Nama : Rezky Aprilianti
NIM : A031191120
Latihan Soal AKL II P.2-5 dan P.2-8
A. P.2-5
1. Schedule to allocate fair value — book value differentials
Investment cost January 1 $ 1,680,000
Book value acquired ($3,900,000 net assets × 30%) 1,170,000
Excess fair value over book value $ 510,000
Allocation of excess
Fair Value –
Percent Acquired Allocation
Book Value
Inventories $ 200,000 30 % $ 60,000
Land 800,000 30 % 240,000
Buildings — net 500,000 30 % 150,000
Equipment — net (700,000) 30 % (210,000)
Bonds payable (100,000) 30 % (30,000)
Assigned to identifiable net assets 210,000
Remainder to goodwill 300,000
Excess fair value over book value $ 510,000
2. Income from Son for 2016
Equity in income ($ 1,200,000 × 30 %) $ 360,000
Less: Amortization of differentials
Inventories (sold in 2016) (60,000)
Buildings — net ($ 150,000 / 10 years) (15,000)
Equipment — net ($ 210,000 / 7 years) 30,000
Bonds payable ($ 30,000 / 5 years) 6,000
Income from Son $ 321,000
3. Investment in Son balance December 31, 2016
Investment cost $ 1,680,000
Add: Income from Son 321,000
Less: Dividends ($ 600,000 × 30 %) (180,000)
Investment in Son December 31 $ 1,821,000
Check:
Underlying equity ($ 4,500,000 × 30 %) $ 1,350,000
Unamortized excess:
Land 240,000
Buildings — net ($ 150,000 - $ 15,000) 135,000
Equipment — net ($ 210,000 - $ 30,000) (180,000)
Bonds payable ($ 30,000 - $ 6,000) (24,000)
Goodwill 300,000
Investment in Son account $ 1,821,000
B. P.2-8
Preliminary computations
Investment cost of 90% interest in Sun $ 1,980,000
Implied total fair value of Sun ($ 1,980,000 / 90%) $ 2,200,000
Book value ($ 2,525,000 + $ 125,000) (2,650,000)
Excess book value over fair value $ (450,000)
Excess allocated
Overvalued plant assets $ (500,000)
Undervalued inventories 50,000
Excess book value over fair value $ (450,000)
1. Investment income for 2016
Share of reported income ($250,000 × 1/2 year × 90%) $ 112,500
Add: Depreciation on overvalued plant assets
(($500,000 x 90%) / 9 years) × ½ 25,000
Less: 90% of Undervaluation allocated to year inventories (45,000)
Income from Sun — 2016 $ 92,500
2. Investment balance at December 31, 2017
Underlying book value of 90% interest in Sun
(Sun’s December 31, 2017 equity of $2,700,000 × 90%) $ 2,430,000
Less: Unamortized overvaluation of plant assets
($50,000 per year × 7 1/2 years) (375,000)
Investment balance December 31, 2017 $ 2,055,000
3. Journal entries to account for investment in 2018
Cash (or Dividends receivable) 135,000
Investment in Sun 135,000
To record receipt of dividends ($150,000 × 90%).
Investment in Sun 230,000
Income from Sun 230,000
To record income from Sun computed as follows: Pam’s share of Sun’s reported net
income ($200,000 × 90%) plus $ 50,000 amortization of overvalued plant assets.
Check: Investment balance December 31, 2017 of $ 2,055,000 + $ 230,000 income from Sun
- $ 135,000 dividends = $ 2,150,000 balance December 31, 2018.
Alternatively, Sun’s underlying equity ($ 2,000,000 paid-in capital + $ 750,000 retained
earnings) × 90 % interest - $ 325,000 unamortized excess allocated to plant assets =
$2,150,000 balance December 31, 2018.
