Initial value method Standard consolidated entries SAIDE

Problem Transfer of Inventory Entry S

NCI present Dr. Common stock
Dr. APIC
Dr. RE (subsidiary beginning)
Cr. Investment (CI%)
Cr. NCI (NCI%)
Entry A
Dr. Assets 1
Dr. Assets 2
Cr. Investment (CI%)
Cr. NCI (NCI%)
Entry I (Equity method)
Dr. Equity earnings
Cr. Investment
Entry I (Initial value method)
Dr. Dividend income
Cr. Dividend declared
Dividend declared to NCI
NI to NCI
Entry D (Just in Equity method)
Dr. Investment
Cr. Dividend declared
Entry E
Dr. Expenses
Cr. Assets
Entry P
Dr. Payable
Cr. Receivable
Dr. Current Liabilities
Cr. Current Assets
Entry C*
Dr. Investment
Cr. RE (parent beginning)
es SAIDE Intra-entity inventory transfer
Entry TI _ current year sales
Dr. Sales
Cr. COGS

Entry G _ unrealized profit current year

Dr. COGS
Cr. Inventory
Consolidation method (acquired >50%)
UP = Transfer price x %GP x %Unsold
Equity method (acquired <50%)
UP = Transfer price x %GP x %Unsold x % ownership
UP: Unrealized Profit, không phải Upin

Entry G* _ unrealized profit last year transferred to this year

Downstream
Dr. Investment
Cr. COGS
Upstream
Dr. RE
Cr. COGS
 NCI Present
Equity method
Downstream transfer
I: (NI - Amort) x CI% - UP in end invent + UP in open invent
NI to NCI = (Subs NI - Amortization) x NCI%
Upstream transfer
I: (NI - Amort - UP in end invent + UP in open invent) x CI%
NI to NCI = (Subs NI - Amortization - UP in end invent + UP in open invent) x NCI%

Consolidated amount
COGS
= Parent COGS + Subs COGS - Intra transfer this year - UP in open invent + UP in end inve
Inventory
= Parent Invent + Subs Invent - UP in end invent
 Present
Initial value method
Downstream transfer
C*: Change in RE x CI%
NI to NCI = (Subs NI - Amortization) x NCI%
Upstream transfer
C*: (Change in RE - Amortization - UP in open invent) x CI%
NI to NCI = (Subs NI - Amort - UP in end invent + UP in open invent) x NCI%
Change in RE = RE_beg (consolidation year) - RE_beg (acquisition year)

ent + UP in end invent

QUESTION 8
Purchase price 500,000
Book value 360,000
Excess value 140,000
Allocation to Useful life
Building 56,000 7
Trademark 84,000 10
Goodwill 0

Investment in Jan 1 500,000

Net income 36,000
Devidend 12,000
Depreciation expense 16,400
Investment in Dec 31 531,600

QUESTION 13
Purchase price 1,160,000
Book value 820,000
Excess value 340,000
Allocation to Useful life
Copyright 340,000 10

Investment in Jan 1 1,160,000

Net income 104,000
Devidend 20,000
Depreciation expense 34,000
Investment in Dec 31 1,210,000

QUESTION 15
Purchase price 2,700,000
Book value 1,035,000 = (Assets - Liabilities)
Excess value 1,665,000
Allocation to Useful life
Computing Equipment 140,000 7
Patented Tech 780,000 3
Trademark 370,000 -
Goodwill 375,000
 2023
Equity on Income Statement
Basic income 360,000
Depreciation 280,000
Net income 80,000
Ending balance on Balance Sheet
Investment in Jan 1 2023 2,700,000
Devidend 30,000
Equity income 80,000
Investment in Dec 31 2023 2,750,000

QUESTION 16
Purchase price 60,000
Book value 50,000
Excess value 10,000
Allocation to Useful life
Patent 6,000 6
Other indefinite-life assets 4,000 -

Equity method
Investment Jan 1 2023 60,000
Basic earnings 12,000
Dividend 4,000
Depreciation expense 1,000
Distributed income 7,000
Investment Dec 31 2023 67,000

QUESTION 19
Sales 200,000
COGS 120,000
Gross profit 80,000
Gross profit percentage 40.00%
Unsold inventory 115,000
Intra - entity gross profit 46,000
Share of intra-entity GP (30%) 13,800

QUESTION 21
Equity method income accrual for 2024
25% of $600,000 for 1/2 year 75,000
21% of $600,000 for 1/2 year 63,000
Total income accrual 138,000
Gain on sale of 12,000 shares 32,000
Total income statement effect 170,000

Calculating Gain on sale of 12.000 shares

Cost of purchase 1,480,000
2022
Income accrual 85,000
Dividend 30,000
2023
Income accrual 120,000
Dividend 35,000
2024
Income accrual (1/2 year) 75,000
Dividend (1/2 year) 20,000
Book value at July 1, 2024 1,675,000
BV of 12,000 shares at July 1, 2024 268,000
Selling price of 12,000 shares at July 1, 2 300,000
Gain on sale of 12,000 shares 32,000

QUESTION 27
Purchase price 312,000
Book value 240,000
Excess value 72,000
Allocation to Useful life
Copyright 72,000 16

Equity income in 2023 and 2024

2023
Basic accrual income 54,000
Depreciation expense 4,500
Equity income 49,500
2024
Basic accrual income 69,000
Depreciation expense 4,500
Equity income 64,500

If Belden sells entire investment

Initial investment 312,000
Equity income 114,000
Dividend 45,000
Book value of investment 381,000
Selling price in Jan 1 2025 400,000
Gain on sale of investment 19,000

Intra - entity income

2023 intra - entity gross profit defer to 2024
Gross profit 20,000
Gross profit percentage 40.00%
Deferred ending inventory to the next per 8,000
Belden's ownership 30%
Intra - entity gross profit 2,400
Deferral of 2024 intra - entity ending inventory
Gross profit 27,000
Gross profit percentage 45.00%
Deferred ending inventory to the next per 18,000
Belden's ownership 30%
Intra - entity gross profit 5,400
Income recognized in 2024
Equity income 64,500
Deferred income from 2023 2,400
Deferred income in 2024 5,400
Total equity income 61,500

QUESTION 28
Purchase price 210,000
Book value 160,000
Excess value 50,000
Allocation to Useful life
Building 16,000 10
Royalty agreement 34,000 20

2023
Gross profit 30,000
Gross profit percentage 33.33%
Ending inventory 5,000
Ownership 40%
Deferred intra - entity income to 2024 2,000

Net loss 16,000

Other comprehensive loss 8,000
Dividend 4,000

2024
Gross profit 30,000
Gross profit percentage 37.50%
Ending inventory 9,000
Ownership 40%
Defeered intra - entity income to 2025 3,600

Net income 16,000

Dividend 4,800

Journal entry
Jan 1 2023 Dr. Investment in Kinman 210,000
Cr. Cash
During 2023 Dr. Dividend receivable 4,000
Cr. Investment in Kinman
Dr. Cash 4,000
Cr. Dividends receivable
Dec 31 2023 Dr. Equity income 16,000
Dr. Other comprehensive inc 8,000
Cr. Investment in Kinman
Dec 31 2023 Dr. Equity income 2,000
Record deferred intra entity Cr. Investment in Kinman
During 2024 Dr. Dividend receivable 4,800
Cr. Investment in Kinman
Dr. Cash 4,800
Cr. Dividends receivable
Dr. Investment in Kinman 16,000
Cr. Equity income
Dec 31 2024 Dr. Investment in Kinman 2,000
Intra entity from 2023 Cr. Equity income
Dec 31 2024 Dr. Entity income 3,600
Record deferred intra entity Cr. Investment in Kinman

