Advanced Financial Accounting and Reporting Consolidation Ca

Advanced Financial Accounting and Reporting Consolidation Case- Part I Aston Corporation acquired 80 percent of the stock of Martin Company on January 1, 20X1, for $150,000. At acquisition, Martin Company reported retained earnings of $75,000. Aston accounts for its investment in Martin using the simple equity method. Trial balance data for Aston Corporation and Martin Company on December 31, 20X3 are as follows: Martin C ration Aston Debit 4,000 180,000 320,000 130,000 750,000 ation Credit Debit 115,000 95,000 135,000 75,000 100,000 Credit Cash Accounts Receivable In Land Buildings and Equipment Investment in: 103,500 226,000 3,500 Bonds Other Stock Martin Other Investment Cost of Goods Sold 50,000 36,000 24,000 20,000 160,000 5,000 7,000 38,000 ation Ex Interest Expense Other Expense Dividends Declared Accumulation De Accounts Payable Bonds payable Bond Premium Common Stock Retained Earnin Sales Interest Income Income from Subsidiar 10, 40,000 103,000 00,000 7,000 100,000 150,000 240,000 500,000 210,000 400,000 ation 200,000 500 7,500 24,000 2,197,000 2,197,000 740.000 740,000 Additional Information: The excess for the determination and distribution schedule at the date of acquisition related to the following assets of Martin Company: I. 25% to Inventory that was sold during 20X2 to an unrelated party 25% to Land that was sold by Martin in 20X2 to an unrelated party for a gain of $800 25% to Equipment with a remaining useful life of 10 years from the date of combination Required: I. n your Excel spreadsheet: A. Prepare the value analysis schedule and the determination and distribution of excess schedule. Show all of the compilati ons and computations necessary to support amounts recorded in the eliminating entries. all of the eliminating and adjusting entries that would be made on the consolidation worksheet as of December 31, 20X3. C. Prepare a consolidation worksheet for 20X3 in good form. D. Prepare the following consolaed financial statements for 20X3 in good form 1. 2. 3. Consolidated Balance Sheet; Consolidated Income Statement; and Consolidated Retained Earnings Statement.

Solution

Value Analysis Schedule Company implied FV Parent (80%) NCI (20%) Common Stock 100000 80000 20000 Retained earnings 75000 60000 15000 175000 140000 35000 Determination and Distribution of excess schedule as below: Parent\'s Price 150000 Parent\'s Fair Value 140000 Excess 10000 Inventory 2500 Land 2500 Equipment 2500 Goodwill 2500 10000 150000 add 60000 deduct 8000 202000 add 24000 226000 Consoldiation worksheet Eliminations Aston Corporation Martin Company Debit Credit Non-controlling interest Consolidated balances Cash 34000 115000 149000 Accounts receivable 180000 95000 275000 Inventory 320000 135000 2500 455000 Land 130000 75000 2500 205000 Buildings & equipment 750000 100000 Accumulated depreciation 500000 40000 Buildings & equipment (net) 250000 60000 2500 312500 Investment in Bonds 103500 103500 Investment in Martin Co. 226000 226000 0 Other investment 3500 3500 Difference between cost and BV 7500 Goodwill 2500 2500 Total Assets 1247000 480000 Accounts payable 210000 103000 313000 Bonds payable 400000 100000 500000 Bond premium 7000 7000 Common Stock Aston Corp 200000 200000 Martin Co 100000 80000 20000 Retained Earnings Aston Corp 415500 415500 Martin Co 150000 120000 30000 Non-Controlling interest 50000 50000