How to calculate nci in consolidated income statement

Instructions
Southern New Hampshire University
ACC 405: Advanced Accounting
MILESTONE ONE (Due in Module Four) FINAL PROJECT ONE (Due in Module Six)
Make corrections to Milestone One
1 Prepare memo
Calculate goodwill
Calculate investment balance
Calculate income assigned to the noncontrolling interest
Calculate noncontrolling interest
Calculate the gain or loss on retirement of bonds
2
Create consolidation entries
3
Prepare consolidation worksheet
Consolidating Entries

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Instructions Milestone One

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Instructions Final Project

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Supporting Calculations

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Consolidation Worksheet

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Instructions - Milestone One
Southern New Hampshire University
ACC 405 Advanced Accounting
INSTRUCTIONS FOR MILESTONE ONE (Due in Module Four)
IMPORTANT NOTE:
Make sure to completely review the rubric for Milestone One
You might want to print out the financial information
Show your work
Use the data from this milestone and begin working on your final project due in Module Six
ITEMS TO COMPLETE FOR THIS MILESTONE:
GENERAL
You are the accountant for Posey Company. Prepare computations, consolidation entries, and consolidation entries for the preparation of consolidated financial statements for 20X7. Show your calculations.
SUPPORTING COMPUTATIONS
a. Compute the amount of the goodwill as of January 1, 20X7.
b. Compute the balance of Posey’s Investment in Stargell Stock account as of January 1, 20X7. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.)
c. Compute the income that should be assigned to the noncontrolling interest in the 20X7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.)
d. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.)
e. Compute the gain or loss on the constructive retirement of Stargell’s bonds that should appear in the 20X7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.)
f. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Round your final answers to nearest whole dollar.)
g. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20X7. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)
FINANCIAL INFORMATION FOR THIS MILESTONE
Refer to Trial Balance 2017 information (red tab)
Posey Manufacturing Company acquired 90% of Stargell Corporation’s outstanding common stock on December 31, 20X5, for $1,116,900. At that date, the fair value of the noncontrolling interest was $124,100, and Stargell reported common stock outstanding of $487,000, premium on common stock of $267,000, and retained earnings of $407,000. The book values and fair values of Stargell’s assets and liabilities were equal except for land, which was worth $30,000 more than its book value.
On April 1, 20X6, Posey issued at par $200,000 of 10% bonds directly to Stargell; interest on the bonds is payable March 31 and September 30. On January 2, 20X7, Posey purchased all of Stargell’s outstanding 10-year, 12% bonds from an unrelated institutional investor at 98. The bonds originally had been issued on January 2, 20X1, for 101. Interest on the bonds is payable December 31 and June 30.
Since the date it was acquired by Posey Manufacturing, Stargell has sold inventory to Posey on a regular basis. The amount of such intercompany sales totaled $67,000 in 20X6 and $83,000 in 20X7, including a 30% gross profit. All inventory transferred in 20X6 had been resold by December 31, 20X6, except inventory for which Posey had paid $18,000 and did not resell until January 20X7. All inventory transferred in 20X7 had been resold at December 31, 20X7, except merchandise for which Posey had paid $16,667
As of December 31, 20X7, Stargell had declared but not yet paid its fourth-quarter dividend of $12,750. Both Posey and Stargell use straight-line depreciation and amortization, including the amortization of bond discount and premium. On December 31, 20X7, Posey’s management reviewed the amount attributed to goodwill as a result of its purchase of Stargell common stock and concluded that an impairment loss in the amount of $25,000 had occurred during 20X7 and should be shared proportionately between the controlling and noncontrolling interests. Posey uses the fully adjusted equity method to account for its investment in Stargell.
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Trial Balance 2017
On December 31, 20X7, trial balances for Posey and Stargell appeared as follows:
Posey Manufacturing Stargell Corporation
Item Debit Credit Debit
Cash $ 49,500 $ 39,000
Current Receivables 121,500 90,100
Inventory 317,000 364,900
Investment in Stargell Stock 1,243,800
Investment in Stargell Bonds 985,000
Investment in Posey Bonds 200,000
Land 1,241,000 518,000
Buildings & Equipment 2,940,000 1,915,000
Cost of Goods Sold 1,829,000 426,000
Depreciation & Amortization 184,000 65,000
Other Expenses 632,000 206,000
Dividends Declared 61,000 51,000
Accumulated Depreciation $ 1,050,000 $ 597,000
Current Payables 699,190 213,000
Bonds Payable 200,000 1,000,000
Premium on Bonds Payable 3,000
Common Stock 910,000 487,000
Premium on Common Stock 610,000 267,000
Retained Earnings, January 1 2,848,950 457,000
Sales 3,010,000 801,000
Other Income 143,000 50,000
Income from Stargell Corp. 132,660
Total $ 9,603,800 $ 9,603,800 $ 3,875,000 $ 3,875,000
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Supporting Calculations
Required:
a. Compute the amount of the goodwill as of January 1, 20X7.
Goodwill at acquisition $50,000
Goodwill as of January 1, 20X7: $1,116,900
fair value considerition by posey 124,100
fair value of non controlling interest at accquision 1,241,000
total -1,161,000
book value of net assets 80,000
difference at accquistion -30,000
increase in fair value of land 50,000
Goodwill at acquisition 50,000
b. Compute the balance of Posey’s Investment in Stargell Stock account as of January 1, 20X7. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.)
Balance in investment $1,157,040
Stargell stockholders' equity, January 1, 20X7:
common stock 487,000
premium on common stock 267,000
Retain Earning 457,000
Stock holders Equity total 1,211,000
Posey's ownership share 0.9
Book value of shares held by the Posey 1,089,900
Differential at january 1, 20X7($80000*0.90) 72,000
invetory sale deffered (18000*0.3) gross profit ($5400*0.90) (4,860)
Balance in Investment in Stargell Stock account, 1,157,040
January 1, 20X7
e. Compute the gain or loss on the constructive retirement of Stargell’s bonds that should appear in the 20X7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.)
Gain $24,000
Gain on constructive retirement of Stargell's bonds: 101000
Premium Amortized -6,000
Book value of Bonds 1,004,000
price paid for Stargell bonds of Posey
Gain on constructive retirement of stargall's bond 980,000
Gain on constructive retirement of Stargell's bonds 24,000
c. Compute the income that should be assigned to the noncontrolling interest in the 20X7 consolidated income statement. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.)
Income to noncontrolling interest $14,740
Stargell's 20X7 net income * 154000
add: 20X6intercompany profit realized in 20X7 5,400
constructive gain on retirement of bonds 24,000
(5,000)
Less: Unrealized intercompany profit on 20X7 transfer portion on constructive gain on bond retirement recogonized currently by saparate ($2400/4 years) (6,000)
Impairment of goodwill (25,000)
subsidery income to be appointed 147,400
Non controlling Interest propoetionate share 0.1
Income to noncontrolling interest 14,740
Net income calculations *
Net income
d. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar.)
Total noncontrolling interest $ 128,560
Total noncontrolling interest, December 31, 20X6:
Stargell's stockholders' equity, December 31, 20X6 1,211,000
Unrealized profits (5,400)
RealizedEquity 1,205,600
Differential assigned to land 30,000
assigned to goodwill 50,000
total 1,285,600
NCI rate 0.1
Total noncontrolling interest, December 31, 20X6 128,560
Milestone 1 instructions

