (142000 + 23000) 165,000
Inventory (117000 + 54000) 171,000
Plant & Equipment (Net) (386000 + 98000) 484,000
Land (63000 + 32000 + 28333) 123,333
Total Assets 1,075,333
Liabilities & Stockholders’ Equity

Current Liabilities

Accounts Payable (104000 + 47000) 151,000


Mortgage Payable (72000 + 39000) 111,000
Non-Controlling Interest 21,333
Stockholders’ Equity

Common Stock 400,000


Other Contributed Capital 208,000
Retained Earnings 184,000
Total Liabilities & Stockholders’ Equity 1,075,333

1. Cash
Prunce $260,000
Sun        $64000
Total     $324000
Acquisition Cost ($192000)
Balance $132,000

2. Land
$192000/0.9 – $(70000+20000+95000) = $28,333 
                                        
3. Non-Controlling Interest
= $(70000 + 20000 + 95000 +28333) * 0.10 = 21,333

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