AAHamlen 3e_Solutions Manual_Ch05

CHAPTER 5 SOLUTIONS TO MULTIPLE MULTIPLE CHOICE QUESTIONS, EXERCISES AND PROBLEMS MULTIPLE MULTIPLE CHOICE QUESTIONS 1.

b Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value lant and equi%&ent revaluation +dentifiable intangibles Fair value of identifiable net assets -oodwill

$ 91,700,000 6,300,000 9!,000,000 $ 13,000,000 '(),000,000* 0,000,000 (!,000,000 $ 70,000,000

Allocation of goodwill between controlling and noncontrolling nonc ontrolling interest: otal goodwill o&egranate.s goodwill: $91 $91,700,000 / '90  $(!,000,000* -oodwill to noncontrolling interest

$ 70,000,000 66,)00,000 $ 3,)00,000

-oodwill is allocated 9) to t2e controlling interest and ) to t2e noncontrolling interest '4* +dentifiable intan intangibles -oodwill lant and equi%&ent +nvest&ent in 5tarfruit '1* oncontrolling interest in 5tarfruit '(* '(*

0,000,000 70,000,000 (),000,000 !0,000,000 ),000,000

'1* 90  '$0,000,000 8 $(),000,000*  $66,)00,000 '(* 10  '$0,000,000 8 $(),000,000*  $3,)00,000

2.

c '4* +dentifiable intangibles -oodwill lant and equi%&ent +nvest&ent in 5tarfruit '1* oncontrolling interest in 5tarfruit '(* '(*

(,000,000 6!,000,000 (0,000,000 6!,(00,000 3,!00,000

'1* 90  '$(,000,000 8 $(0,000,000*  '9)  $6!,000,000* '(* 10  '$(,000,000 8 $(0,000,000*  ')  $6!,000,000*

Solutions Manual, Chapter 5

©Cambridge Business Publishers, 2016 5-1

3.

b

5tarfruit net inco&e 4evaluation write8offs: lant and equi%&ent de%reciation +dentifiable intangibles a&orti;ation -oodwill i&%air&ent loss

$.

Equi Eq uitty in in Nt Nt In! In!" "# $ 6,7)0,000

NCI NCI in in Nt Nt In!" In!"# # $ 7 ) 0 ,0 0 0

(,()0,000 '7,(00,000* '7),000* $ 1,3(),000

() 0 ,000 '!00,000* '(),000* $ 1 7) ,0 00

c 10  '$13,000,000  $0,000,000 / $(),000,000* < $(,!00,000

5.

c oncontrolling interest in net inco&e < $7)0,000  $()0,000 / $!00,000 < oncontrolling interest in =C+ < 10  $100,000 < oncontrolling interest in co&%re2ensive inco&e

%.

$ (00,000 10,000 $ (10,000

d '>* 5toc#2olders. equit? +nvest&ent in 5tarfruit oncontrolling interest in 5tarfruit

13,000,000 11,700,000 1,300,000

'4* +dentifiable intangibles lant and equi%&ent +nvest&ent in 5tarfruit ' 5tarfruit '1 1* oncontrolling interest in 5tarfruit '(* '(*

0,000,000 (),000,000 1,300,000 700,000

'1* +nvest&ent in 5tarfruit balance on o&egranate.s o&egranate.s boo#s is $(6,000,000 '< $(0,000,000 cost cost  $6,000,000 gain on acquisition* >li&ination of t2e invest&ent in '4* is t2e re&ainder re&ainder of t2e invest&ent balance, after eli&ination '>* '(* 2e credit to noncontrolling interest interest in '4* brings t2e noncontrolling interest to fair value, after eli&ination '>*

&.

a 2ere is no goodwill w2en t2e acquisition is a bargain %urc2ase

!

d

9

b

10

a


Adan!ed A!!ounting, "rd #dition

3.

b

5tarfruit net inco&e 4evaluation write8offs: lant and equi%&ent de%reciation +dentifiable intangibles a&orti;ation -oodwill i&%air&ent loss

$.

Equi Eq uitty in in Nt Nt In! In!" "# $ 6,7)0,000

NCI NCI in in Nt Nt In!" In!"# # $ 7 ) 0 ,0 0 0

(,()0,000 '7,(00,000* '7),000* $ 1,3(),000

() 0 ,000 '!00,000* '(),000* $ 1 7) ,0 00

c 10  '$13,000,000  $0,000,000 / $(),000,000* < $(,!00,000

5.

c oncontrolling interest in net inco&e < $7)0,000  $()0,000 / $!00,000 < oncontrolling interest in =C+ < 10  $100,000 < oncontrolling interest in co&%re2ensive inco&e

%.

$ (00,000 10,000 $ (10,000

d '>* 5toc#2olders. equit? +nvest&ent in 5tarfruit oncontrolling interest in 5tarfruit

13,000,000 11,700,000 1,300,000

'4* +dentifiable intangibles lant and equi%&ent +nvest&ent in 5tarfruit ' 5tarfruit '1 1* oncontrolling interest in 5tarfruit '(* '(*

0,000,000 (),000,000 1,300,000 700,000

'1* +nvest&ent in 5tarfruit balance on o&egranate.s o&egranate.s boo#s is $(6,000,000 '< $(0,000,000 cost cost  $6,000,000 gain on acquisition* >li&ination of t2e invest&ent in '4* is t2e re&ainder re&ainder of t2e invest&ent balance, after eli&ination '>* '(* 2e credit to noncontrolling interest interest in '4* brings t2e noncontrolling interest to fair value, after eli&ination '>*

&.

a 2ere is no goodwill w2en t2e acquisition is a bargain %urc2ase

!

d

9

b

10

a



EXERCISES E5.1

D't "( A!qu A!qui)it i)iti"n i"n C"n) C"n)"*i+ "*i+'ti" 'ti"n n E*i#in' E*i#in'tin tin Ent Ent-i) -i)

a Calc Calcul ulat atio ion n of of good goodwi will ll:: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value of 5a?lor 4evaluations: @and +4B -oodwill

$ 1(,000,000 (,600,000 1,600,000 $ 3,000,000 (00,000 1,)00,000

,700,000 $ 9,900,000

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill ennant.s goodwill: $1 $1(,000,000 / '!0  $,700,000* -oodwill to noncontrolling interest

$ 9,900,000 !,(0,000 $ 1, 1,660,000

b or#ing or#ing %a%er eli&inating entries, date of acquisition: '>* 5toc#2olders. eq equit? / 5a?lor +nvest&ent in 5a?lor '!0* oncontrolling interest in 5a?lor '(0*

3,000,000 (,00,000 600,000

'4* @and +4B -oodwill +nvest&ent in 5a?lor '1* oncontrollin oncontrolling interest in 5a?lor '(*

( 0 0 ,0 0 0 1,)00,000 9,900,000 9,600,000 (,000,000

'1* !0  '$(00,000  $1,)00,000*  $!,(0,000 < $9,600,000 '(* (0  '$(00,000  $1,)00,000*  $1,660,000 < $(,000,000


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E5.2

Equity Equity in Nt Nt In!"# In!"# 'n+ 'n+ N"n!"n N"n!"nt-" t-"**in **in  Int- Int-)t )t in Nt Nt In!"# In!"#

o allocate allocate t2e goodwill i&%air&ent, we need to #now t2e original allocations of goodwill: Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value of 5un Cit? 4evaluation: +dentifiable intangibles -oodwill

$ 3),(00,000 9,!00,000 ),000,000 $ 3,000,000 ),000,000

!,000,000 $ 37,000,000

Allocation of goodwill between controlling and noncontrolling nonc ontrolling interest: otal goodwill al&.s goodwill: $3 $3),(00,000 / '70  $!,000,000* -oodwill to noncontrolling interest

$ 37,000,000 (9,600,000 $ 7,00,000

-oodwill is allocated in an !0:(0 ratio (017 equit? in net inco&e and noncontrolling interest in net inco&e:

5un Cit?.s re%orted net inco&e 4evaluation write8offs: write8offs: +dentifiable intangibles $),000,000D) -oodwill i&%air&ent loss

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T"t'* $ !,000,000

Equity in NI $ ),600,000

N"n!"nt-"**in Int-)t in NI $ (,00,000

'1,000,000* '(,000,000* $ ),000,000

'700,000* '1,600,000* $ 3,300,000

'300,000* '00,000* $ 1,700,000


E5.3

C"n)"*i+'ti"n E*i#in'tin Ent-i), D't "( A!qui)iti"n 'n+ T" /'-) L't-

a Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value of 5tardust 4evaluations: lant and equi%&ent +dentifiable intangibles -oodwill

$ )1,100,000 (,900,000 ),000,000 $ (,000,000 '6,000,000* !,000,000

,000,000 $ )0,000,000

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill la;a.s goodwill: $)1,100,000 / '90  $,000,000* -oodwill to noncontrolling interest

$ )0,000,000 7,)00,000 $ (,)00,000

-oodwill is allocated in a 9):) ratio b or#ing %a%er eli&inating entries, date of acquisition: '>* Ca %ital stoc# 4etained earnings Accu&ulated =C+ +nvest&ent in 5tardust '90* oncontrolling interest in 5tardust '10*

300,000 1,6)0,000 )0,000 1,!00,000 (00,000

'4* +dentifiable intangibles -oodwill lant and equi%&ent +nvest&ent in 5tardust '1* oncontrolling interest in 5tardust '(*

!,000,000 )0,000,000 6,000,000 9,300,000 (,700,000

'1* 90  '$!,000,000 8 $6,000,000*  $7,)00,000 < $9,300,000 '(* 10  '$!,000,000 8 $6,000,000*  $(,)00,000 < $(,700,000



c (01! equit? in net inco&e and noncontrolling interest in net inco&e:

5tardust.s re%orted net inco&e 4evaluation write8offs: lant and equi%&ent $6,000,000D10 +dentifiable intangibles $!,000,000D -oodwill i&%air&ent loss 9):)

T"t'* $ ,000,000

Equity in NI $ 3,600,000

600,000 )0,000 '(,000,000* '1,!00,000* '(00,000* '190,000* $ (,00,000 $ (,1)0,000

N"n!"nt-"**in Int-)t in NI $ 00,000

60,000 '(00,000* '10,000* $ ()0,000

or#ing %a%er eli&inating entries, two ?ears later: 'C* >quit? in + >quit? in =C@ +nvest&ent in 5tardust '>* Ca%ital stoc# 4etained earnings, beg '1* Accu&ulated =C+, beg '(* +nvest&ent in 5tardust '90* oncontrolling interest in 5tardust '10*

(,1)0,000 9,000 (,11,000

300,000 ,)0,000 7),000 ,3(,)00 !(,)00

'1* $1,6)0,000  $(,!00,000 < $,)0,000 '(* $)0,000  $(),000 < $7),000

'4* +dentifiable intangibles -oodwill lant and equi%&ent +nvest&ent in 5tardust '3* oncontrolling interest in 5tardust '*

6,000,000 )0,000,000 ),00,000 !,00,000 (,)60,000

'3* 90  '$6,000,000 8 $),00,000*  $7,)00,000 < $!,00,000 '* 10  '$6,000,000 8 $),00,000*  $(,)00,000 < $(,)60,000

'=* =%erating e%enses lant and equi%&ent +dentifiable intangibles -oodwill '* oncontrolling interest in + oncontrolling interest in =C@ oncontrolling interest ©Cambridge Business Publishers, 2016 5-6

1,600,000 600,000 (,000,000 (00,000

()0,000 1,000 (9,000


E5.$

D't "( A!qui)iti"n C"n)"*i+'ti"n E*i#in'tin Ent-i), B'-'in Pu-!0')

a Acquisition cost Fair value of noncontrolling interest otal "oo# value of 5%arrow 4evaluations: @and =t2er %lant assets, net >quit? &et2od invest&ents @ong8ter& debt Fair value of identifiable net assets -ain on acquisition

$ ((,000,000 ,000,000 (6,000,000 $ (),000,000 '!00,000* (,000,000 1,)00,000 '700,000* (7,000,000 $ '1,000,000*

eregrine.s acquisition entr?: +nvest&ent in 5%arrow Eerger e%enses Cas2 -ain on acquisition

(3,000,000 3,000,000 (),000,000 1,000,000

b or#ing %a%er eli&inating entries, date of acquisition: '>* Ca%ital stoc# 4etained earnings Accu&ulated ot2er co&%re2ensive inco&e reasur? stoc# +nvest&ent in 5%arrow '!0* oncontrolling interest in 5%arrow '(0* '4* =t2er %lant assets, net >quit? &et2od invest&ents oncontrolling interest in 5%arrow '1* @and @ong8ter& debt +nvest&ent in 5%arrow '(*

,000,000 (0,000,000 1,)00,000 )00,000 (0,000,000 ),000,000

(,000,000 1,)00,000 1,000,000 !00,000 700,000 3,000,000

'1* $),000,000 / $,000,000 < $1,000,000 adust&ent needed to bring t2e C+ balance to its fair value at t2e date of acquisition '(* $(3,000,000 / $(0,000,000 < $3,000,000 to eli&inate t2e re&ainder of t2e invest&ent balance


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E5.5

C"n)"*i+'ti"n E*i#in'tin Ent-i) 't En+ "( i-)t /'- ) -*'t+ E$.3

a Calculation of goodwill is as follows: Acquisition cost '$10,000,000  $300,000* Fair value of noncontrolling interest otal "oo# value of 5addlestone 4evaluation: +dentifiable intangibles -oodwill

$ 10,300,000 6,)00,000 16,!00,000 $ 7,(00,000 (,000,000

9,(00,000 $ 7,600,000

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill ea#.s goodwill: $10,300,000 / '60  $9,(00,000* -oodwill to noncontrolling interest

$ 7,600,000 ,7!0,000 $ (,!(0,000

b (016 equit? in net inco&e and noncontrolling interest in net inco&e:

5addlestone.s re%orted net inco&e 4evaluation write8off: +dentifiable intangibles $(,000,000D)

T"t'* $ 3,000,000

N"n!"nt-"**in int-)t in NI $ 1,(00,000

Equity in NI $ 1,!00,000

'00,000* $ (,600,000

'(0,000* $ 1,)60,000

'160,000* $ 1,00,000

c Consolidation wor#ing %a%er eli&inating entries for (016: 'C* >quit? in net inco&e of 5addlestone Bividends / 5addlestone +nvest&ent in 5addlestone '>* 5toc#2olders. equit?G5addlestone, 1D1 +nvest&ent in 5addlestone oncontrolling interest in 5addlestone '4* +dentifiable intangibles -oodwill +nvest&ent in 5addlestone '1* oncontrolling interest in 5addlestone '(*

1,)60,000 600,000 960,000

7,(00,000 ,3(0,000 (,!!0,000

(,000,000 7,600,000 ),9!0,000 3,6(0,000

'1* '60  $(,000,000*  $,7!0,000 '(* '0  $(,000,000*  $(,!(0,000

©Cambridge Business Publishers, 2016 5-&


'=* A&orti;ation e%ense +dentifiable intangibles

00,000 00,000

'* oncontrolling interest in inco&e of 5addlestone Bividends / 5addlestone oncontrolling interest in 5addlestone

E5.%

1,00,000 00,000 60,000

C"n)"*i+'ti"n E*i#in'ti"n) S4-'* /'-) A(t- A!qui)iti"n

a ara&ount.s acquisition cost Fair value of noncontrolling interest otal "oo# value, date of acquisition 4evaluations: Accounts receivable +nventor? >qui%&ent atents Beferred ta liabilities -oodwill

$ (,910,000 790,000 3,700,000 $1,)00,000 '100,000* '1(),000* '00,000* (00,000 '7),000*

1,000,000 $ (,700,000

ara&ount.s s2are of goodwill < $(,910,000 / '7)  $1,000,000* < $(,160,000 oncontrolling interest.s s2are of goodwill < $)0,000 '(0*

'!0*

b

Hanuar? (01( balance C2ange in 5un.s retained earnings, (01(8(017: '$1,!00,000 / $!00,000*, divided 7):() rite8off of 5un.s identifiable net asset revaluations, (01(8(017: '$100,000  $1(),000  $(0,000 / $(00,000  $60,000*, divided 7):() -oodwill i&%air&ent, (01(8(017: '$(,700,000 / $(,000,000*, divided !0:(0 "alance, end of (017


In4)t#nt $ (,910,000

N"n!"nt-"**in int-)t $ 790,000

7)0,000

()0,000

(3,7)0

!1,()0

')60,000* $ 3,33,7)0

$

'10,000* 9!1,()0

©Cambridge Business Publishers, 2016 5-'

c '>* 5toc#2olders. equit?85un +nvest&ent in 5un oncontrolling interest in 5un

(,)00,000 1,!7),000 6(),000

'4* -oodwill >qui%&ent, net '1* Beferred ta liabilities +nvest&ent in 5un '(* oncontrolling interest in 5un '3*

(,000,000 160,000 1),000 1,6!,7)0 3)6,()0

'1* $00,000 / '6D10*  $00,000 '(* '!0  $(,000,000* / '7)  $17),000* '3* '(0  $(,000,000* / '()  $17),000*

E5.&

C"n)"*i+'ti"n E*i#in'tin Ent-i) S4-'* /'-) A(t- A!qui)iti"n

a Acquisition cost Fair value of noncontrolling interest otal "oo# value, date of acquisition 4evaluations: lant and equi%&ent Favorable lease agree&ents -a&ing licenses Beferred ta liabilities -oodwill

$ 1,)0 13,))0 )),000 $

,000 '1),000* ),000 7,000 '3,000*

alo&ar.s s2are of goodwill < $1,)0 / '6)  8$(,000* < $(,7)0 oncontrolling interest.s s2are of goodwill < $1,()0 '()*

'(,000* $ )7,000 '7)*

b Bate of acquisition cost C2ange in 5a2ara.s retained earnings, (0138(016: '$1(,000 / $1,)00*  6) 4evaluation write8offs, identifiable net assets, (0138(016:  lant and equi%&ent   '$1),000D(0*  6) 8 Favorable leases $),000  6) 8 -a&ing licenses   '$7,000D7*  6)  Beferred ta reversals $(,(00  6) -oodwill i&%air&ent losses, (0138(016 $3,600  7) "alance, Hanuar? 1, (017  >quit? in + for (017 '$(,))0  $1),000D(0 8 $7,000D7  $300*  6) / '$1,000  7)* 8 Bividends '6)  $(00* +nvest&ent balance, Bece&ber 31, (017


In4)t#nt $ 1,)0 6,!()

1,9)0 '3,()0* '(,600* 1,30 '(,700* 3,10) 90 '130* $ 3,91)


c 'C* >quit? in + Bividends +nvest&ent in 5a2ara

90 130 !10

'>* Ca%ital stoc# 4>, Hanuar? 1 +nvest&ent in 5a2ara oncontrolling interest

(,)00 1(,000 9,() ),07)

'4* -a&ing licenses -oodwill lant and equi%&ent Beferred ta liabilities +nvest&ent in 5a2ara '1* oncontrolling interest '(*

3,000 )3,00 1(,000 !00 33,6!0 9,9(0

'1* 6)  '$3,000 8 $1(,000 8 $!00*  '7)  $)3,00* < $33,6!0 '(* 3)  '$3,000 8 $1(,000 8 $!00*  '()  $)3,00* < $9,9(0

'=* lant and equi%&ent Beferred ta liabilities -oodwill i&%air&ent loss A&orti;ation e%ense Be%reciation e%ense a e%ense -oodwill -a&ing licenses

7)0 300 1,000 1,000 7)0 300 1,000 1,000

'* oncontrolling interest in + '3* Bividends oncontrolling interest

660 70 )90

'3* '$(,))0  $1),000D(0 8 $7,000D7  $300*  3) / '$1,000  ()* < $660



E5.