QUESTION 31
Useful life
Excess value 60,000 15
Initial investment Jan 1 2023 982,000
Equity income 236,000 = 160 + 76
Deprecition 6,000
Total equity income 230,000
Dividend 40,000
Investment in July 1 2024 1,172,000
Percentage of shares sold 25.00%
Book value of shares sold 293,000
Selling price 330,000
Gain on sale 37,000

Jan 1 2023 Dr. Investment in Bowden 982,000

Cr. Cash
Sept 15 2023 Dr. Cash 40,000
Cr. Investment in Bowden
Dec 31 2023 Dr. Investment in Bowden 160,000
2023 dividend income Cr. Equity in Investee Income
Depreciation expense Dr. Equity in Investee income 4,000
Cr. Investment in Bowden
July 1 2024 Dr. Investment in Bowden 76,000
Cr. Equity in Investee Income
Dr. Equity in Investee income 2,000
Cr. Investment in Bowden
July 1 2024 Dr. Cash 330,000
Cr. Investment in Bowden
Cr. Gain on sale of Investment
Sept 15 2024 Dr. Cash 30,000
Cr. Investment in Bowden
Dec 31 2024 Dr. Investment in Bowden 57,000
Record 1/2 income of 2024 Cr. Equity in Investee Income
Annual amortization Dr. Equity in Investee income 1,500
Cr. Investment in Bowden
Calculate 1.500 depreciation
Annual patent depreciation 4,000
Percantage of shares retained 75.00%
Annual patent depreciation _ new 3,000
Annual patent depreciation in 2024 1,500
 Depreciation
8,000
8,400
16,400

Depreciation
34,000

Assets - Liabilities) x % of puchase

Depreciation
20,000
260,000
-
280,000
 2024
Equity on Income Statement
Basic income 397,000
Depreciation 280,000
Net income 117,000
Ending balance on Balance S
Investment in Jan 1 2,750,000
Devidend 32,000
Equity income 117,000
Investment in Dec 3 2,835,000

Depreciation expense
1,000
-

Investment Jan 1 2024 67,000

Basic earnings 20,000
Dividend 6,000
Depreciation expens 1,000
Distributed income 13,000
Investment Dec 31 2023 80,000
Depreciation
4,500
Depreciation expense
1,600
1,700
3,300
 210,000

4,000

4,000

24,000

2,000

4,800

4,800

16,000

2,000

3,600

Depreciation
4,000
160 + 76

982,000

40,000

160,000

4,000

76,000

2,000

293,000
37,000

30,000

57,000

1,500
Intra - entity gross profit: When A invest in B 20% to 50%, and A sells goods or inve
--> Defer the amount the subsidiary cannot sell during the period to the next period
ells goods or inventory to B
xt period
QUESTION 31
Case 1: 145.000 cash
Fair value of consideration assets 145,000
Fair value of identifiable assets (except go 120,000
Excess value to goodwill 25,000
Journal entry
Dr. Current assets 60,000
Dr. Building 50,000
Dr. Land 20,000
Dr. Trademark 30,000
Dr. Goodwill 25,000
Cr. Liabilities 40,000
Cr. Cash 145,000
Case 2: 110.000 cash
Fair value of consideration assets 110,000
Fair value of identifiable assets (except go 120,000
Gain on bargain purchase 10,000
Journal entry
Dr. Current assets 60,000
Dr. Building 50,000
Dr. Land 20,000
Dr. Trademark 30,000
Cr. Liabilities 40,000
Cr. Cash 110,000
Cr. Gain on bargain purchase 10,000

QUESTION 26
Case 1: Initial cash payment $700.000
Cash paid 700,000
Contingent liabilities 35,000
Consideration transfer 735,000
Fair value of identifiable assets 750,000
Gain on bargain purchase 15,000
Journal entry
Dr. Receivables 90,000
Dr. Inventory 75,000
Dr. Copyrights 480,000
Dr. Patented technology 700,000
Dr. R&D project 200,000
Cr. Liabilities 795,000
Cr. Contingent liability 35,000
Cr. Cash 700,000
Cr. Gain on bargain purchase 15,000
Case 2: Initial cash payment $800.000
Fair value of consideration assets 800,000
Contingent performance liability 35,000
Consideration transfer 835,000
Fair value of identifiable assets 750,000
Excess value to goodwill 85,000
Journal entry
Dr. Receivables 90,000
Dr. Inventory 75,000
Dr. Copyrights 480,000
Dr. Patented technology 700,000
Dr. R&D project 200,000
Dr. Goodwill 85,000
Cr. Liabilities (Long-term and Current) 795,000
Cr. Contingent liability 35,000
Cr. Cash 800,000

QUESTION 28
Journal entry
Dr. Common stock 1,000,000
Dr. APIC 500,000
Dr. RE 1,100,000
Cr. Investment 2,600,000
Dr. Buildings 382,000
Dr. Goodwill 426,000
Cr. Licensing agreement 108,000
 Cr. Investment 700,000
CONSOLIDATED BALANCE SHEET
Casey Kennedy

Cash 457,000 172,500

Account receivable 1,655,000 347,000
Inventory 1,310,000 263,500
Investment in Kennedy 3,300,000 0

Buildings 6,315,000 2,090,000

Licensing agreement 0 3,070,000
Goodwill 347,000 0
Total assets ### 5,943,000

Account payable 394,000 393,000

Long-term debt 3,990,000 2,950,000
Common stock 3,000,000 1,000,000
APIC 0 500,000
RE 6,000,000 1,100,000
Total L&E ### 5,943,000
BALANCE SHEET
Consolidated entry Consolidation
Dr. Cr.
629,500
2,002,000
1,573,500
(A) 700.000 0
(S) 2.600.000
(A) 382.000 8,787,000
(A) 108.000 2,962,000
(A) 426.000 773,000
16,727,000

787,000
6,940,000
(S) 1.000.000 3,000,000
(S) 500.000 0
(S) 1.100.000 6,000,000
16,727,000
3,408,000 3408000
QUESTION 16
Cash 198,000
Common stock 100,000
APIC 1,400,000
Total acquisition 1,698,000
Book value of Bruno at acquisition date 1,298,000
Goodwill 400,000
Journal entry
Journal entry
Dr. Cash 65,000
Dr. Receivables 203,000
Dr. Inventory 275,000
Dr. Patents 531,000
Dr. Royalty agreements 580,000
Dr. Equipment 215,000
Dr. Goodwill 400,000
Cr. Accounts Payable
Cr. Long-term payable
Cr. Cash
Cr. Common Stock
Cr. APIC
Goodwill impairment
FV of the entire reporting unit 1,325,000
BV of entire reporting unit 1,560,000

--> FV<BV, so there is a potential GW

impairment loss exists
FV of reporting unit as a whole 1,325,000
FV of reporting unit net assets (exclude GW) 1,160,000
Implied FV of goodwill 165,000
BV of GW 400,000
GW impairment loss 235,000

QUESTION 19
Purchase price 490,000
Net identifiable assets (= Total assets - Total lia 400,000
Excess value 90,000
Allocation to
 Land 10,000
Building 40,000
Equipment (20,000)
Goodwill 60,000

