Question: At 1/1/15, Pirate Company acquired 80 % of Sissy Company for $ 425,000. At that date, the fair value of the 20 % noncontrolling interest was $ 102,500. Sissy Company's book value consisted of $ 150,000 in Common Stock and $ 250,000 in Retained Earnings at that date. Pirate hired an appraisal company and found three accounts undervalued and one account not recorded as follows:
| Account |
Undervalued or
Unrecorded Amounts
|
Useful Life |
| Building |
20,000 |
8 years |
| land |
50,000 |
? |
| Equipment |
12,500 |
5 years |
| Unrecorded Royalty Agreement |
30,000 |
20 Years |
| Total |
112,500 |
|
1. What is the Acquisition Date Excess Fair Value over Book Value of Sissy Company?
2. What is the individual Annual Excess Amortization on the specific subsidiary accounts that were bumped up to Fair Value and the grand total of the annual amortization?
3. What amount is allocated to Goodwill? Is there any Goodwill allocation to the noncontrolling interest?
4. Prepare Consolidation Entries S and A below:
5. If Sissy Company earned $ 100,000 in 2015 and declared and paid dividends of $ 60,000:
Prepare Entries I, D & E:
a. Calculate the 2015 Net Income allocated to the controlling and noncontrolling interests.
b. Calculate the 12/31/15 balance of the noncontrolling interest. Where on the balance sheet is this amount reported?