C"n)"*i+'ti"n 6"-7in P'8-, D't "( A!qui)iti"n ) -*'t+ E3.9

a Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value of 5?lvan -oodwill

$ 3,000,000 ,()0,000 7,()0,000 17,000,000 $ 30,()0,000

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill rincecraft.s goodwill: $3,000,000 / '90  $17,000,000* -oodwill to noncontrolling interest

$ 30,()0,000 (7,700,000 $ (,))0,000

b C"n)"*i+'ti"n 6"-7in P'8A!!"unt) T'7n -"# B""7)

(in thousands)

Cas2

P-in!!-'(t D- C-

$

17,000

E*i#in'ti"n)

Sy*4'n D- C-

$

D-

C-

(,000

C"n)"*i+'t+ B'*'n!) D- C-

$

19,000

=t2er current assets

(0,000

!,000

(!,000

ro%ert? and equi%&ent, net

70,000

1),000

!),000

+nvest&ent in 5?lvan

3,000

88

1),300 '>* (7,700 '4*

-oodwill

88

88

'4*

88

30,()0

30,()0

otal liabilities

'30,000*

'!,000*

'3!,000*

Co&&on stoc#

'1),000*

'),000*

'>*

),000

'1),000*

Additional %aid8in ca%ital

'),000*

'10,000*

'>*

10,000

'),000*

4etained earnings

'60,000*

'(,000*

'>*

(,000

'60,000*

oncontrolling interest

1,700 '>* IIIIII

otal

$

0

IIIIII $

0

IIIIII $ 7,()0

(,))0 '4* $7,()0

',()0* $

0

ote: rincecraft.s balance s2eet above reflects t2e following acquisition entr? (in thousands) : +nvest&ent in 5?lvan Cas2 ©Cambridge Business Publishers, 2016 5-12

3,000 3,000


c C"n)"*i+'t+ B'*'n! S0t, D't "( A!qui)iti"n (in thousands) A))t) Cas2 =t2er current assets ro%ert? and equi%&ent, net -oodwill otal assets Li':i*iti) 'n+ )t"!70"*+-); quity otal liabilities 5toc#2olders. equit? rincecraft.s stoc#2olders. equit?: Co&&on stoc# Additional %aid8in ca%ital 4etained earnings otal rincecraft.s stoc#2olders. equit? oncontrolling interest otal stoc#2olders. equit? otal liabilities and stoc#2olders. equit?

E5.9

$

19,000 (!,000 !),000 30,()0 $ 16(,()0 $

3!,000

1),000 ),000 60,000 1(0,000 ,()0 1(,()0 $ 16(,()0

C"n)"*i+'ti"n E*i#in'tin Ent-i), D't "( A!qui)iti"n< U.S. =AAP 'n+ IRS

(in thousands)

a lu&&er.s acquisition entr?: +nvest&ent in 5ofte# Eerger e%enses Cas2 Co&&on stoc#, %ar value Additional %aid8in ca%ital

(),000 )00 )00 ,000 (1,000

Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value of 5ofte# 4evaluations: lant assets rade&ar#s Custo&er lists @ong8ter& debt -oodwill


$ (),000 (,)00 (7,)00 $ 1(,000 '3,000* 1,)00 1,000 '100*

11,00 $ 16,100

©Cambridge Business Publishers, 2016 5-1"

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill lu&&er.s goodwill: $(),000 / '90  $11,00* -oodwill to noncontrolling interest

$ $

16,100 1,70 1,360

Consolidation eli&inating entries: '>* Co&&on stoc# Additional %aid8in ca%ital 4etained earnings Accu&ulated =C+ reasur? stoc# +nvest&ent in 5ofte# oncontrolling interest in 5ofte#

(00 !,000 ),000 !00 00 10,!00 1,(00

'4* rade&ar#s Custo&er lists -oodwill lant assets, net @ong8ter& debt +nvest&ent in 5ofte# '1* oncontrolling interest in 5ofte# '(*

1,)00 1,000 16,100 3,000 100 1,(00 1,300

'1* 90  '$1,)00  $1,000 / $3,000 / $100*  $1,70 < $1,(00 '(* 10  '$1,)00  $1,000 / $3,000 / $100*  $1,360 < $1,300

b Consolidation eli&inating entries: '>* Co&&on stoc# Additional %aid8in ca%ital 4etained earnings Accu&ulated =C+ reasur ? stoc# +nvest&ent in 5ofte# oncontrolling interest in 5ofte#

©Cambridge Business Publishers, 2016 5-1$

(00 !,000 ),000 !00 00 10,!00 1,(00


'4* rade&ar#s Custo&er lists -oodwill oncontrolling interest in 5ofte# '3* lant assets, net @ong8ter& debt +nvest&ent in 5ofte#

1,)00 1,000 1,70 60 3,000 100 1,(00

'3* 10  '$1,)00  $1,000 / $3,000 / $100* < $'60*

Note: 2e +F45 alternative valuation &et2od attributes no goodwill to t2e noncontrolling interest 2e noncontrolling interest balance at t2e date of acquisition is 10  t2e fair value of 5ofte#.s identifiable net assets, or 10  $11,00 < $1,10

E5.1> C"n)"*i+'ti"n 't D't "( A!qui)iti"n, IRS 'n+ U.S. =AAP

(in millions)

a Calculation of goodwill: Acquisition cost @ess 9 fair value of identifiable net assets -oodwill

J 3900 '()* J 36))

9  J)

oncontrolling interest < )1  J) < J()) b '>* 5toc#2olders. equit? +nvest&ent in Co&%ador oncontrolling interest '4* Current assets Current liabilities and %rovisions -oodwill oncurrent assets +nvest&ent in Co&%ador

)00 () ())

010 010 36)) 0(0 36))

Note: 2ere is no revaluation adust&ent to t2e noncontrolling interest in '4* because t2e total fair value of t2e identifiable net assets equals boo# value



c Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value et revaluations of identifiable net assets Fair value of identifiable net assets -oodwill

J 3900 3!00 7700 J )00 88 )00 J 7(00

-oodwill to t2e controlling interest < J3900 / '9  J)00* < J36)) 'equal to t2e a&ount re%orted using t2e +F45 alternative* oncontrolling interests < fair value at date of acquisition < J3! d '>* 5toc#2olders. equit? +nvest&ent in Co&%ador oncontrolling interest

)00 () ())

'4* Current assets Current liabilities and %rovisions -oodwill oncurrent assets +nvest&ent in Co&%ador oncontrolling interest

010 010 7(00 0(0 36)) 3))

E5.11 C"n)"*i+'ti"n E*i#in'tin Ent-i), On /'- A(t- A!qui)iti"n, IRS

a Calculation of goodwill: Acquisition cost 52are of fair value of identifiable net assets: ' J7,000,000  )* -oodwill

J 6),000,000 3,1)0,000 J 61,!)0,000

oncontrolling interests < ))  J7,000,000 < J3,!)0,000



b 'C* >quit? in + of >8Einus +nvest&ent in >8Einus

1,!00,000 1,!00,000

)  J,000,000 < J1,!00,000

'>* 5toc#2olders. equit? +nvest&ent in >8Einus oncontrolling interest '4* -oodwill +nvest&ent in >8Einus

7,000,000 3,1)0,000 3,!)0,000

61,!)0,000 61,!)0,000

>li&inating entr? '=* is not required since goodwill is not i&%aired '* oncontrolling interest in + oncontrolling interest

(,(00,000 (,(00,000

J,000,000  )) < J(,(00,000

E5.12 C"n)"*i+'ti"n 't A!qui)iti"n D't, IRS

(in millions)

a Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value of 5otel&a Fair value of identifiable net assets: "oo# value 4evaluations: @icense Custo&er bases Beferred ta otal fair value of identifiable net assets -oodwill

J (7! (0! !6 J

3) ( ( '3* )! J (!

-oodwill to controlling interests < J(7! / ')1  J)!* < J(! -oodwill to noncontrolling interests < J(! 8 J(! < J1!0


©Cambridge Business Publishers, 2016 5-1%

b Earoc eleco& %aid a %re&iu& to %urc2ase a controlling interest in 5otel&a Earoc.s acquisition cost of J(7! i&%lies a full %rice of J(7!D)1 < J)), and a noncontrolling interest value of J))  9 < J(67 Kowever, t2e fair value of t2e noncontrolling interest is onl? J(0! c '>* 5toc#2olders. equit?85otel&a +nvest&ent in 5otel&a oncontrolling interest

3) 1! 17

'4* @icense Custo&er bases -oodwill Beferred ta +nvest&ent in 5otel&a oncontrolling interest

( ( (! 3 (60 191

J(60 < ')1  J(3*  J(!L J191 < '9  J(3*  J1!0

d oncontrolling interest < 9  J)! < J(!