Consolidation worksheet entries for Dec 31, 2023

Entry S
Dr. Common stock 250,000
Dr. APIC 50,000
Dr. RE 1/1/2023 100,000
Cr. Investment in Abernethy
Entry A
Dr. Land 10,000
Dr. Building 40,000
Dr. Goodwill 60,000
Cr. Equipment
Cr. Investment in Abernethy
Entry I
Dr. Equity income from Abernthy 74,000
Cr. Investment in Abernethy
Entry D
Dr. Investment in Abernethy 10,000
Cr. Dividend paid
Entry E
Dr. Depreciation expense 6,000
Dr. Equipment 4,000
Cr. Building
Consolidation worksheet entries for Dec 31, 2024
Entry S
Dr. Common stock 250,000
Dr. APIC 50,000
Dr. RE 1/1/2024 170,000
 Cr. Investment in Abernethy
Entry A
Dr. Land 10,000
Dr. Building 30,000
Dr. Goodwill 60,000
Cr. Equipment
Cr. Investment in Abernethy
Entry I
Dr. Equity earnings in Abernethy 104,000
Cr. Investment in Abernethy
Entry D
Dr. Investment in Abernethy 30,000
Cr. Dividend paid
Entry E
Dr. Depreciation expense 6,000
Dr. Equipment 4,000
Cr. Equipment

QUESTION 20
Purchase price 500,000
Book Value 400,000
Excess value 100,000
Allocation to
Equipment 20,000
Long-term liabilities 30,000
Goodwill 50,000
Consolidation entries for Dec 31 2023
Entry S
Dr. Common stock 250,000
Dr. APIC 50,000
Dr. RE 1/1/2023 100,000
Cr. Investment
Entry A
Dr. Equipment 20,000
Dr. Liabilities 30,000
Dr. Goodwill 50,000
Cr. Investment
Entry I
Dr. Dividend Income 10,000
Cr. Dividend declared
Entry E
Dr. Depreciation expense 4,000
Dr. Interest expense 7,500
Cr. LT Liabilities
Cr. Equipment
Consolidation entries for Dec 31 2024
Entry C*
Dr. Investment in Abernethy 58,500
Cr. RE 1/1/2024
Entry S
Dr. Common stock 250,000
Dr. APIC 50,000
Dr. RE 1/1/2024 170,000
Cr. Investment in Abernethy
Entry A
Dr. Equipment 16,000
Dr. LT Liabilities 22,500
Cr. Investment in Abernethy
Entry I
Dr. Dividend Income 30,000
Cr. Dividend declared
Entry E
Dr. Depreciation expense 4,000
Dr. Interest expense 7,500
 Cr. Equipment
Cr. LT Liabilities

QUESTION 26
Purchase price 6,000,000
BV of subsidiary 2,500,000
Excess value 3,500,000
Allocation
Patented technology 2,100,000
Computer software 1,200,000
Goodwill 200,000

Equity earnings in Sea Cliff balance for Dec 31, 2024

NI in Sea Cliff 975,000
Depreciation 400,000
Equity income 575,000

Investment balance for Dec 31, 2024

Initial amount in Jan 3, 2022 6,000,000
Equity earnings in 2022 500,000
Equity earnings in 2023 540,000
Equity earnings in 2024 575,000
Dividend paid 450,000
Investment balance for Dec 31, 2024 7,165,000

Consolidated journal entry for Dec 31, 2024

Entry S
Dr. Common stock 800,000
Dr. RE 1/1/2023 3,240,000
Cr. Investment
Entry A
Dr. Patented technology 1,500,000
Dr. Computer software 1,000,000
Dr. Goodwill 200,000
Cr. Investment
Entry I
Dr. Equity earnings 575,000
Cr. Investment
Entry D
Dr. Investment 150,000
Cr. Dividend declared
Entry E
Dr. Amortization expense 400,000
Cr. Patented technology
Cr. Computer software

Consolidated balance sheet

Persoff Company

Revenues 2,720,000
COGS 1,350,000
Depreciation expense 275,000
Amortization expense 370,000
Equity earnings 575,000
Net income 1,300,000

RE 1/1/2024 7,470,000
NI (above) 1,300,000
Dividends declared 600,000
RE 31/12/2024 8,170,000

Current assets 490,000

Investment in Sea Cliff 7,165,000
Computer software 300,000

Patented technology 800,000

Goodwill 100,000
Equipment 1,835,000
Total Assets 10,690,000

Liabilities 520,000
Common stock 2,000,000
RE 31/12/2024 8,170,000
Total Liabilities and Equity 10,690,000
 111,000
460,000
198,000
100,000
1,400,000

Useful life Depreciation expense

 0 0
4 10,000
5 (4,000)
0 0
6,000

400,000

20,000
90,000

74,000

10,000

10,000
 470,000

16,000
84,000

104,000

30,000

10,000

Remaining life Depreciation expense

5 4,000
4 7,500

400,000
100,000

10,000

7,500
4,000

58,500

470,000

38,500

30,000
 4,000
7,500

Useful life Depreciation expense

7 300,000
12 100,000
400,000

4,040,000
 2,700,000

575,000

150,000

300,000
100,000

Consolidated entries
Sea Cliff Company
Entry Dr. Cr.
2,250,000
870,000
380,000
25,000 E 400,000
0 I 575,000
1,000,000

3,240,000 S 3,240,000
1,000,000 0 0
150,000 D 150,000
4,090,000

375,000
D 150,000
A 2,700,000
 I 575,000
S 4,040,000
45,000 A 1,000,000
E 100,000
80,000 A 1,500,000
E 300,000
0 A 200,000
4,500,000
5,000,000

135,000
800,000 S 800,000
4,065,000
5,000,000
7,865,000 7,865,000
Consolidated amount

4,970,000
2,220,000
655,000
795,000
0
1,300,000

7,470,000
1,300,000
600,000
8,170,000

865,000
0
 1,245,000

2,080,000

300,000
6,335,000
10,825,000

655,000
2,000,000
8,170,000
10,825,000
QUESTION 22
Fair value 60,000
Book value 10,000
Excess value 50,000
Allocation to Useful life
Machine 40,000 10
Trade secret 10,000 4

NCI in subsidiary income 9,400

NCI at the end of the year
Fair value at acquisition date 60,000
Considenration paid 36,000
NCI value 24,000
NCI net income 9,400
Dividends 2,000
NCI at the end of the year 31,400

At the end of the year

Machine 45,000
Trade secret 7,500

QUESTION 23
Fair value 1,125,000
Book value 690,000
Excess value 435,000
Allocation to Useful life
Trade name 23,000
PPE 40,000 8
Patent 140,000 14
Goodwill 232,000

Journal entry
Entry S
Dr. Common stock 120,000
Dr. APIC 40,000
Dr. RE 1/1/2024 530,000
Cr. Investment (80%) 552,000
 Cr. NCI (20%) 138,000
Entry A
Dr. Trade name 23,000
Dr. PPE 40,000
Dr. Patent 140,000
Dr. Goodwill 232,000
Cr. Investment (80%) 348,000
Cr. NCI (20%) 87,000
Entry I
Dr. Equity income 280,000
Cr. Investment 280,000
NI to NCI = (365.000 - 15.000) x 20% = 70.000
Entry D
Dr. Investment 40,000
Cr. Dividend declared 40,000
Dividend to NCI = 50.000 x 20% = 10.000
Entry E
Dr. Depreciation expense 5,000
Dr. Amortization expense 10,000
Cr. PPE 5,000
Cr. Patent 10,000

Consolidated balance sheet

Plaza Stanford

Revenues 1,400,000 825,000

COGS 774,000 395,750
Depreciation expense 328,000 36,250
Amortization expense 0 28,000
Equity income of Stanford 280,000 0
Net income 578,000 365,000
NCI share of NI
 Pizza share of NI

RE 1/1/2024 1,275,000 530,000

NI 578,000 365,000
Dividends declared 300,000 50,000
RE 31/12/2024 1,553,000 845,000