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Consolidation Entries
A
Record the basic consolidation entry. Accounts Debit Credit
A Common Stock 487,000
B Premium on Common Stock 267,000
Record the amortized excess value differential entry. Retain Earning 457,000
Income From StarGel 155,160
C NCI in NI of StarGel 17,240
Record the excess value (differential) reclassification entry. Dividend Declare 51,000
Investment in StarGel Stock 1,199,160
D NCIin Stargel Corporation 133,240
Record the reversal of last year's deferral.
B
E Goodwill Impairment Loss 25000
Record the deferral of the 20X7 unrealized profits on the inventory transfer. Income from Stargel Corporation 22,500
NIC in NI of Stragel Corporation 2500
C Land 30,000
F Goodwill 25,000
Record the elimination of the intercompany holdings of Posey's bonds. Investment in Stargel 49,500
NCI in NA of Star gel 5,500
G
Record the entry to eliminate the intercompany interest receivables/payables. D Investment in StarGel 4,860
NCI in NA of StarGel Corporation 540
H Cost of Goods Sold 5,400
Record the entry to eliminate the accrued interest on the intercompany bonds.
E Sales 83,000
I Cost of Goods Sold 78,000
Record the entry to eliminate the intercompany holdings of Stargell's bonds. Inventory 5,000
J F Bonds Payable 200,000
Record the entry to eliminate the intercompany dividend payable/receivable. Investment in Posey bonds 200,000
G Other Income 20,000 20000
Other Expense 20,000
H Current Payables 5,000
Current Recieveables 5,000 5000
I Bonds payable 1,000,000
Premium on Bonds Payable 3,000
Other Income 125,000 125000
Investement in StarGel bond 985,000
Gain on retirement of Bonds 24,000 24000
Other Expenses(Interest) 119,000 119000
J Current Paayable 11,475
Current Recieveable 11,475
Milestone One instructions