E5.13 C"n)"*i+'t+ B'*'n! S0t, D't "( A!qui)iti"n< U.S. =AAP 'n+ IRS

a Calculation of goodwill: Acquisition cost $3,000,000  '(00,000  $!0* Fair value of noncontrolling interest otal fair value "oo# value of owerline 4evaluations: Current assets lant and equi%&ent "rand na&es -oodwill

$ 19,000,000 1,!00,000 (0,!00,000 $ ,)00,000 ')00,000* '6,000,000* 3,000,000

1,000,000 $ 19,!00,000

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill Eicrosoft.s goodwill: $19,000,000 / '90  $1,000,000* -oodwill to noncontrolling interest

©Cambridge Business Publishers, 2016 5-1&

$ 19,!00,000 1!,100,000 $ 1,700,000



(in thousands)

Mi!-")"(t D- C-

Current assets

$

7,000

lant and equi%&ent, net

3),000

+nvest&ent in owerline

19,000

E*i#in'ti"n)

P"-*in D- C-

$

D-

C"n)"*i+'t+ B'*'n!) D- C-

C-

(,000

)00 '4*

7,000

6,000 '4* ,0)0

$

!,)00 36,000

'>*

1,9)0 '4*

88

"rand na&es

88

'4* 3,000

3,000

-oodwill

88

'4* 19,!00

19,!00

Current liabilities

'),000*

'1,)00*

'6,)00*

'(0,000*

'3,000*

'(3,000*

Co&&on stoc#, %ar value

'),000*

'100*

'>*

100

'),000*


'19,600*

'1,)0*

'>*

1,)0

'19,600*

4etained earnings

'11,000*

'3,000*

'>*

3,000

'11,000*

@ong8ter& liabilities

Accu&ulated ot2er co&%re2ensive 'inco&e* loss

'00*

)0

)0

'>*

88

88

)0

'>*

IIIIIIII

IIIIIII

$

$


otal

0

0

IIIIII $ (7,3)0

'00*

1,3)0 '4* $ (7,3)0

'1,!00 * $

0

Note 1: Eicrosoft.s balance s2eet above reflects t2e following acquisition entr? (in thousands) : +nvest&ent in owerline 19,000 Cas2 3,000 Co&&on stoc# (,000 Additional %aid8in ca%ital 1,000 Note 2: 2e $1,9)0,000 credit to invest&ent in entr? '4* < 90 '8$)00,000 8 $6,000,000  $3,000,000*  $1!,100,000 'goodwill*

2e $1,3)0,000 credit to noncontrolling interest in entr? '4* < 10 '8 $)00,000 8 $6,000,000  $3,000,000*  $1,700,000 'goodwill*


©Cambridge Business Publishers, 2016 5-1'

c Calculation of goodwill: Acquisition cost 90  fair value of identifiable net assets -oodwill

90  $1,000,000

$ 19,000,000 900,000 $ 1!,100,000

C"n)"*i+'ti"n 6"-7in P'8A!!"unt) T'7n -"# B""7)

(in thousands)

Mi!-")"(t D- C-

Current assets

$

7,000


3),000

+nvest&ent in owerline

19,000

E*i#in'ti"n)

P"-*in D- C-

$

D-

C"n)"*i+'t+ B'*'n!) D- C-

C-

(,000

)00 '4*

7,000

6,000 '4* ,0)0

$

!,)00 36,000

'>*

1,9)0 '4*

88

"rand na&es

88

'4* 3,000

3,000

-oodwill

88

'4* 1!,100

1!,100

Current liabilities

'),000*

'1,)00*

'6,)00*

'(0,000*

'3,000*

'(3,000*


'),000*

'100*

'>*

100

'),000*


'19,600*

'1,)0*

'>*

1,)0

'19,600*

4etained earnings

'11,000*

'3,000*

'>*

3,000

'11,000*


Accu&ulated ot2er co&%re2ensive 'inco&e* loss

'00*

oncontrolling interest otal

)0

88 $

0

88 $

0

)0

'>*

'00*

3)0

)0

'>*

'100*

$ (6,000

$ (6,000

'4*

$

0

Note: 2e +F45 alternative valuation &et2od attributes no goodwill to t2e noncontrolling interest At t2e date of acquisition, t2e noncontrolling interest is valued at 10 of t2e fair value of owerline.s identifiable net assets, or 10  $1,000,000 < $100,000



E5.1$ C"n)"*i+'t+ C')0 *" (-"# O8-'ti"n)

Consolidated net inco&e  Consolidated de%reciation e%ense  A&orti;ation of %reviousl? unrecogni;ed identifiable intangibles 8 A&orti;ation of %re&iu& on @ debt 8 0 of undistributed equit? &et2od inco&e '0  $1,700,000*  Becrease in noncas2 current o%erating assets 8 Becrease in current o%erating liabilities Cas2 flow fro& o%erating activities

$ (0,000,000 3,000,000 1,00,000 '!0,000* '6!0,000* (,!00,000 '(,100,000* $ (,30,000

E5.15 C"n)"*i+'t+ C')0 *" (-"# O8-'ti"n)

a arent.s re%orted inco&e 5ubsidiar?.s re%orted inco&e @ess revaluation write8offs: Be%reciation A&orti;ation -oodwill i&%air&ent loss Consolidated net inco&e

$ 1,000,000 (0,000

Consolidated net inco&e  Consolidated de%reciation e%ense '1*  Consolidated a&orti;ation e%ense '(*  -oodwill i&%air&ent loss 8 Mndistributed equit? invest&ent inco&e '3* Cas2 flow fro& o%erating activities

$ 1,1!(,000 (16,000 6),000 0,000 '(),000* $ 1,7!,000

'3,000* '1),000* '0,000* $ 1,1!(,000

b

'1* $17),000  $3!,000  $3,000 '(* $)0,000  $1),000 '3* $60,000 8 $3),000



PROBLEMS P5.1

C"n)"*i+'ti"n 6"-7in P'8-, D't "( A!qui)iti"n

(in millions)

a Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value of "agota 4evaluations: ro%ert?, %lant and equi%&ent atents and trade&ar#s Custo&er8related intangibles @ong8ter& liabilities -oodwill

$ 1,(00 I37) 1,)7) $ )00 '(00* ) 30 ()

I 00 $ 1,17)

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill Kers2e?.s goodwill: $1,(00 / '7)  $00* -oodwill to noncontrolling interest

$ 1,17) 900 $ (7)


(in millions)

Current assets

H-)0y D- C-

E*i#in'ti"n)

B'"t' D- C-

$ 1,)00

$

D-

C-

3()

C"n)"*i+'t+ B'*'n!) D- C-

$ 1,!()

>, net

1,600

600

(00 '4*

+nvest&ent in "agota

1,(00

88

37) '>*

(,000

!() '4* atents and trade&ar#s

1,300

Custo&er8related intangs

7)

88

-oodwill

88

'4*

)

1,(0

'4*

30

30

'4* 1,17)

1,17)

Current liabilities

'1,600*

'100*


'1,900*

'00*

'4*

()

'(,(7)*

'300*

'10*

'>*

10

'300*


'1,700*


'1,9)0*

'(00*

'>*

(00

'1,9)0*

4etained earnings

'3,900*

'300*

'>*

300

'3,900*

reasur? stoc# Accu&ulated =C@

,000

88

)0

10

,000 10 '>*

oncontrolling interest otal liabilities and equit? ©Cambridge Business Publishers, 2016 5-22

)0

1() '>* IIIIII

IIIIII

IIIIII

$

$

$ 1,7!)

0

0

()0 '4* $ 1,7!)

'37)* $

0


c C"n)"*i+'t+ B'*'n! S0t, ?u*y 1, 2>1% A))t) Current assets ro%ert?, %lant and equi%&ent, net -oodwill +dentifiable intangibles otal assets Li':i*iti) 'n+ )t"!70"*+-); quity Current liabilities @ong8ter& liabilities otal liabilities 5toc#2olders. equit? Kers2e?.s stoc#2olders. equit?: Co&&on stoc# Additional %aid8in ca%ital 4etained earnings reasur? stoc# Accu&ulated ot2er co&%re2ensive loss otal Kers2e? stoc#2olders. equit? oncontrolling interest otal stoc#2olders. equit? otal liabilities and stoc#2olders. equit?

P5.2

$

$ $

1,!() (,000 1,17) 1,)0 6,)0 1,700 (,(7) 3,97)

300 1,9)0 3,900 ',000* ')0* (,100 37) (,7) $ 6,)0

C"n)"*i+'t+ B'*'n! S0t 6"-7in P'8-, D't "( A!qui)iti"n, B'-'in Pu-!0') ) -*'t+ P3.$

(in millions)

a Acquisition cost Fair value of noncontrolling interest otal "oo# value of 5aon 4evaluations: +nventor? @ong8ter& invest&ents @and "uildings and equi%&ent, net @ong8ter& debt Fair value of identifiable net assets -ain on acquisition


$ 1,000 (00 $ 1,(00 $ 1,(9) 100 ')0* () 300 110 (,000 $ '!00*

©Cambridge Business Publishers, 2016 5-2"

aon.s acquisition entr?: +nvest&ent in 5aon Cas2 -ain on acquisition

1,!00 1,000 !00

b C"n)"*i+'ti"n 6"-7in P'8A!!"unt) T'7n -"# B""7) P'@"n D- C-

Cas2 and receivables

E*i#in'ti"n)

S'@"n D- C-

$ 1,!60

$ 7(0

1,700

900

88

300

+nventor? @ong8ter& invest&ents +nvest&ent in 5aon

D-

C"n)"*i+'t+ B'*'n!) D- C-

C-

$ (,)!0 '4*

100

(,700 )0 '4*

1,!00

()0

1,036 '>* 76 '4*

@and

88

6)0

17)

'4*

()

1,070

"uildings and equi%&ent

3,00

600

'4*

300

,300

Accu&ulated de%reciation

'1,000*

Current liabilities

'1,)00*

'1,000*

@ong8ter& debt

'(,000*

'00*

'4*

110

'(,(90*


')00*

'100*

'>*

100

')00*


'1,(00*

'3)0*

'>*

3)0

'1,(00*

4etained earnings

'3,(10*

'!)*

'>*

!)