Current assets 860,000 432,250

Investment in Stanford 1,140,000 0

Trade name 240,000 360,000

PPE 1,030,000 253,750

Patents 0 104,000

Goodwill 0 0
Total Assets 3,270,000 1,150,000

Accounts Payble 142,000 145,000

Common stock 300,000 120,000
APIC 1,275,000 40,000
RE 31/12/2024 1,553,000 845,000

NCI

Total L and E 3,270,000 1,150,000

QUESTION 33 Inintial value method

80% shares acquired 576,000
20% NCI 144,000
Fair value of the company 720,000
Book value 326,500
Excess value 393,500
Allocation to Useful life
Building 85,500 5
Trademark 64,000 10
Goodwill 244,000

Journal entry
Entry C*
Dr. Investment in Devine 37,200
Cr. RE 1/1/2024 37,200
Entry S
Dr. Common stock 100,000
Dr. RE 1/1/2024 296,500
Cr. Investment in Devine 317,200
Cr. NCI 79,300
Entry A
Dr. Building 68,400
Dr. Trademark 57,600
Dr. Goodwill 244,000
Cr. Investment in Devine 296,000
Cr. NCI 74,000
Entry I
Dr. Dividend income 16,000
Cr. Dividend declared 16,000
Dividend declared to NCI = 20.000 x 20% = 4.000
NI to NCI = (97.000-23.500) x 20% = 14.700
Entry E
Dr. Depreciation expense 17,100
Dr. Amortization expense 6,400
Cr. Building 17,100
 Cr. Trademark 6,400

Consolidated balance sheet

Holtz Devine

Sales 641,000 399,000

COGS 198,000 176,000
Operating expense 273,000 126,000
Dividend income 16,000 0
Net income 186,000 97,000
NI to NCI
NI to Holtz

RE 1/1/2024 762,000 296,500

NI 186,000 97,000
Dividends declared 70,000 20,000
RE 31/1/2024 878,000 373,500

Current assets 121,000 120,500

Investment in Devine 576,000 0

Buildings and equipment 887,000 335,000

Trademarks 149,000 236,000

Goodwill
Total Asets 1,733,000 691,500

Liabilities 535,000 218,000

Common stock 320,000 100,000
RE 31/12/2024 878,000 373,500
NCI

Total L and E 1,733,000 691,500

Depreciation
4,000
2,500
6,500

Depreciation

5,000
10,000
15,000
 Consolidated entries Consolidated
NCI
amount
Entry Dr. Cr.
2,225,000
1,169,750
E 5,000 369,250
E 10,000 38,000
I 280,000 0
648,000
70,000 70,000
 578,000

S 530,000 1,275,000
578,000
D 40,000 10,000 300,000
1,553,000

1,292,250
S 552,000 0
A 348,000
I 280,000
D 40,000
A 23,000 623,000
A 40,000 1,318,750
E 5,000
A 140,000 234,000
E 10,000
A 232,000 232,000
3,700,000

287,000
S 120,000 300,000
S 40,000 1,275,000
1,553,000
S 138,000
225,000 285,000
A 87,000
3,700,000
1,460,000 1,460,000
Depreciation
17,100
6,400
23,500
 Consolidated entries Consolidated
NCI
amount
Entry Dr. Cr.
1,040,000
374,000
E 23,500 422,500
D 16,000 0
243,500
14,700 14,700
228,800

S 296,500 37,200 799,200

0 0 0 0 228,800
I 16,000 4,000 70,000
958,000

241,500
C* 37,200 0
S 317,200
A 296,000
A 68,400 1,273,300
E 17,100
A 57,600 436,200
E 6,400
A 244,000 244,000
2,195,000

753,000
S 100,000 320,000
958,000
S 79,300 153,300 164,000
A 74,000

2,195,000
843,200 843,200
QUESTION 12 (Upstream)
Unpatented tech depreciation 19,500
Intra-entity gross profit 50,000
Inventory remaining at year end 10%
Intra-entity GP in ending inventory 5,000
Consolidated total
Inventory 795,000
Sales 1,620,000
COGS 725,000
Operating expense 549,500
Net income attributable to NCI
Sutter's NI 100,000
Intra-entity GP deferral 5,000
Excess depreciation 19,500
Adjusted Sutter's NI 75,500
NCI percentage 10%
NI attributed to NCI 7,550

QUESTION 13 (Downstream)
80% voting stock acquired 980,000
20% NCI 245,000
Fair value 1,225,000
Book value 950,000
Excess value 275,000
Allocation to
Covenants 275,000

2023 ending inventory deferral

Cost 62,500
Intra-entity GP 37,500
Ending inventory percentage 40%
Ending inventory deferral 15,000
2024 ending inventory deferral
Cost 75,000
Intra-entity GP 45,000
Ending inventory percentage 40%
Ending inventory deferral 18,000

Invesment balance
Initial investment 980,000
Net income 2023 120,000
Covenants amortization (11,000)
Ending inventory deferral 2023 (15,000)
Dividend income 2023 (28,000)
Investment balance in Dec 31 2023 1,046,000
Net income 2024 104,000
Covenants amortization (11,000)
Ending inventory deferral 2024 (18,000)
Ending inventory deferred from 2023 15,000
Dividend income 2024 (36,000)
Investment balance in Dec 31 2024 1,100,000

Consolidation worksheet for Dec 31 2024

Entry S
Dr. Common stock 700,000
Dr. RE 365,000
Cr. Investment
Cr. NCI
Entry A
Dr. Covenants 261,250
Cr. Investment
Cr. NCI
Entry I
Dr. Equity earnings 90,000
Cr. Investment
Entry D
Dr. Investment 36,000
Cr. Dividend declared
Entry E
Dr. Amortization expense 13,750
Cr. Covenants
Entry G*
Dr. Investment 15,000
Cr. COGS
Entry G
Dr. COGS 18,000
Cr. Inventory
Entry TI
Dr. Sales 120,000
Cr. COGS

QUESTION 24 (Initial value method - Downstream)

Undervalued intangible 400,000
Depreciation 10,000
Intra-entity GP, Dec 31 2023
Intra entity GP 48,000
Inventory remaining at year end 30%
Intra-entity GP in inventory, Dec 31 2023 14,400
Intra-entity GP, Dec 31 2024
Intra-entity GP 50,000
Inventory remaining at year end 10%
Intra-entity GP in inventory, Dec 31 2024 5,000
Consolidated total for Dec 31, 2024
Sales 1,150,000
COGS
Proform's COGS book value 535,000
ClipRate's COGS BV 400,000
Eliminated intra-entity transfer 250,000
Adjusted GP deferred in 2023 14,400
Deferreal of GP in inventory 2024 5,000
 COGS 675,600
Operating expense 210,000
Dividend Income 0
NI attributable to NCI Inventory ignore deferred intra entity GP
ClipRate reported NI 2024 100,000
Intangible amortization 10,000
ClipRate adjusted NI 90,000
Outside ownership 30%
NI attributable to NCI 27,000
Inventory 985,000
NCI in subsidiary
BV at at Jan 1 2024 (=CS + RE 1/1/2024) 950,000
30% of beginning 285,000
Excess Jan 1 intangible allocation 118,500
Depreciation from July 1 2023 to Jan 1 2024
NI attributable to NCI 27,000
Dividends 15,000
Total NCI at Dec 31 2024 415,500

QUESTION 24 (Initial value method - Upstream)