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Consolidation Worksheet
POSEY MANUFACTURING COMPANY AND SUBSIDIARY
Consolidated Financial Statement Worksheet
December 31, 20X7
Consolidation Entries
Posey Co. Stargell Corp. DR CR Consolidated
Income Statement
Sales 3,010,000 801,000 83,000
Other Income 143,000 50,000 145,000
Less: COGS (1,829,000) (426,000)
Less: Depr. & Amort. Expense (181,000) (65,000)
Less: Other Expenses (632,000) (206,000)
Goodwill Impairment Loss
Gain on Bond Retirement
Income from Stargell Corp. 132,660
Consolidated Net Income 640,660 154,000 228,000
NCI in Net Income
Controlling Interest in NI 640,660 154,000 228,000
Statement of Retained Earnings
Beginning Balance 2,848,950 457,000
Net Income 640,660 154,000 228,000
Less: Dividends Declared (61,000) (51,000)
Ending Balance 3,428,610 560,000 228,000
Balance Sheet
Assets
Cash $ 49,500 $ 39,000
Current Receivables 121,500 90,100
Inventory 317,000 364,900
Land 1,241,000 518,000
Buildings & Equipment 2,940,000 1,915,000
Less: Accumulated Depreciation (1,050,000) (597,000)
Investment in Stargell Stock 1,243,800
Investment in Stargell Bonds 985,000
Investment in Posey Bonds 200,000
Goodwill
Total Assets 5,847,800 2,530,000
Liabilities & Equity
Current Payables 699,190 213,000
Bonds Payable 200,000 1,000,000
Premium on Bonds Payable 3,000
Common Stock 910,000 487,000
Premium on Common Stock 610,000 267,000
Retained Earnings 3,428,610 560,000 228,000
NCI in NA of Stargell Corp.
Total Liabilities & Equity 5,847,800 2,530,000 228,000
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MIlestone 1 instructions

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Instructions - final
Southern New Hampshire University
ACC 405: Advanced Accounting
INSTRUCTIONS FOR FINAL
IMPORTANT NOTE:
Make sure to completely review the rubric for the final project.
This page contains new information that must be included in the final project but has not been the milestone.
ITEMS TO COMPLETE FOR THIS MILESTONE:
GENERAL
II. Final updated Excel Workbook and Memo
h. Prepare a memo outlining the unique calculations required on the consolidation worksheet and on the statement of cash flows if Posey also obtains an international subsidiary with non-US$ functioning currency. [ACC-405-02]
Milestones
Final Submission: Consolidation Workbook and Memo
In Module Six, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. In addition to revising your milestone work, make sure that you include the following elements from the prompt above, which were not included in the milestones:
Prepare a memo outlining the unique calculations required on the consolidation worksheet and on the statement of cash flows if Posey also obtains an international subsidiary with non-US$ functioning currency.
This submission will be graded with the Final Project One Rubric.