'3,(10*

'4*

)9

oncontrolling interest otal

Note:

88

88 $

0

88 $

0

'1,000* '(,)00*

$ (,109

()9 '>* $ (,109

'(00* $

0

+n ournal entr? for&, t2e eli&inating entries are:

'>* Co&&on stoc#, %ar value Additional %aid8in ca%ital 4etained earnings +nvest&ent in 5aon oncontrolling interest

©Cambridge Business Publishers, 2016 5-2$

100 3)0 !) 1,036 ()9


'4* +nventor? @and "uildings and equi%&ent @ong8ter& debt oncontrolling interest @ong8ter& invest&ents +nvest&ent in 5aon

100 () 300 110 )9 )0 76

2e adust&ent to noncontrolling interest brings its balance to fair value at t2e acquisition date 2e adust&ent to t2e invest&ent eli&inates t2e re&aining balance c C"n)"*i+'t+ B'*'n! S0t, ?'nu'-y 1, 2>1% A))t) Cas2 and receivables +nventor? Current assets @ong8ter& invest&ents @and "uildings and equi%&ent, net of $1,000 accu&ulated de%reciation otal assets Li':i*iti) 'n+ )t"!70"*+-); quity Current liabilities @ong8ter& debt otal liabilities 5toc#2olders. equit? aon stoc#2olders. equit?: Co&&on stoc# Additional %aid8in ca%ital 4etained earnings otal aon stoc#2olders. equit? oncontrolling interest otal stoc#2olders. equit? otal liabilities and stoc#2olders. equit?


$

$ $

$

(,)!0 (,700 ),(!0 ()0 1,070 3,300 9,900 (,)00 (,(90 ,790

)00 1,(00 3,(10 ,910 (00 ),110 9,900


P5.3

C"n)"*i+'ti"n E*i#in'tin Ent-i), D't "( A!qui)iti"n

(in thousands) a +nvest&ent in 5u&&er Eerger e%enses Cas2 >arnings contingenc? liabilit?

!,!00 300 !,300 !00

b Consolidation wor#ing %a%er eli&inating entries: '>* Co&&on stoc# 4etained earnings +nvest&ent in 5u&&er oncontrolling interest

)00 3,000 (,6() !7)

'4* +n8%rocess researc2 and develo%&ent -oodwill '1* oncurrent liabilities Cas2 and receivables +nventories lant assets, net +ntangibles @awsuit liabilit? +nvest&ent in 5u&&er '(* oncontrolling interest '3* '1* Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value of 5u&&er 4evaluations: Cas2 and receivables +nventories lant assets, net +ntangibles oncurrent liabilities +4B @awsuit liabilit? -oodwill

1,)00 9,300 100 (00 )00 1,000 1,000 00 6,17) 1,6() $ !,!00 (,)00 11,300 $ 3,)00 '(00* ')00* '1,000* '1,000* 100 1,)00 '00*

(,000 $ 9,300

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill $ 9,300 lacer.s goodwill: $!,!00 / '7)  $(,000* 7,300 -oodwill to noncontrolling interest $ (,000 '(* 7)  '$100  $1,)00 / $(00 / $)00 / $1,000 / $1,000 / $00*  $7,300 < $6,17) '3* ()  '$100  $1,)00 / $(00 / $)00 / $1,000 / $1,000 / $00*  $(,000 < $1,6() ©Cambridge Business Publishers, 2016 5-26


P5.$

C"n)"*i+'t+ 6"-7in P'8- On /'- A(t- A!qui)iti"n, B'-'in Pu-!0') ) -*'t+ P$.$

(in millions)

a Calculation of gain on acquisition: Acquisition cost Fair value of noncontrolling interest

$ 1,6(0 1!0 1,!00

"oo# value '$100  $3)0  $!)* 4evaluations: +nventor? @ong8ter& invest&ents @and "uildings and equi%&ent @ong8ter& debt 'discount* -ain on acquisition

$ 1,(9) 100 ')0* () 300 110

(,000 $ '(00*

b Equity in NI

T"t'*

5aon.s re%orted net inco&e for (016 '$10,000  $10 / $!,000 / $0 / $() / $1,600 < $3)* 4evaluation write8offs: +nventor? @ong8ter& invest&ents 'adust&ent to gain on sale* "uildings and equi%&ent '$300D(0* @ong8ter& debt '$110D)*


$ 3) '100* )0 '1)* '((* $ ()!

$ 310)

N"n!"nt-"**in int-)t in NI

$ 3)

'90*

'10*

) '13)* '19!* $ (3((

) '1)* '((* $ ()!

©Cambridge Business Publishers, 2016 5-2%

c C"n)"*i+'ti"n 6"-7in P'8-, D!#:- 31, 2>1% T-i'* B'*'n!) T'7n -"# B""7) P'@"n D- C-


$

3,(70

+nventor? @ong8ter& invest&ents +nvest&ent in 5aon

E*i#in'ti"n)

S'@"n D- C-

$

D-

C"n)"*i+'t+ B'*'n!) D- C-

C-

!00

(,(60

90

88

88

1,96((

$ '4*

100

'=8(*

)0

88

,070

100 '=81* )0

3,(00

'4*

88

1(( 'C* 1,16)) '>* 6)) '4*

@and

88

6)0

300

'4*

()

3,600

1,1)0

'4*

300

Current liabilities

'(,0(0*

'1,(00*

@ong8ter& debt

'),000*

')0*

'4*

110

Co&&on stoc#

')00*

'100*

'>*

100

')00*


'1,(00*

'3)0*

'>*

3)0

'1,(00*

4etained earnings, Han 1

'(,610*

'!)*

'>*

!)

'(,610*

"uildings and equi%&ent, net


88

1,19) 1) '=83*

),03) '3,((0*

88

(( '=8*

'),36(*

1(9) '>* )0) '4* 1)! '*

Bividends

5ales revenue

)00

'30,000*

>quit? in net inco&e of 5aon -ain on sale of securities Cost of goods sold

100

90

'C*

10

'*

'10,000*

'(3((*

88

88

'10*

'19)!*

)00 '0,000*

'C*

(3((

88 )0 '=8(*

'60*

(6,000

!,000

Be%reciation e%ense

300

0

'=83*

1)

3))

+nterest e%ense

()0

()

'=8*

((

(97

(,770

1,600

88

88

=t2er o%erating e%enses oncontrolling interest in + $

©Cambridge Business Publishers, 2016 5-2&

0

$

0

'=81* 100

3,100

,370 '*

()!

IIIIII

$ (,9)

$ (,9)

()! $

0


P5.5

C"n)"*i+'t+ 6"-7in P'8- T" /'-) A(t- A!qui)iti"n, B'-'in Pu-!0') ) -*'t+ P5.$

(all amounts in millions)

a Equity in NI


$ (00

$ 1!0

$ (0

'1)* '((* $ 163

'13)* '19!* $ 167

'1)* '((* $ 163

T"t'*

5aon.s re%orted net inco&e for (017 '$1(,000 / $9,)00 / $60 / $0 / $(,(00 < $(00* 4evaluation write8offs: "uildings and equi%&ent '$300D(0* @ong8ter& debt '$110D)*

+nventor? 'F+F=* and long8ter& invest&ent revaluations were reali;ed Note: t2roug2 sale in (016 b C"n)"*i+'ti"n 6"-7in P'8-, D!#:- 31, 2>1& T-i'* B'*'n!) T'7n -"# B""7) P'@)"n D- C-


$ 3,000

+nventor?

(,)00

+nvest&ent in 5aon

(,0639

E*i#in'ti"n)

S'@"n D- C-

$

D-

C"n)"*i+'t+ B'*'n!) D- C-

C-

!)0

$

9)0

3,)0

88

1017 'C* 1,3!6

'>*

)76( '4* @and

3,!)0

88

6)0

()0

'4*

()

),90)

1,0

'4*

(!)

Current liabilities

'(,)00*

'1,000*

@ong8ter& debt

'6,000*

'!00*

'4*

!!

Co&&on stoc#

')00*

'100*

'>*

100

')00*


'1,(00*

'3)0*

'>*

3)0

'1,(00*


'3,0(((*

'1,090*

'>*

1,090

"uildings and equi%&ent, net


88

88

1,1) 1) '=81*

7,61) '3,)00*

(( '=8(*

'6,73*

'3,0(((* 1)

'>*

1! '4* 113 '*

'(071*

continued


©Cambridge Business Publishers, 2016 5-2'

b table continued C"n)"*i+'ti"n 6"-7in P'8-, D!#:- 31, 2>1& T-i'* B'*'n!) T'7n -"# B""7) P'@)"n D- C-

Bividends

5ales revenue >quit? in net inco&e of 5aon

D-

C"n)"*i+'t+ B'*'n!) D- C-

C-

)0

)

'C*

)

'*

)00

'1(,000*

'167*

Cost of goods sold

88

'7,000* 'C*

167

88

30,000

9,)00

Be%reciation e%ense

)0

60

'=81*

1)

)()

+nterest e%ense

300

0

'=8(*

((

36(

3,000

(,(00

88

88

=t2er o%erating e%enses oncontrolling interest in + $

P5.%

S'@"n D- C-

)00

'3),000*

E*i#in'ti"n)

0

$

0

39,)00

),(00 '*

163 $ (,3)!

IIIIII

163

$ (,3)!