Intra-entity GP 2023
Gross profit 48,000
Ending inventory 30%
Intra-entity GP 2023 14,400
Intra-entity GP 2024
Gross Profit 50,000
Ending inventory 10%
Intra-entity GP 2024 5,000
Calcualting consolidated amount for Dec 31 2024
Sales 1,150,000
COGS
ProForm's COGS BV 535,000
 ClipRate's COGS BV 400,000
Eliminate intra-entity transfer 250,000
Recognized GP deferred in 2023 14,400
Deferral of 2024 GP in inventory 5,000
Consolidated COGS 675,600
Operating expense 210,000
Dividend income 0
NI attributable to NCI
ClipRate reported NI 100,000
Intangible amortization 10,000
2023 gross profit deferred to 2024 14,400
2024 deferral GP 5,000
ClipRate adjusted NI 99,400
Outside ownership 30%
NI attributable to NCI 29,820
Inventory 985,000
NCI in subsidiary
Beginning BV 950,000
Adjusted beginning BV (eliminate 2023 deferred GP) 935,600
30% of adjusted BV 280,680
Excess intangible allocation 118,500
NI attributable to NCI 29,820
Dividends 15,000
Total NCI at Dec 31 2024 414,000

QUESTION 27
Fair value 620,000
Book value 320,000
Excess value 300,000
Allocation to
Patents 70,000
Unpatented technology 45,000
 Tradename 185,000
Intra-entity inventory 2023
Gross Profit 30,000
Ending inventory 33.33%
Unrealized profit 10,000
Intra-entity inventory 2024
Gross Profit 48,000
Ending inventory 25.00%
Unrealized profit 12,000

Investment in Sheridan acocunt balance

Initial amount 1/1/2023
RE 1/1/2024 280,000
RE 1/1/2023 220,000
Depreciation 10,000
Adjusted contributable RE at 1/1/2024
Deferral income 2023
Investment in Dec 31 2023
NI 2024 60,000
Dividend declared 15,000
Depreciation 10,000
Contributable at Dec 31 2024
Deferred income 2023
Deferral income 2024
Investment in Dec 31 2024

Journal entry
Entry G*
Dr. Investment 10,000
Cr. COGS
Entry G
Dr. COGS 12,000
 Cr. Inventory
Entry TI
Dr. Sales 160,000
Cr. COGS
Entry S
Dr. Common stock 100,000
Dr. RE 1/1/2024 280,000
Cr. Investment
Cr. NCI (40%)
Entry A
Dr. Patent 63,000
Dr. Unpatented technology 42,000
Dr. Trademark 185,000
Cr. Investment
Cr. NCI (40%)
Entry I
Dr. Equity earnings 28,000
Cr. Investment
NCI to NCI = (NI - depreciation) x NCI% 20,000
Entry D
Dr. Investment 9,000
Cr. Dividend declared
Dividend to NCI 6,000
Entry E
Dr. Operating expense 10,000
Cr. Patents
Cr. Unpatented technology
Consolidated worksheet for Dec 31 2024

Pulaski

Sales 700,000
COGS 460,000
Operating expenses 188,000
Equity earnings 28,000
Net income 80,000
NI to NCI
NI to Pulaski

RE 1/1/2024 695,000
NI 80,000
Dividend declared 45,000
RE 31/12/2024 730,000

Cash and receivables 248,000

Inventory 233,000
411,000

Investment

Buildings (net) 308,000

Equipment (net) 220,000
Patents (net) 0

Trademarks 0
Technology 0

Total Assets 1,420,000

Liabilities 390,000
Common stock 300,000
RE 31/12/2024 730,000
NCI

Total Liabilities and Equity 1,420,000

Useful life Depreciation
20 13,750
852,000
213,000

209,000
52,250

90,000

36,000
 13,750

15,000

18,000

120,000
Useful life Depreciation
10 7,000
15 3,000
- -
10,000

372,000

30,000
10,000
392,000

21,000
10,000
12,000
411,000

10,000
 12,000

160,000

228,000
152,000

174,000
116,000

28,000

9,000

7,000
3,000

Consolidated entry
Sheridan NCI Consolidation
Entry Dr Cr
335,000 (TI) 160,000 875,000
205,000 (G) 12,000
 (G*) 10,000 507,000
(TI) 160,000
70,000 (E) 10,000 268,000
(I) 28,000 0
60,000 100,000
20,000 20,000
80,000

280,000 280,000 695,000

60,000 100,000
15,000 (D) 9,000 6,000 45,000
325,000 750,000

148,000 396,000
129,000 (G) 12,000 350,000
0 (G*) 10,000
(S) 228,000
(A) 174,000 0
(I) 28,000
(D) 9,000
202,000 510,000
86,000 306,000
20,000 (A) 63,000 76,000
(E) 7,000
0 (A) 185,000 185,000
0 (A) 42,000 39,000
(E) 3,000
585,000 1,862,000

160,000 550,000
100,000 (S) 100,000 300,000
325,000 730,000
 (A) 116,000 268,000 282,000
(S) 152,000
585,000 1,862,000
899,000 899,000
QUESTION 16
FV of subsidiary at acquisition d 765,000
Net identifiable assets and liabil 765,000
Excess value 0
a. Downstream
Unrealized profit 2023 19,500
Unrealized profit 2024 24,750

Protrade's BV of COGS 410,000

Seacraft's BV of COGS 317,000
Eliminate intra-entity transfer 134,000
Unrealized profit 2023 19,500
Unrealized profit 2024 24,750
Consolidated COGS 598,250

Protrade's BV of Inventory 370,000

Seacraft's BV of Inventory 144,000
Unrealized profit 2024 24,750
Consolidated Inventory 489,250

Subsidiary's sales 600,000

COGS 317,000
Operating expense 129,000
Net income 154,000
Outside ownership 0
NI to NCI 30,800

b. Upstream
Unrealized profit 2023 16,875
Unrealized profit 2024 22,125

Protrade's BV of COGS 410,000

Seacraft's BV of COGS 317,000
Eliminate intra-entity transfer 104,000
Unrealized profit 2023 16,875
Unrealized profit 2024 22,125
Consolidated COGS 628,250
Protrade's BV of Inventory 370,000
Seacraft's BV of Inventory 144,000
Unrealized profit 2024 22,125
Consolidated Inventory 491,875

Subsidiary's sales 600,000

COGS 317,000
Operating expense 129,000
Net income 154,000
Unrealized profit 2023 16,875
Unrealized profit 2024 22,125
Adjusted NI 148,750
Outside ownership 0
NI to NCI 29,750

c. Assets Transfer
Gain on transferring assets 54,000
Depreciation 10,800
Entry TA*
Dr. Investment 43,200
Cr. Assets 43,200
Write-off assets 32,400

Net building in Protrade 382,000

Net building in Seacraft 181,000
Write off building 32,400
Consolidated building 530,600

Protrade's Operating expense 174,000

Seacraft's Operating expense 129,000
Depreciation building 10,800
Operaing expense 292,200

Subsidiary's sales 600,000

COGS 317,000
Operating expense 129,000
Net income 154,000
Outside ownership 0
NI to NCI 30,800

QUESTION 26 (Upstream)
FV at acquisition date 730,000
BV at acquisition date 620,000
Common stock 1/1/2023 150,000
RE 1/1/2023 470,000
Excess value 110,000
Useful life
Undervalued equipment 20,000 4 5,000
Overvalued liabilities 40,000 5 8,000
Undervalued brand name 50,000 10 5,000
18,000
Unrealized profit 2023 8,700
Unrealized profit 2024 12,800
RE 1/1/2023 470,000 RE 2023 = RE 1/1/2024 - NI 2023 + Div

Transfer of building
Book value 10,000
Considered price 25,000 Useful life Depreciation
Gain 15,000 5 3,000

