Place Company purchased 92% of the common stock of Shaw, Inc. on January 1, 2017, for $400,000. Trial
balances at the end of 2017 for the companies were:
Place Shaw
Cash $ 80,350 $ 87,000
Account and Notes Receivable 200,000 210,000
Inventory, 1/1 70,000 50,000
Investment in Shaw, Inc. 400,000
Plant assets 300,000 200,000
Dividend Declared 35,000 22,000
Purchases 240,000 150,000
Selling Expenses 28,000 20,000
Other Expenses 15,000 13,000
$ 1,368,350 $ 752,000
Account and Notes Payable $ 99,110 $ 38,000
Other Liabilities 45,000 15,000
Common Stock, $10 par 150,000 100,000
Other Contributed Capital 279,000 149,000
Retained Earnings, 1/1 225,000 170,000
Sales 550,000 280,000
Dividend Income 20,240
$ 1,368,350 $ 752,000
Inventory balances on December 31, 2017, were $25,000 for Place and $15,000 for Shaw, Inc. Shaw’s
accounts and notes payable contain a $15,000 note payable to Place.
Required: Prepare a workpaper for the preparation of consolidated financial statements on
December 31, 2012. The difference between book value of equity acquired and the value implied
by the purchase price relates to subsidiary land, which is included in plant assets
P Share Non Controlling Total Value
Purchase price & implied value 400,000 34,783 434,783
Less: BV of subsidiary equity
Common Stock 92,000 8,000 100,000
Other Contributed Capital 137,080 11,920 149,000
Retained Earning 156,400 13,600 170,000
Total BV 385,480 33,520 419,000
Difference between IV&BV 14,520 1,263 15,783
PPE (14,520) (1,263) (15,783)
Balance - - -
Journal:
Common Stock 100,000
Other Contributed Capital 149,000
Retained Earnings 170,000
Difference between IV & BV 15,783
Investment in S 400,000
balances at the end of 2017 for the companies were:
Place Shaw
Cash $ 80,350 $ 87,000
Account and Notes Receivable 200,000 210,000
Inventory, 1/1 70,000 50,000
Investment in Shaw, Inc. 400,000
Plant assets 300,000 200,000
Dividend Declared 35,000 22,000
Purchases 240,000 150,000
Selling Expenses 28,000 20,000
Other Expenses 15,000 13,000
$ 1,368,350 $ 752,000
Account and Notes Payable $ 99,110 $ 38,000
Other Liabilities 45,000 15,000
Common Stock, $10 par 150,000 100,000
Other Contributed Capital 279,000 149,000
Retained Earnings, 1/1 225,000 170,000
Sales 550,000 280,000
Dividend Income 20,240
$ 1,368,350 $ 752,000
Inventory balances on December 31, 2017, were $25,000 for Place and $15,000 for Shaw, Inc. Shaw’s
accounts and notes payable contain a $15,000 note payable to Place.
Required: Prepare a workpaper for the preparation of consolidated financial statements on
December 31, 2012. The difference between book value of equity acquired and the value implied
by the purchase price relates to subsidiary land, which is included in plant assets
P Share Non Controlling Total Value
Purchase price & implied value 400,000 34,783 434,783
Less: BV of subsidiary equity
Common Stock 92,000 8,000 100,000
Other Contributed Capital 137,080 11,920 149,000
Retained Earning 156,400 13,600 170,000
Total BV 385,480 33,520 419,000
Difference between IV&BV 14,520 1,263 15,783
PPE (14,520) (1,263) (15,783)
Balance - - -
Journal:
Common Stock 100,000
Other Contributed Capital 149,000
Retained Earnings 170,000
Difference between IV & BV 15,783
Investment in S 400,000