$

0

C"n)"*i+'ti"n 6"-7in P'8-, S!"n+ /'- "**"in A!qui)iti"n

(in millions)

a Calculation of (01) equit? in net loss and noncontrolling interest in net loss: Equity in NL

T"t'*

>&erald 5afari 4esort re%orted loss '$(,(00  $300  $(00 / $1,!00 / $1,000* < $'100*

N"n!"nt-"**in int-)t in NL

$ '100*

$ '70*

$ '30*

' 10*

'7*

'3*

$ '110*

$ '77*

$ '33*

4evaluation write8offs: +dentifiable intangibles

©Cambridge Business Publishers, 2016 5-"0


b C"n)"*i+'ti"n 6"-7in P'8-, D!#:- 31, 2>15 T-i'* B'*'n!) T'7n -"# B""7) D- C- H'--'0;) Ent-t'in#nt

Current assets

$

1,00

@and, buildings, riverboats and equi%&ent, net

17,!7

+ntangible assets

(,)00

+nvest&ent in >&erald

E*i#in'ti"n)

E#-'*+ S'('-i R)"-t

$

D-

C-

(00

$

(,19

39!3


1,600

(0,(637

!00

'4*

60

88

'C*

!0)

10

'=*

3,3)0

36! '>* (

Current liabilities

C"n)"*i+'t+ B'*'n!) D- C-

'4*

88

'1,)00*

'300*

'1,!00*

'1,000*

'(,600*

'16,600*

'),)(0*

'3(*

'>*

3(

'),)(0*

'900*

'300*

'>*

300

'900*

Ca%ital stoc# 4etained earnings, Han 1 oncontrolling interest

88

88

'*

3)

1!7( '>* 1!

Bividends

100

)

'4*

'1707*

3) 'C* 1) '*

100

Casino revenues

'6,600*

'(,(00*

'!,!00*

Food and beverage revenues

'1,00*

'300*

'1,700*

4oo&s revenues

'1,000*

'(00*

'1,(00*

>quit? in net loss of >&erald

77

88

Birect casino, food and beverage, roo&s e%enses

7,(00

1,!00

9,000

-eneral and ad&inistrative e%enses

1,00

1,000

(,00

+&%air&ent losses

88

88

oncontrolling interest in net loss

88

88

IIIII

33

0

$ !09

$ !09

$


0

$

77

'=*

'C*

88

10

10 '*

'33* $

0


P5.&

Equity Mt0"+ 'n+ E*i#in'tin Ent-i) T0- /'-) A(t- A!qui)iti"n ) -*'t+ P$.2

a Calculation of equit? in net inco&e and noncontrolling interest in net inco&e for (016: Equity in NI

T"t'*

5unset Coast.s re%orted net inco&e for (016 4evaluation write8offs: lant assets '$1,000,000*D10 +dentifiable intangibles $3,600,000D(0 '1*


$ (00,000

$ 1!0,000

$ (0,000

100,000 '1!0,000* $ 1(0,000

90,000 '16(,000* $ 10!,000

10,000 '1!,000* $ 1(,000

'1* $3,600,000 < $3,1)0,000  $3)0,000 / '$1,00,000 / $)00,000 / $1,000,000*

b Calculation of invest&ent balance at Bece&ber 31, (016: +nvest&ent in 5unset Coast, Hanuar? 1, (01 90  5unset Coast.s re%orted inco&e, (018(016 90  5unset Coast.s re%orted dividends, (018(016 ')0 of re%orted inco&e* 4evaluation write8offs, (018(016: lant assets '$1,000,000*D10  3  90 +dentifiable intangibles '$3,600,000D(0*  3  90 +nvest&ent in 5unset Coast, Bece&ber 31, (016

$3,1)0,000 76),000 '3!(,)00* (70,000 '!6,000* $3,316,)00

Note: Mnder @+F= and increasing inventor?, t2e revalued inventor? is assu&ed to still be on 2and

c Calculation of noncontrolling interest balance at Bece&ber 31, (016: Fair value of noncontrolling interest, Hanuar? 1, (01 10  5unset Coast.s re%orted inco&e, (018(016 10  5unset Coast.s re%orted dividends, (018(016 ')0 of re%orted inco&e* 4evaluation write8offs, (018(016: lant assets '$1,000,000D10*  3  10 +dentifiable intangibles '$3,600,000D(0*  3  10 oncontrolling interest in 5unset Coast, Bece&ber 31, (016


$ 3)0,000 !),000 '(,)00* 30,000 '),000* $ 36!,)00


d Consolidation wor#ing %a%er eli&inating entries for (016: 'C* >quit? in net inco&e of 5unset Coast Bividends/5unset Coast '0)  $(00,000  90* +nvest&ent in 5unset Coast '>* 5toc#2olders. equit?G5unset Coast, 1D1 +nvest&ent in 5unset Coast oncontrolling interest in 5unset Coast

10!,000 90,000 1!,000

1,7(),000 1,))(,)00 17(,)00

5unset Coast.s stoc#2olders. equit?, Hanuar? 1, (016 < $1,00,000  '1 8 0)*'$!)0,000 / $(00,000* < $1,7(),000

'4* +dentifiable intangibles 3,(0,000 +nventor? )00,000 lant assets, net !00,000 +nvest&ent in 5unset Coast 1,76,000 oncontrolling interest in 5unset Coast 19,000 4evaluations at Hanuar? 1, (016 < original revaluations less write8offs for (01 and (01) '=* lant assets, net A&orti;ation e%ense Be%reciation e%ense +dentifiable intangibles

100,000 1!0,000 100,000 1!0,000

'* oncontrolling interest in + of 5unset Coast Bividends / 5unset Coast '0)  $(00,000  10* oncontrolling interest in 5unset Coast


1(,000 10,000 (,000

©Cambridge Business Publishers, 2016 5-""

P5.

C"n)"*i+'ti"n 6"-7in P'8- A(t- S4-'* /'-)

(in thousands)

a Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value of 4egional "ottling reviousl? unre%orted franc2ise rig2ts -oodwill

$ 7(,000 13,000 !),000 $ (),000 ),000

30,000 $ )),000

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill Consolidated "ottling.s goodwill: $7(,000 / '7)  $30,000* '90* -oodwill to noncontrolling interest '10*

$ )),000 9,)00 $ ),)00

b Calculation of equit? in net loss and noncontrolling interest in net loss for (017:

T"t'*

4egional "ottling.s re%orted net inco&e for (017 '1* 4evaluation write8offs: Franc2ise rig2ts i&%air&ent -oodwill i&%air&ent '90:10 ratio*

$ 3,000 '(,)00* '6,000* $ '),)00*

Equity in NL

$

(,()0

'1,!7)* '),00* $ '),0()*

N"n!"nt-"**in int-)t in NL

$

7)0

'6()* II'600* $ '7)*

'1* $3,000 < $300,000 / '$17),000  $11,000  $!,000*

c Calculation of invest&ent balance at Bece&ber 31, (017: +nvest&ent in 4egional "ottling, Hanuar? 1, (00! 7)  4egional.s re%orted co&%re2ensive inco&e less dividends, (00!8(016 '(* 7)  franc2ise rig2ts write8offs, (00!8(016 +nvest&ent in 4egional "ottling, Hanuar? 1, (017 >quit? in net loss, (017 >quit? in =C@, (017 +nvest&ent in 4egional "ottling, Bece&ber 31, (017

$ 7(,000 ,3)0 '7)0* 7),600 '),0()* '1)* $ 70,)60

'(* C2ange in boo# value (00!8(016 of $),!00 '< $30,!00 / $(),000* is attributed to accu&ulated co&%re2ensive inco&e less dividends, since t2e stoc# accounts did not c2angeL $30,!00 < $1,000  $1(,000  $1!,100 / $100 / $(00

©Cambridge Business Publishers, 2016 5-"$


d C"n)"*i+'ti"n 6"-7in P'8-, D!#:- 31, 2>1& T-i'* B'*'n!) T'7n -"# B""7)

E*i#in'ti"n)

C"n)"*i+'t+ B"tt*in D- C-

Ri"n'* B"tt*in D- C-

$ 160,000

$ 30,000

ro%ert?, %lant  equi%&ent, net

(!,000

(33,7!0

Franc2ise rig2ts, net

66,00

88

'4*

,000

(,)00 '=*

70,)60

88

'C*

),00

(3,100 '>*

Current assets

+nvest&ent in 4egional "ottling

-oodwill

88

88

D-

C"n)"*i+'t+ B'*'n!) D- C-

C-

$

190,000 !1,7!0

'4* )),000

67,900

)(,)00 '4*

88

6,000 '=*

9,000

Current liabilities

'1(0,000*

'(0,000*

'10,000*

@ong8ter& debt

'700,000*

'(10,000*

'910,000*

Co&&on stoc#

'1(,000*

'1,000*


'100,000*


')0,)00*

'>*

1,000

'1(,000*

'1(,000*

'>* 1(,000

'100,000*

'1!,100*

'>* 1!,100

')0,)00*

Accu&ulated ot2er co&%re2ensive loss, Han 1

13,000

100

100 '>*

13,000

reasur? stoc#

30,000

(00

(00 '>*

30,000

88

88


'*

!0

7,700 '>* 6,)00 '4*

Bividends et sales

(,000 '1,(00,000*

>quit? in net loss of 4egional "ottling

88

(,000

'300,000*

),0()

>quit? in =C@ of 4egional "ottling

'13,7(0*

'1,)00,000*

88

1)

),0() 'C*

88

1) 'C*

88

Cost of sales

760,000

17),000

93),000

5elling, deliver? and ad&inistrative e%enses

00,000

11,000

)1,000

)00

88

+nterest e%ense

(!,000

!,000

=t2er co&%re2ensive 'inco&e* loss

'1,000*

+&%air&ent losses

88

88

oncontrolling interest in =C@

88

88


0

!,)00

9,000 36,000

(0

oncontrolling interest in @

$

'=*

$

0

'9!0*

IIIII $10,1(0

7) '*

'7)*

) '*

')*

$10,1(0

$


0

e C"n)"*i+'t+ St't#nt "( In!"# 'n+ C"#8-0n)i4 In!"# /'- En++ D!#:- 31, 2>1&

et sales Cost of sales -ross %rofit 5elling, deliver? and ad&inistrative e%enses +&%air&ent losses +nterest e%ense Consolidated net inco&e lus: et loss attributable to noncontrolling interest et inco&e attributable to Consolidated "ottling

$ 1,)00,000 '93),000* )6),000 ')1,000* '9,000* '36,000* 6,000 I II7) $ 6,7)

Consolidated net inco&e lus: =t2er co&%re2ensive inco&e Co&%re2ensive inco&e lus: Co&%re2ensive loss attributable to noncontrolling interest '1* Co&%re2ensive inco&e attributable to Consolidated "ottling

$

$

6,000 9!0 6,9!0 !0 7,60

'1* $7)  $) < $!0

C"n)"*i+'t+ B'*'n! S0t, D!#:- 31, 2>1& A))t) Current assets ro%ert?, %lant and equi%&ent, net Franc2ise rig2ts, net -oodwill otal assets Li':i*iti) 'n+ )t"!70"*+-); quity Current liabilities @ong8ter& liabilities otal liabilities 5toc#2olders. equit? Consolidated "ottling stoc#2olders. equit?: Co&&on stoc# Additional %aid8in ca%ital 4etained earnings '(* reasur? stoc# Accu&ulated ot2er co&%re2ensive loss '3* otal Consolidated "ottling stoc#2olders. equit? oncontrolling interest otal stoc#2olders. equit? otal liabilities and stoc#2olders. equit?