Journal entry
Entry C*
Dr. Investment 47,970
Cr. RE (1/1/2024) 47,970
Entry S
Dr. Common stock 150,000
Dr. Retained earnings (1/1/2024 541,300
Cr. Investment 622,170
Cr. NCI 69,130
Entry A
Dr. Equipment 15,000
Dr. Liabilities 32,000
Dr. Brand Name 45,000
Cr. Investment 82,800
Cr. NCI 9,200
Entry E
Dr. Operating and Interest expe 18,000
Cr. Equipment 5,000
Cr. Liabilities 8,000
Cr. Brand name 5,000
Entry TI
Dr. Sales 160,000
Cr. COGS 160,000
Entry G*
Dr. RE 1/1/2024 8,700
Cr. COGS 8,700
Entry G
Dr. COGS 12,800
Cr. Inventory 12,800
Entry TA*
Dr. RE 1/1/2024 12,000
Dr. Building 75,000
Cr. AD 87,000
Entry ED
Dr. AD 3,000
Cr. Depreciation 3,000

Consolidated worksheet for Dec 31 2024

Consolidated entry
Moore Kirby Entry
Sales 800,000 600,000 TI
COGS 500,000 400,000 TI
G*
G
Operating and interest expense 100,000 160,000 E
ED
Net income 200,000 40,000
NI to NCI
NI to CI
RE 1/1/2024 990,000 550,000 C*
S
G*
TA*
NI 200,000 40,000
Dividend declared 130,000 0
RE 31/12/2024 1,060,000 590,000
Cash and receivables 217,000 180,000
Inventory 224,000 160,000 G
Investment in Kirby 657,000 0 S
A
C*
Equipment 600,000 420,000 A
E
Buildings 1,000,000 650,000 TA*
Brandnames A
 E
AD - buildings 100,000 200,000 TA*
ED
Other assets 200,000 100,000
Total Assets 2,798,000 1,310,000
Liabilities 1,138,000 570,000 A
E

Common stock 600,000 150,000 S

RE 31/12/2024 1,060,000 590,000 0
NCI S
A
Total Liabilities and Equity 2,798,000 1,310,000
1/1/2024 - NI 2023 + Div 2023

reciation
Consolidated entry
Dr Cr NCI Consolidation
160,000 1,240,000
160,000 744,100
8,700
12,800
18,000 275,000
3,000
220,900
1,790
219,110
47,970 1,025,970
541,300
8,700
12,000
219,110
130,000
1,115,080
397,000
12,800 371,200
622,170 0
82,800
47,970
15,000 1,030,000
5,000
75,000 1,725,000
45,000 40,000
 5,000
87,000 384,000
3,000
300,000
3,479,200
32,000 1,684,000
8,000

150,000 600,000
0 0 0 1,115,080
69,130 80,120
9,200 78,330
3,479,200
CHAPTER 10 Translation method/
Current rate method
Income statement items A
Balance sheet items
Current assets and Current liabs C
Non - current A C
Non - current L C
Equity items H
Depreciation and Amortization
Expense A
Accumulated C
Note: BS items don't use A
Remeasurement method/
Temporal method
A

C
H
C
H

H
H
Problem 7
Cash flow from operating activities
Consolidated Net income
Add: Depreciation expense
Add: Amortization expense
Increase in Account receivable
Increase in Inventory
Increase in Account payable
Net Cash flow from operating activities

Choose D
Problem 8
Cash flow from financing activities
Decrease in Notes payable
Dividend paid for Common stock
Dividend paid for NCI
Net cash flow from financing activities

Choose C

Question 32
1 Record: Intra entity inventory transfer- Downstream
Dr. Revenue

2 Consolidated Net income calculation

Approach 1:

Approach 2:

3 INDIRECT METHOD

Cash flow from operating activities

Consolidated Net income
Add: Depreciation and Amortization expense
Less: Gain on sale of equipment
Increase in inventories
 Decrease in Account Receivable
Decrease in Account Payable
Net Cash flow from operating activities

Question 42
Cash flow from operating activities
Consolidated Net income
Add: Depreciation and Amortization expense
Less: Gain on sale of building
Decrease in Account receivable
Increase in Inventory
Decrease in Account payable
Net cash flow from operating activities

Cash flow from investing activities

Sale of building
Acquisition of equipment
Net cash flow from investing activities

Cash flow from financing activities

Increase in Bond payable
Issuance of Common stock
Dividend paid for Common stock
Dividend paid for NCI
Net cash flow from financing activities

Net change in cash - according to CFs

Net change in cash
Cash - beginning, 2024
Cash - ending, 2024

Question 44
Cash flow from operating activities

Consolidated Net income

Add: Depreciation expense
Add: Amortization expense
Decrease in Account receivable
Increase in Inventory
Decrease in Account payable
Net cash flow from operating activities

Cash flow from investing activities

Acquisition of Stucco's assets
Net cash flow from investing activities
Cash flow from financing activities
Increase in long-term debt
Dividend paid of Common stock
Dividend paid of NCI
Net cash flow from financing activities

Net change in cash - According to CFs

Net change in cash
Cash - beginning, 2024
Cash - ending, 2024
 45,000
10,000
15,000
(17,000)
(40,000)
12,000
25,000

(25,000)
(12,000)
(1,000)
(38,000)

fer- Downstream
90,000
Cr. Inventory/COGS 90,000

Consolidated Net income = Parent's Net income +

216,000 206,200

Consolidated Revenue 640,000

Consolidated COGS (353,000)
Consolidated Depreciation and Amortization expense (61,000)
Consolidated other expenses (40,000)
Gain on sale of equipment 30,000
Consolidated Net income 216,000

216,000
61,000
(30,000)
(11,000)
 8,000
(6,000)
238,000

250,000
120,000
(30,000)
20,000
(150,000)
(50,000)
160,000

70,000
(205,000)
(135,000)

110,000
67,000
(110,000)
(2,000)
65,000

90,000
90,000
90,000
180,000

274,000
187,500
8,750
3,600
(102,000)
(8,000)
363,850

(856,000)
(856,000)
 800,000
(100,000)
(8,000)
692,000

199,850
199,850
43,000
242,850
NCI's share of Sub's income
9,800
=Book value+Gain on sales of building

CONSOLIDATED ACCOUNTS

Stucco Plaster
Cash 60,000 43,000
Account receivable 127,000 362,000
Inventory 203,000 415,000
Account payable 35,000 80,000

Net cash acquired

Consolidated Consolidated
in June in Dec
103,000 242,850
489,000 485,400
618,000 720,000
115,000 107,000
QUESTION 16
Date
December 1, 2023
December 31, 2024
March 1, 2024

Forward contract to buy 1M peso

1M peso at contract rate
1M peso at available forward rate at Dec 31 2023
Value of forward contract

QUESTION 17
Date
December 1, 2023
December 31, 2024
March 1, 2024

Account receivable (South Korea won)

a. Do not enter forward contract
Value of AR on Dec 1, 2023
Value of AR on Dec 31, 2023
Foreign exchange loss
b. Enter fwd contract to sell 10,000,000 won
Value of 10M won at contract rate
Value of 10M won at available fwd contract rate (Dec
Gain on fwd contract

