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G H I J K L M N O 1 In-class assignment Chapter 4 3 Park Company purchased 90% of the stock of Salt Company on January 1, 2014 for $465,000, 4 an amount equal to $15,000 in excess of the book value of equity acquired. This excess payment 5 relates to an undervaluation of Salt Company's land. On the date of purchase, Salt Company's 6 retained earnings balance was $50,000. The remainder of the stockholders' equity consists of 7 no-par common stock. During 2018, Salt Company declared dividends in the amount of $10,000, 8 and reported net income of $40,000. The retained earnings balance of Salt Company on 9 December 31, 2017, was $160,000. Park Company uses the cost method to record its investment. 10 11 Park reported net income of $180,000 in 2018. 12 13 Required: 14 A. Complete the Computation and Allocation Schedule 15 16 B. Calculate the change in Retained Earnings from the acquisition date until the beginning of 2018 17 18 C. Prepare the workpaper eliminating entries for a workpaper on December 31, 2018 20 D. Calculate the Controlling interest in net income for the consoldiated entity at the end of December 31, 2018 (show calculation details) E. Calculate the balance in the Noncontrolling Interest account at the end of December 31, 2018 (show calculation details) 13 Required: 14 A. Complete the Computation and Allocation Schedule Parent Noncontrolling 90% 10% 465,000 51,667 Total Value 516,667 18 Purchase price and implied value 19 Less: Book value of subsidiary equity 20 Common stock Retained earnings 22 Total book value 23 Diff btwn implied and book 24 Less: Land 25 Remaining Difference 40,500 4,500 45,000 (1,500) 1,500 45,000 5,000 50,000 (1,667) 1,667 450,000 50,000 500,000 (16,667) 16,667 29 B. Calculate Change in S Retained Earnings since Acquisition 32 Beginning Balance of Retained Earnings 2014 33 S Beginning Balance of Retained Earnings 2018 34 Change Since Acquisition 2014-2017 50,000 160,000 110,000 (2) Eliminate CY Subsidiary income recorded by Parent (or establish reciprocity) 99,000 - Inv in s Retained Earnings, Parent 99,000 - (3) Eliminate CY dividends Subsidiary paid to Parent 9,000 - Dividend Revenue Dividend Declared 9,000 (4) Eliminate Subsidiary equity - Common stock - Retained Earnings Difference in BV and implied Investment in S NCI 450,000 160,000 16,667 564,000 62,667 = (5) Allocate difference between implied and book 16,667 Land Difference in BV and implied 16,667 - 11 Park reported net income of $180,000 in 2018. 13 Required: 15 D. Calculate the Controlling interest in net income for the consoldiated entity at the end of December 31, 2018 (show calculation details) $ $ $ 17 Net income 18 Dividends 19 Change in RE 20 NCI 21 Increase to NCI 22 NCI Beg Bal 23 Ending balance 40,000.00 10,000.00 30,000.00 10% 3,000.00 62,667.00 65,667.00 $ $ $ 27 E. Calculate the balance in the Noncontrolling Interest account at the end of December 31, 2018 (show calculation details)

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