$

190,000 !1,7!0 67,900 9,000 $ 1,1!!,6!0

$

10,000 910,000 1,0)0,000

1(,000 100,000 ),97) '30,000* '1(,01)* 1(,960 13,7(0 13!,6!0 $ 1,1!!,6!0

'(* $)0,)00  $6,7) 8 $(,000 < $),97) '3* $13,000 8 $9!0 8 $) < $1(,01) ©Cambridge Business Publishers, 2016 5-"6


P5.9

C"n)"*i+'t+ St't#nt "( C')0 *")

(in thousands) Sunny '**y R)"-t 'n+ Su:)i+i'-y C"n)"*i+'t+ St't#nt "( C')0 *") "- t0 y'- 2>1& C')0 (-"# "8-'tin '!ti4iti) Consolidated net inco&e '$00,000  $(,000* '1* Add 'subtract* ite&s not affecting cas2: Be%reciation e%ense -oodwill i&%air&ent loss @oss on retire&ent of %lant assets '(* C2anges in current assets and liabilities: +ncrease in ot2er current assets Becrease in current liabilities et cas2 fro& o%erating activities C')0 (-"# in4)tin '!ti4iti) Acquisition of %lant assets '3* C')0 (-"# (in'n!in '!ti4iti) +ncrease in noncurrent liabilities Bividends %aid to controlling stoc#2olders Bividends %aid to noncontrolling stoc#2olders et decrease in cas2 lus cas2 balance, Hanuar? 1 Cas2 balance, Bece&ber 31

$ (,000 $ 3)0,000 30,000 )0,000 '00,000* '(6!,000*

30,000

'66!,000* 1!6,000 '300,000*

100,000 '70,000* '16,000*

1,000 '100,000* 700,000 $ 600,000

'1* oncontrolling interest in net inco&e < $1(0,000  (0 '(* $1,600,000  $3)0,000 / $1,)00,000 < $)0,000 accu&ulated de%reciation on %lant assets scra%%edL $)00,000 / $)0,000 < $)0,000 loss on retire&ent of %lant assets '3* N < cost of %lant assets acquiredL $,(00,000  N / $)00,000 < $,000,000L N < $300,000


©Cambridge Business Publishers, 2016 5-"%

P5.1> C"n)"*i+'t+ St't#nt "( C')0 *")

(in millions) P-i# C')in") 'n+ S'-'t"' Int-n'ti"n'* H"t*) C"n)"*i+'t+ St't#nt "( C')0 *") "- t0 /'- n++ D!#:- 31, 2>1& C')0 (-"# "8-'tin '!ti4iti)< Consolidated net inco&e Add 'subtract* ite&s not affecting cas2 fro& o%erations: Be%reciation e%ense -oodwill i&%air&ent loss @oss on sale of %lant assets C2anges in current assets and liabilities: +ncrease in ot2er current assets +ncrease in current liabilities et cas2 fro& o%erating activities C')0 (-"# in4)tin '!ti4iti)< 5ale of %lant assets '1* Acquisition of %lant assets C')0 (-"# (in'n!in '!ti4iti)< +ncrease in long8ter& liabilities +ssuance of ca%ital stoc# Bividends %aid to &aorit? stoc#2olders Bividends %aid to noncontrolling interest '(* et increase in cas2 lus cas2 balance, Hanuar? 1, (017 Cas2 balance, Bece&ber 31, (017

$ 61( $ ()0 () 10 '100* ()0

1) '67)* 1)0 (00 '3)* '(*

(!)

1)0 1,07

'660*

'!7* 300 (00 $ )00

'1* Cost of %lant assets sold < $(,)00  $67) 8 $3,100 < $7) Accu&ulated de%reciation on %lant assets sold < $!00  $()0 8 $1,000 < $)0 Cas2 received fro& sale of %lant assets < $7) 8 $)0 8 $10 < $1) '(* $1)0  $1( / $160 < $(

©Cambridge Business Publishers, 2016 5-"&


P5.11 C"n)"*i+'ti"n T" /'-) A(t- A!qui)iti"n, IRS

(in millions)

a Calculation of goodwill is as follows: Acquisition cost "oo# value of Eonaco 4evaluations: +nventor? ro%ert?, %lant and equi%&ent +dentifiable intangibles Fair value of identifiable net assets

J ,000 J 1,000 '100* 00 300 1,600  !0

-oodwill

1,(!0 J (,7(0

b Calculation of equit? in net inco&e and noncontrolling interest in net inco&e for (016:

Eonaco.s re%orted net inco&e for (016 '1* 4evaluation write8offs: ro%ert?, %lant and equi%&ent J00D10 +dentifiable intangibles J300D3 -oodwill

T"t'* J 600

'0* '100* '(00* J (60

Equity in NI J !0

'3(* '!0* '(00* J 16!

N"n!"nt-"**in int-)t in NI J 1(0

I J

'!* '(0* I88 9(

'1* J600 < J3,)00 / 'J(,)00  J00*


©Cambridge Business Publishers, 2016 5-"'

c C"n)"*i+'ti"n 6"-7in P'8-, D!#:- 31, 2>1% T-i'* B'*'n!) T'7n -"# B""7) Rn+4"u) D- C-

Current assets

J

)00

E*i#in'ti"n)

M"n'!" D- C-

J

D-

C"n)"*i+'t+ B'*'n!) D- C-

C-

900

ro%ert?, %lant and equi%&ent, net

3,000

(,000

+nvest&ent in Eonaco

,316

88

J '4*

360

0 '=*

88

(00

-oodwill

88

88

),3(0

1(! 'C* 1,1(0

+dentifiable intangibles

1,00

'>*

3,06! '4*

88

(00

100 '=*

300

'4* (,6(0

(00 '=*

(,(0

'4*

@iabilities

',6!*

'1,1)0*

Ca%ital stoc#

'1,)00*

'!00*

'>*

!00

'1,)00*


'1,000*

'600*

'>*

600

'1,000*


88

'),79!*

88

(!0

'>*

11( '4* !( '* Bividends

88

)0

'7*

0 'C* 10 '*

5ales revenue

'),000*

>quit? in + of Eonaco

-oodwill i&%air&ent loss Ad&inistrative and ot2er o%erating e%enses

oncontrolling interest in +

88

'!,)00* 'C*

16!

88

,(00

(,)00

88

88

'=*

(00

(00

300

00

'=*

0

!0

'=*

100

'*

9(

IIII

J ),1!0

J ),1!0

88 J

©Cambridge Business Publishers, 2016 5-$0

'3,)00*

'16!*

Cost of sales

88

0

88 J

0

6,700

9( J


0

P5.12 C"n)"*i+'ti"n S4-'* /'-) A(t- A!qui)iti"n, IRS

(in thousands)

a Calculation of goodwill is as follows: Acquisition cost "oo# value of Keart? 4evaluations: lant and equi%&ent +dentifiable intangibles @ong8ter& debt Fair value of identifiable net assets

J 1)0,000 J 70,000 ')0,000* 0,000 (,000 6(,000  7)

-oodwill

6,)00 J 103,)00

b Calculation of equit? in net inco&e and noncontrolling interest in net inco&e for (017:

T"t'*

Keart?.s re%orted net inco&e for (017 '1*

Equity in NI


J 1),000

J 11,()0

J 3,7)0

),000

3,7)0

1,()0

',000*

'3,000*

'1,000*

'7)0*

'7)0*

88

J 11,()0

J ,000

4evaluation write8offs: ro%ert?, %lant and equi%&ent 'J)0,000D10* +dentifiable intangibles 'J0,000D10* -oodwill

J 1),()0 '1* J1),000 < J10,000 / 'J!0,000  J),000*



c C"n)"*i+'ti"n 6"-7in P'8-, D!#:- 31, 2>1& T-i'* B'*'n!) T'7n -"# B""7)

E*i#in'ti"n)

Li*y D- C-

H'-ty D- C-

J 3),000

J (0,000

ro%ert?, %lant and equi%&ent, net

((6,)00

(0(,000

+nvest&ent in Keart?

176,7)0

88

Current assets

D-

C-

C"n)"*i+'t+ B'*'n!) D- C-

J '=*

),000

)),000

30,000 '4*

03,)00

11,()0 'C* 69,000 '>*

+dentifiable intangibles -oodwill Current liabilities

100,000

10,000

88

88

96,)00 '4*

88

(,000

,000 '=*

130,000

'4* 101,000

7)0 '=*

100,()0

'4*

'30,000*

'(),000*

')),000*

'3)0,000*

'100,000*

')0,000*

Ca%ital stoc#

'!0,000*

'),000*

'>*

),000

'!0,000*


'60,000*

'3!,000*

'>*

3!,000

'60,000*

'4*

1,)00

@ong8ter& debt


88

88

(3,000 '>* ,000 '*

5ales revenue

'00,000*

'10,000*

')0,000*

>quit? in net inco&e of Keart?