Forward contract loss

QUESTION 25
September 15

September 30

October 15

October 15
QUESTION 26
Date
Dec 15, 2023
Dec 31, 2023
Jan 25, 2024
Jan 31, 2024

Dec 15, 2023

Dec 31, 2023

Jan 25, 2024

QUESTION 27
Date
March 1
May 1
Aug 1
Sep 1
Dec 31

Inventory
COGS
Sales
AR
AP
Cash

QUESTION 32
Date
December 1, 2023
December 31, 2023
March 1, 2024

a. Fair value hedge

Date
Dec 1, 2023
Dec 31, 2023

Mar 1, 2024

Mar 1, 2024

Mar 1, 2024

Mar 1, 2024

Mar 1, 2024

Impact on 2024 net income

Foreign exchange gain/ loss
Toal
Impact on net income over both periods
= Net cash outflow

b. Fair value hedge

Date
Dec 1, 2023

Dec 31, 2023

Impact on 2023 NI
COGS
Foreign exchange G/L
Total
 Spot rate Forward rate (to march 1, 2024)
0.088 0.094
0.095 0.098
0.105 NA

94,000.000
98,000.000
4,000.000

Spot rate Forward rate (to march 1, 2024)

0.0035 0.0034
0.0033 0.0032
0.0038 NA

10,000,000

35,000.000
33,000.000
-2,000.000

34,000.000
32,000.000
2,000.000

-250.000000000001

AR: tăng tỉ giá > nhận nhiều > gain

Dr. AR 60,000
Cr. Sales 60,000
Dr. AR 6,000
Cr. Foreign exchange GL 6,000
Dr. Foreign exchange GL 4,000
Cr. AR 4,000
Dr. Cash 62,000
Cr. AR 62,000
AP: tăng tỉ giá > trả nhiều > loss
US dollar per Schilling
0.28
0.30
0.33
0.34

Dr. Inventory 140,000

Cr. AP 140,000
Dr. Foreign ex GL 1,000
Cr. AP 1,000
Dr. Foreign exchange GL 1,500
Cr. AP 1,500
Dr. AP 16,500
Cr. Cash 16,500

US dollar per Peso

0.1
0.12
0.13
0.14
0.15

4,000
6,000
9,600
1,500
6,000
700

Spot rate Forward rate (to March 1, 2024)

2.7 2.775
2.8 2.9
2.95 NA

Journal entry
Dr. COGS 43,200
Cr. AP 43,200
Dr. Foreign exchange G/L 1,600
Cr. AP 1,600
Dr. Foreign exchange G/L 2,400
Cr. AP 2,400
Dr. Foreign exchange G/L 800
Cr. OCI 800
Dr. OCI 2,400
Cr. Foreign exchange G/L 2,400
Dr. Foreign exchange G/L 800
Cr. OCI 800
Dr. Foreign currency (dinars) 47,200
Cr. Cash 44,400
Cr. Forward contract 2,800

-800
-800

-44400

Journal entry
Dr. COGS 43,200
Cr. AP 43,200
Dr. Foreign exchange G/L 1,600
Cr. AP 1,600
Dr. Forward contract 2,000
Cr. Foreign exchange G/L 2,000
Dr. Foreign exchange G/L 800
Cr. OCI 800

(43,200)
(400)
(43,600)
28
1, Translation adjustment NGN Translation rate
Net assets balance 1/1 30,000.00 0.0064
Increase in net assets
sold inventory 1/5 6000 0.0068
sold land 1/6 2000 0.007
decrease in net assets
paid dividend 1/12 (3,000) 0.0082
recorded depreciation 31/12 (2,000) 0.0074
Net assets balance 31/12 33,000.00
Net assets at current exchange rate 33,000.00 0.0084
Translation adjustment

2, Remeasurement gain or not NGN Remeasurement rate

Net monetary liabilities 1/1 (4,000) 0.0064
Increase in net monetary assets

sold inventory 1/5 16000 0.0068

sold land 1/6 6000 0.007

Decrease in net monetary assets

bought inventory 1/10 (20,000.00) 0.0078

bought land 1/11 (3,000.00) 0.008

paid dividend 1/12 (3,000.00) 0.0082

Net monetary liabilities 31/12 (8,000)

Net monetary at current exchange
rate (8,000) 0.0084

Remeasurement gain

24
CHF Translation
Cash 800000 1.1
Inventory 1300000 1.1
PPE 4000000 1.1
 Total assets 6100000
Notes payable 2,100,000 1.1
Equity 4,000,000 1
Translation adjustment
Remeasurement loss
Total 6,100,000

Translation
net assets 18/12 4,000,000 1
Net assets 31/12 at current exchange
rate 4,000,000 1.1
Traslation adjustment

Remeasurment
Net monetary assets 18/12 (1,300,000) 1
Net monetary assets 31/12 at current
exchange rate (1,300,000) 1.1
Remeasurment loss

35. Pesos
Rate
Account payable 49,000 0.350
Accumulated depreciation 19,000 0.250
Buildings and equipment 40,000 0.250
Cash 59,000 0.350
Depreciation expense 2,000 0.250
Inventory ( beginning - IS) 23,000 0.300
Inventory ( ending - IS) 28,000 0.340
Inventory (ending - BS) 28,000 0.340
Purchases of inventory - ending 68,000 0.340
Receivables 21,000 0.350
Salary expense 9,000 0.340
Sales 124,000 0.340
Main office 30,000 given
Remeasurment loss
Total

Remeasurement loss Pesos

Net monetary liabilities 1/1/24 (16,000) 0.32
Increase in NMA
Sales 124,000 0.34
Decrease in NMA
Purchases (68,000) 0.34
Salary expense (9,000) 0.34
Net monetary assets 31/12/24 31,000
Net monatary assets at current
exchange rate 31,000 0.35
Remeasurement loss
$
192

40.8 H
14 H

(24.60) H
(14.80) A
207.4
277.2
(69.80)

$
(25.6)

108.8 H

42.0 H

(156.0) H

(24.0) H

(24.6) H

(79.4)

(67.20)

(12.2)

$ Remeasurement
880000 1.1
1430000 1
4400000 1.0
 6710000
2,310,000 1.1
4,000,000 1
400,000

6,710,000

4000000

4400000
(400,000)

(1,300,000)

(1,430,000)
130,000

$
Code Debit
C
H
H 10,000
C 20,650
H 500
A 6,900
A
A 9,520
A 23,120
C 7,350
A 3,060
A

10
81,110

$
 (5,120)

42,160

(23,120)
(3,060)
10,860

10,850
10
Explanation Exercise 28

Feb 1. Paid 8M NGN on the NP

May 1. Sold entire inventory for 16M NGN on account

June 1. Sold land for 6M in cash

Aug 1. Collect all accounts receivable

Sept 1. Signed long term note to receive 8M cash

Oct 1. Bough inventory for 20M cash

Nov 1. Bought land for 3M on account

Dec 1. Declared and paid 3M cash dividend

Dec 31. Recorded depreciation for 2M

880000
1300000
4000000
 6180000
2,310,000
4,000,000

(130,000)
6,180,000

Credit
17,150
4,750

9,520

42,160
7,530

81,110
 Note

Change in Net assets

(Total A - Total L)
Cash decrease, NP decrease
>> Net A unchanged
Inventory decrease 10M, AR increase 16M
>> Net A increase 6M
Land decrease 4M, Cash increase 6M
>> Net A increase 2M
Cash increase, AR decrease
>> Net A unchanged
Long term liab increase, Cash increase
>> Net A unchanged
Inventory increase, Cash decrease
>> Net A unchanged
Land increase, AP increase
>> Net A unchanged
Cash decrease
>> Net A decrease
Depreciation increase >> AD decrease >> Total assets decrease
>> Net A decrease
Translation
Remeasurement

Current rate
Historical cost
Average cost

Net monetary assets = cash + receivales - total liabilities

Remeasurement loss - positive -> DEBIT

Remeasurement gain- negative -> CREDIT
Translation adjustment - positive -> DEBIT
Translation adjustment - negative-> CREDIT

