| Paxton purchased an 80% interest in the Saxton Company on January 1, 20X4 for $692,000. On that date, Saxton had the following balance sheet: |
| | | | | | |
| Assets | Liabilities and Equity | | | |
| Current assets | $190,000 | Current liabilities | $100,000 | | | |
| Land | 100,000 | | | | | |
| Building | 300,000 | | | | | |
| Accum. Depreciation | -60,000 | Common stock (par) | 100,000 | | | |
| Equipment | 300,000 | Paid-in-capital in excess of par | 200,000 | | | |
| Accum. Depreciation | -30,000 | Retained earnings | 400,000 | | | |
| Total assets | $800,000 | Total liabilities and equity | $800,000 | | | |
| | | | | | |
| Fair values that differ from book values on the purchase date are: | | | | |
| Buildings | $400,000, 20 year remaining life | | | | |
| Equipment | $250,000, 10 year remaining life | | | | |
| Any remaining excess is attributed to goodwill | | | | | |
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| Instructions | | | | | | |
| The following worksheet is being prepared as of December 31, 20X6. That is 3 years after the purchase. 1. Prepare a price analysis and a determination and distribution of excess schedule and income distribution schedules 2. Complete the following worksheet. Be sure to number your entries and provide a brief description in the spaces provided below the income distribution schedules |
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| Worksheet for Paxton Company | | | | | |
| Trial Balance | Eliminations and Adjustments | NCI | Consolidated |
| Paxton | Saxton | Dr. | Cr. | | |
| Sales | -250,000 | -200,000 | | | | |
| Cost of goods sold | 150,000 | 120,000 | | | | |
| Expenses | 50,000 | 40,000 | | | | |
| | | | | | |
| Divided income | -8,000 | | | | | |
| Net income | -58,000 | -40,000 | | | | |
| NCI | | | | | | |
| Controlling interest | | | | | | |
| | | | | | |
| Retained earnings Jan 1, Paxton | -670,000 | | | | | |
| | | | | | |
| Retained earnings Jan 1, Saxton | | -500,000 | | | | |
| Dividends declared | | 10,000 | | | | |
| Net income (from above) | -58,000 | -40,000 | | | | |
| Retained earnings Dec 31 | -728,000 | -530,000 | | | | |
| | | | | | |
| | | | | | |
| Current assets | 246,000 | 230,000 | | | | |
| Investment saxton | 962,000 | | | | | |
| | | | | | |
| Land | 100,000 | 100,000 | | | | |
| Building | 300,000 | 400,000 | | | | |
| Accumulated depr (building) | -100,000 | -90,000 | | | | |
| Equipment | 150,000 | 300,000 | | | | |
| Accumulated depr (equipment) | -60,000 | -90,000 | | | | |
| Goodwill | | | | | | |
| Current liabilities | -300,000 | -20,000 | | | | |
| Common stock, par - Paxton | -300,000 | | | | | |
| Common stock, par - Saxton | | -100,000 | | | | |
| Paid in capital in excess Saxton | | -200,000 | | | | |
| Retained earnings Dec, 31 Paxton (from above) | -728,000 | | | | | |
| Retained earnings Dec, 31 Saxton (from above) | | -530,000 | | | | |
| Total NCI | | | | | | |
| Total | 0 | 0 | | | | |
| | | | | | |
| Subsidiary Saxton Company Income Distribution | | | | |
| Internally generated net income | | | | |
| Adjusted income | | | | | |
| NCI share | | | | | |
| NCI share | | | | | |
| | | | | | |
| Parent PaxtonCompany Income Distribution | | | | | |
| | | | | | |
| | | | | | |
| Building depreciation | Internally generated net income | | | | |
| Equipment depreciation | | | | |
| 80% xSaxton adjusted net income of $______________ | | | |
| Controlling interest | __________________ | | | | |
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