'11,()0*

Cost of goods sold

()0,000

!0,000

-oodwill i&%air&ent loss

88

88

'=*

7)0

=t2er o%erating e%enses

13,000

),000

'=*

,000

88

88

'*

,000

IIIIII

J(3,)00

J(3,)00

oncontrolling interest in + J


0

88

J

0

'(),)00*

'C*

11,()0

88 330,000 7)0 ),000 '=*

1!7,000 ,000 J


0

P5.13 C"n)"*i+'ti"n T" /'-) A(t- A!qui)iti"n

(in thousands)

a Calculation of (017 equit? in net inco&e and noncontrolling interest in net inco&e: Equity in NI

T"t'*

5ilver ugget.s re%orted + for (017 '$100,000 / $!0,000 / $1,000 < $6,000* 4evaluation write8off: +dentifiable intangibles '$(0,000D)*


$ 6,000

$ ,!00

$ 1,(00

',000* $ (,000

'3,(00* $ 1,600

'!00* $ 00

b C"n)"*i+'ti"n 6"-7in P'8-, D!#:- 31, 2>1& T-i'* B'*'n!) T'7n -"# B""7) Mi--"R)"-t) D- C-

Current assets

$

3),000

E*i#in'ti"n)

Si*4Nut D- C-

$

C-

),000


(16,600

10,000

+ntangibles

3)0,000

)1,0)0

!6,0

88

+nvest&ent in 5ilver ugget

D-

C"n)"*i+'t+ B'*'n!) D- C-

$

0,000 3)6,600

'4* 16,000

,000 '=*

13,0)0

0 'C* 17,(00 '>* 6!,!00 '4*

-oodwill '1* Current liabilities

'4* 6!,000

88 6!,000

')0,000*

'(0,000*

'70,000*

@ong8ter& debt

'600,000*

'1)0,000*

'7)0,000*

Co&&on stoc#

')00*

'100*

'>*

100

')00*

'6,000*

'),)00*

'>*

),)00

'6,000*

'(),000*

'17,700*

'>* 17,700

'(),000*

Additional %aid8in ca%ital 4etained earnings, Han 1 A=C+, Han 1 reasur? stoc#

'1,000* ,000

(00

(00 '>*

1,600

1,600 '>*


'1,000* ,000

,300 '>* 1),(00 '4* 110 '*

'19,610*

continued


©Cambridge Business Publishers, 2016 5-$"

b table continued C"n)"*i+'ti"n 6"-7in P'8-, D!#:- 31, 2>1& T-i'* B'*'n!) T'7n -"# B""7) Mi--"R)"-t) D- C-

Bividends

E*i#in'ti"n)

Si*4Nut D- C-

(,000

D-

C-

1,)00

C"n)"*i+'t+ B'*'n!) D- C-

1,(00 'C* 300 '*

5ales revenue

'!00,000*

>quit? in net inco&e of 5ilver ugget

'100,000*

'1,600*

>quit? in =C+ of 5ilver ugget

88

'0*

Cost of goods sold

6)0,000

!0,000

=%erating e%enses

10,000

1,000

'900,000* 'C*

1,600

88

'C*

0

88 730,000

'=*

,000

=t2er co&%re2ensive inco&e

100

oncontrolling interest in +

88

88

'*

00

oncontrolling interest in =C+

88

88

'*

10

$

0

(,000

1)!,000

')0*

$

)0

0

$ 113,3)0

00 IIIIIIII $ 113,3)0

10 $

1* =riginal goodwill < $!0,000  $1!,000 8 $10,000 8 $(0,000 < $6!,000 -oodwill allocated to Eirror 4esorts < $!0,000 / !0  '$10,000  $(0,000* < $)6,000

P5.1$ C"n)"*i+'ti"n 6"-7in P'8- On /'- A(t- A!qui)iti"n

(in thousands)

a Calculation of goodwill: Acquisition cost Fair value of noncontrolling interest otal fair value "oo# value of 52awnee 4evaluations: lant and equi%&ent @icenses and certificates -oodwill

©Cambridge Business Publishers, 2016 5-$$

$ (),00 11,600 37,000 $ (,000 '),000* !,000

),000 $ 3(,000


0

Allocation of goodwill between controlling and noncontrolling interest: otal goodwill ine Eountain.s goodwill: $(),00 / '60  $),000* < -oodwill to noncontrolling interest

$

3(,000 ((,00 9,600

$

-oodwill is allocated in a 70:30 ratio b Calculation of (016 equit? in net inco&e and noncontrolling interest in net inco&e: Equity in NI

T"t'*

52awnee.s re%orted + for (016 '$,000 / $(,100 < $1,900* 4evaluation write8offs: lant and equi%&ent '$),000D10* @icenses and certificates '$!,000D* -oodwill i&%air&ent loss '70:30 ratio*


$ 1,900

$ 1,10

$ 760

)00 '(,000* '1)0* $ ()0

300 '1,(00* '10)* $ 13)

(00 '!00* ')* $ 11)

c C"n)"*i+'ti"n 6"-7in P'8A!!"unt) T'7n -"# B""7) Pin M"unt'in D- C-

Current assets lant and equi%&ent, net AF5 invest&ents +nvest&ent in 52awnee

$

),000

E*i#in'ti"n)

S0'n P'7 D- C-

$

D-

C-

1,000

70,000

1(,000

(,000

!00

(),)3!

88

C"n)"*i+'t+ B'*'n!) D- C-

$ '=*

)00

),000 '4*

6,000 77,)00 (,!00

13! 'C* 1,(00 '>* (,(00 '4*

88

@icenses and certificates

88

88

'4*

!,000

(,000 '=*

6,000

-oodwill

88

88

'4*

3(,000

1)0 '=*

31,!)0

@iabilities Ca%ital stoc# 4etained earnings, Han 1 A=C+, Hanuar? 1

'!(,)77*

'9,!9)*

'9(,7(*

'100*

'9*

'>*

9

'100*

'13,700*

'1,9!)*

'>*

1,9!)

'13,700*

'1)*

'6*

'>*

6

'1)*

continnued



c table continued C"n)"*i+'ti"n 6"-7in P'8A!!"unt) T'7n -"# B""7) Pin M"unt'in D- C-

E*i#in'ti"n)

S0'n P'7 D- C-

D-

C"n)"*i+'t+ B'*'n!) D- C-

C-


!00 '>* 10,!00 '4* 117 '*

4evenues

'(!,000*

>quit? in net inco&e >quit? in =C+ =%erating e%enses

',000*

'3(,000*

'13)*

88

'C*

13)

88

'3*

88

'C*

3

88

(,100

'=*

1,6)0

(),7)0

((,000

Mnreali;ed gains '=C+*

'!*

')*

oncontrolling interest in inco&e

88

88

'*

11)

oncontrolling interest in =C+

88

88

'*

(

IIIIII

$ ,0)

$ ,0)

otal

$

'11,717*

0

$

0

'13*

11) ( $

d C"n)"*i+'t+ St't#nt "( In!"# 'n+ C"#8-0n)i4 In!"# /'- En++ D!#:- 31, 2>1%

4evenues =%erating e%enses Consolidated net inco&e et inco&e attributable to noncontrolling interest et inco&e attributable to ine Eountain

$ 3(,000 '(),7)0* 6,()0 '11)* 6,13)

Consolidated net inco&e =t2er co&%re2ensive inco&e: Mnreali;ed gains on AF5 securities Co&%re2ensive inco&e Co&%re2ensive inco&e attributable to noncontrolling interest '1* Co&%re2ensive inco&e attributable to ine Eountain

6,()0

$

13 6,(63 '117* 6,16

'1* $11)  $( < $117



0

C"n)"*i+'t+ B'*'n! S0t, D!#:- 31, 2>1% A))t) Current assets lant and equi%&ent, net AF5 invest&ents @icenses and certificates -oodwill otal assets Li':i*iti) 'n+ )t"!70"*+-); quity @iabilities 5toc#2olders. equit? ine Eountain stoc#2olders. equit?: Ca%ital stoc# 4etained earnings '(* Accu&ulated ot2er co&%re2ensive inco&e '3* ine Eountain stoc#2olders. equit? oncontrolling interest otal stoc#2olders. equit? otal liabilities and stoc#2olders. equit?

$

6,000 77,)00 (,!00 6,000 31,!)0 $ 1(,1)0

$

9(,7(

100 19,!3) (6 19,961 11,717 31,67! $ 1(,1)0

'(* $13,700  $6,13) < $19,!3) '3* $1)  $13 8 $( < $(6

P5.15 N"n!"nt-"**in Int-)t in C"#8-0n)i4 In!"#

a Oodafone.s ) %ercent noncontrolling interest in net inco&e is $1(,0)0, i&%l?ing t2at Oeri;on ireless. total net inco&e 'adusted for revaluation write8offs* was $(6,77! '< $1(,0)0D)* 5ince consolidated inco&e is $(3,)7, Oeri;on.s se%arate results are a loss of $3,(31 '< $(3,)7 8 $(6,77!* b Oeri;on ireless &ust 2ave re%orted an ot2er co&%re2ensive loss for (013 "ut t2e ot2er co&%re2ensive inco&e attributed to Oeri;on Co&&unications includes its own ot2er co&%re2ensive inco&e %lus its s2are of Oeri;on ireless. ot2er co&%re2ensive loss Oeri;on Co&&unications re%orted a net gain in ot2er co&%re2ensive inco&e, &ore t2an offsetting its s2are in Oeri;on ireless. loss


©Cambridge Business Publishers, 2016 5-$%

AAHamlen 3e_Solutions Manual_Ch05

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