Change in Net monetary assets

(Cash + AR - Total L)
Cash decrease, NP decrease
>> Net A unchanged
AR increase 16M
>> NMA increase 16M
Cash increase 6M
>> NMA increase 6M
Cash increase, AR decrease
>> NMA unchanged
Long term liab increase, Cash increase
>> Net A unchanged
Cash decrease
>> NMA decrease
AP increase
>> NMA decrease
Cash decrease
>> NMA decrease
NMA unchanged

1.0 - H
1,1 - C
change in net assets
change in NMA and NML

C
H
A

trừ
cộng
trừ
cộng

33 Livingston Compan
Translation Income Statement 31/12

Sales
COGS
 Gross profit
Less Operating expense
Gain on sale of equipment 1/9/24
Net income

Statement of Retained Ea
Retained Earnings 1/1/24
Net Income
Less Dividends 1/4/24

Retained Earnings 31/12/24

Balance Sheet
Assets
Cash

Receivables
Inventory
PPE - 2018
Total assets
Liabilities & Equities
Liabilities
Common stock
RE 31/12/24
Translation adjustment
Total L&E

Translation adjustment

Net assets 1/1/24

Net Income 31/12/24
Dividend paid
Net assets 31/12/24
Net assets at current exchange rate 31/12/
Translation adjustment 2024
Translation adjustment 2023
Translation adjustment 31/12/24
 Livingston Company
Income Statement 31/12/2024
Pounds Exchange rate $
270,000 1.59 A 429,300
(155,000) 1.59 A (246,450)
 115,000 182,850
(54,000) 1.59 A (85,860)
10,000 1.72 H 17,200
71,000 114,190

tatement of Retained Earnings

216,000 đầu bài cho 396,520
71,000 114,190
(26,000) 1.61 H (41,860)

261,000 468,850

Balance Sheet

44,000 1.54 C 67,760

116,000 1.54 C 178,640

58,000 1.54 C 89,320
339,000 1.54 C 522,060
557,000 857,780

176,000 1.54 C 271,040

120,000 2.08 đầu bài cho 249,600
261,000 468,850
(131,710)
557,000 857,780

Pounds Rate $
336,000 1.67 561,120
71,000 114,190
(26,000) (41,860)
381,000 633,450
381,000 1.54 586,740
46,710
85,000 debit balance
131,710
QUESTION 29
Debts Amounts
Government claims to unpaid taxes 7,000
Salary during last month owed to Mr. Key 19,200
Administrative expense 3,450
Salary during last month owed to Ms. Ranking 5,850
Unsecured accounts payable 7,550
Paid first: Administrative expense
Paid sencond: Salary
For Mr. Key
For Ms. Ranking
Total Cash
Remaining cash (use this amt to pay tax)
Remaining amount of 3.250 will be paid to Unpaid taxes

Unpaid amount Remaining salary for Mr. Key

Remaining unpaid tax
Unsecured AP
Total unpaid amount

QUESTION 30
Free assets 126,000
Other assets 80,000
Free assets excess the secured debt 46,000
Liability with priority 42,000
Free A after pmt of liabs with priotiry 84,000
Unsecured liabilities 280,000
Excess of partially secured over pledged A 80,000
Other unsecured debt 200,000

Unsecured debt will be paid 30%

Total partially secured debt will be paid 74,000

QUESTION 36
Free assets 94,000
Cash 30,000
AR 15,000
Inventory 39,000
Land excess NP 10,000
Liabilities with priority 10,000
Salaries 10,000
Free A after pmt of liabs with priority 84,000
Unsecured liabilities 210,000
AP 90,000
Excess bond payable 120,000

Unsecured liab will be paid 40.00%

Liab with priority 10,000

AP 90,000
NP 10,000
Bond 120,000

QUESTION 38
Reorganization value
Fair value of assets
Goodwill
No change in number of shares, only the ownership change
Reorganization value 0
Liabilities
Owner equity
Common stock
APIC must be
Fresh start accounting Journal entry
Dr. AR
Dr. Inventory
Dr. Building
Dr. GW
Dr. Liability
Cr. RE
Cr. APIC

QUESTION 45
LIMESTONE COMPANY
Statement of Financial Affairs
June 3, 2024

Book value
Assets pledged with fully secured
creditors
400,000 Land and buildings (FV)
LT Note payable
Assets pledged with partially
secured creditors
180,000 Equipment (FV)
 Current Note payable
Free cash
3,000 Cash
65,000 AR
88,000 Inventory
Total amount available to pay liabs with pri
unsecured creditors
Less: Liabilities with priority (*)
Available for unsecured creditors
Estimated defeciency
736,000
Liabilities with priority (*)

Liabilities with priority

Administrative expense
Salary payable
Tax payable
Total
Fully secured creditors
190,000 Notes payable - long-term
Less: Land and buildings
Partially secured creditors
250,000 Notes payable current
Less: Equipment
Unsecured creditors
88,000 AP (other than salaries)
198,000 Stockholders' equity
726,000

QUESTION 47
Reorganization value 82,000
Fair value of assets 73,000
Goodwill 9,000

Reorganization value 82,000

Liability 5,000
Owner equity 77,000
Common stock (40,000)
APIC 37,000

Dr. Land 17,000

Dr. Investment 5,000
Dr. GW 9,000
Cr. APIC

Dr. Note payable 80,000

 Cr. APIC
Cr. Gain on debt discharge

Dr. AP 20,000
Cr. NP
Cr. Gain on debt discharge

Dr. APIC 16,200

Dr. Gain on debt discharge 72,800
Cr. RE

QUESTION 48

Cash
Balance, 8/8/2024 16,000
Investment sold 39,000
Inventory sold 48,000
PMT is made on note from proceed of auction (48,000)
Remaining debt is reclassified
Administrative expenses incurred

Land and buildings all sold 315,000

PMT is made on note from proceeds of sales (259,000)
Reclassify liab with priority

Equipment sold 84,000

Receivables collected 34,000
Admin expenses paid (15,000)
Final balances remaining for unsecured creditors 214,000

Total amount available to pay liabs w priority

214,000
and unsercured creditors
Liabs with priority (34,000)
Available for unsecured creditors 180,000
Percentage of claim to be received by each
90%
unsecured creditors
 Classification Priority
Liability with priority 3rd
Priority with limit $15,150 2nd
Priority 1st
Priority 2nd
Unsecured debts 4th
3,450
21,000
15,150
5,850
27,700
3,250

4,050
3,750
7,550
15,350
 = Free A after pmt of liabs with priority/ Unsecured liabilities

in exchange for a $500,000 reduction in the liabilities.

E COMPANY
Financial Affairs
3, 2024
Available for unsecured
creditors

310,000
120,000
(190,000)

130,000
0
 0
(250,000)

3,000
26,000
80,000
e to pay liabs with priority and
229,000
riority (*) 42,000
187,000
21,000
208,000

18,000
10,000
14,000
42,000

190,000
(310,000) 0

250,000
(130,000) 120,000

88,000 88,000
0 0
208,000

31,000
 22,200
57,800

5,000
15,000

89,000

LITZ CORPORATION
Statement of realization and liquidation
Non-cash assets Liabilities with priority Fully secured creditors
763,000 0 259,000
(32,000)
(69,000)

15,000

(370,000)
(259,000)
34,000

(210,000)
(82,000)
(15,000)
0 34,000 (15,000)
uidation
Partially secured creditors Unsecured nonpriority creditors
132,000 150,000

(48,000)
(84,000) 84,000

(34,000)

0 200,000
Stock-holders equity (deficits)
238,000
7,000
(21,000)
0
0
(15,000)
0
(55,000)
0
0
0
(126,000)
(48,000)
0
(5,000)