Question

Jeter Corporation purchases 80% of the outstanding stock of Super Company for $275,000 on July 1, 2011. Super Company has the following stockholders’ equity on July 1, 2011:
Common stock($5 par).. .. . . . . . .. . . . . . .. . $150,000
Retained earnings, July 1, 2011 . . . . .. . . ... 50,000
Total equity . .... .. .... . .. ... . .. ... .. .. . . . . . $200,000
The fair values of Super’s assets and liabilities agree with the book values, except for the equipment and the building. The equipment is undervalued by $10,000 and is thought to have a 5-year life; the building is undervalued by $50,000 and is thought to have a 20-year life.
The remaining excess of cost over book value is attributable to goodwill. Jeter Corporation uses the simple equity method to record its investments.
Since the purchase date, both firms have operated separately, and no intercompany transactions have occurred. Super Company closes its books on the date of acquisition.
The separate trial balances of the firms on December 31, 2011, are as follows:
Required
1. Prepare a value analysis and a determination and distribution of excess schedule for the investment.
2. Prepare the 2011 consolidated worksheet. Include columns for the eliminations and adjustments, the consolidated income statement, the NCI, the controlling retained earnings, and the consolidated balance sheet. Prepare supporting income distribution schedules as well.
3. Prepare the 2011 consolidated statements, including the income statement, retained earnings statement, and balance sheet.


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  • CreatedApril 13, 2015
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