Par Value Stock When to Sell - Excel

Document Sample

```					Acct 415/515                                                                                    Prof. Teresa Gordon

Pebble & Stone                               Created Subsidiary with minority interest

Pebble Corporation created a wholly-owned subsidiary (Stone Inc.) in 19X8 by
investing \$60,000 to acquire 60,000 shares of Stone's \$1 par value stock.

Pebble can sell a 20% interest in Stone Inc. in one of two ways.
A. Pebble could sell 12,000 of its 60,000 shares at \$9 per share.
B. Stone Inc. could issue another 15,000 shares of its stock at \$9 per share

Either way, Pebble Corporation would own an 80% interest in Stone Inc.

Compute Pebble's gain:

Option A:
Pebble sells stock                  12,000 shares sold directly
it owns and carries on its           \$9.00 fair market value
books as an investment            \$108,000
12,000 Basis in stock         \$1.00 per share
Gain =    \$96,000                   COST METHOD

Option B:                           15,000   new shares
Stone issues new shares             60,000   existing shares
to other investors                  75,000   Total shares after initial public offering (IPO)
80%   Pebble's ownership percentage after IPO

So, in effect, Pebble has sold (indirectly) 80% of the 15,000 new shares
12,000 shares sold indirectly
\$9.00 fair market value
\$108,000
12,000 Basis in stock           \$1.00 per share
Gain =      \$96,000                   COST METHOD

Note that the gain will be a different amount if Pebble has been using the
equity method to account for its investment in Stone.

Pebble & Stone                                     11/22/2010                                               Page 1
Acct 415/515                                                                           Prof. Teresa Gordon

Assume that Pebble sells 20% of its Stone stock at \$9 per share
EQUITY METHOD
Transaction at                      Pebble                Journal entry         Revised
December 31, 20X2                                Debits               Credits   Statement

BALANCE SHEET:
Cash                                20,000
Other Current Accounts             300,000

Property Plant & Equipment          780,000
Accumulated Depreciation           (390,000)

Investment in Company S            100,000

Total assets   810,000
Liabilities                       421,000

Capital Stock Company P            300,000
R/E December 31, 20X2                89,000

Total liabilities & equity   810,000

Proof of postings:

A Pebble sells 20%                              11/22/2010                                         Page 2
Acct 415/515                                                                           Prof. Teresa Gordon

Assume that Pebble sells 20% of its Stone stock at \$9 per share
Cost Method
Transaction at                 Pebble                        Journal entry              Revised
December 31, 20X2                                   Debits                   Credits   Statement

BALANCE SHEET:
Cash                               20,000
Other Current Accounts            300,000

Property Plant & Equipment        780,000
Accumulated Depreciation         (390,000)

Investment in Company S            60,000

Total assets       770,000
Liabilities                      421,000

Capital Stock Company P           300,000
R/E December 31, 20X2               49,000

Total liabilities & equity       770,000

Proof of postings:

A Pebble sells 20%                            11/22/2010                                           Page 3
Acct 415/515                                      Pebble Stone                            Prof. Teresa Gordon

Pebble & Stone                  Created Subsidiary with minority interest

Pebble Corporation created a wholly-owned subsidiary (Stone Inc.) in 19X8 by
investing \$60,000 to acquire 60,000 shares of Stone's \$1 par value stock.

Pebble can sell a 20% interest in Stone Inc. in one of two ways.
A. Pebble could sell 12,000 of its 60,000 shares at \$9 per share.
B. Stone Inc. could issue another 15,000 shares of its stock at \$9 per share

Either way, Pebble Corporation would own an 80% interest in Stone Inc.

Pebble & Stone
Conceptual Analyis                                            Print version
Parent's
Method A - sell 12,000 shares                                      Common                 Retained
NCI        Investment                      APIC
of stock held by Pebble                                           Stock                 Earnings
Account
Percentage               20%           80%
Balances at 12/31/X2                      0         100,000          60,000           0      40,000
Record sale of stock
Equity in net income
To parent
To NCI
Dividends declared
To parent
To NCI
Balances at 12/31/X3
Equity in net income
To parent
To NCI
Dividends declared
To parent
To NCI
Balances at 12/31/X4
Equity in net income
To parent
To NCI
Dividends declared
To parent
To NCI
Balances at 12/31/X5

Con Anal A                                         11/22/2010                                         Page 4
Acct 415/515                                         Pebble Stone                                    Prof. Teresa Gordon

Pebble & Stone                                 Created Subsidiary with minority interest
Parent's
Method A - sell 12,000 shares of                                                                Retained
NCI           Investment    Common Stock       APIC
stock held by Pebble                                                                       Earnings
Account
Percentage              20%              80%
Adjusted balance at 12/31/X2         20,000              80,000      60,000                0            40,000
Equity in net income
To parent                                              64,000                                          64,000
To NCI                             16,000                                                              16,000
Dividends declared
To parent                                             (32,000)                                     (32,000)
To NCI                             (8,000)                                                          (8,000)
Balances at 12/31/X3                28,000             112,000         60,000              0         80,000

EQUITY METHOD                                                                   Case A         Year 3
For year ended December 31, 20X3
1 Basic elimination - book value element                              Debit                         Credit
Common stock                                                         60,000
Retained earnings (beginning)                                        40,000
Equity in earnings of sub                                            64,000
Noncontrolling interest in earnings             new                  16,000
Dividends declared                                                                                 40,000
Noncontrolling interest in net assets          new                                                 28,000
Investment in Subsidiary                                                                          112,000
180,000                        180,000

Parent's
Method A - sell 12,000 shares of                                                                Retained
NCI           Investment    Common Stock       APIC
stock held by Pebble                                                                       Earnings
Account
Balances at 12/31/X3                28,000              112,000      60,000                0            80,000
Equity in net income
To parent                                              80,000                                          80,000
To NCI                             20,000                                                              20,000
Dividends declared
To parent                                             (40,000)                                     (40,000)
To NCI                             (10,000)                                                        (10,000)
Balances at 12/31/X4                 38,000            152,000         60,000              0        130,000

For year ended December 31, 20X4                                 Case A         Year 4
1 Basic elimination - book value element                              Debit                         Credit
Common stock
Retained earnings (beginning)
Equity in earnings of sub
Noncontrolling interest in earnings
Dividends declared
Noncontrolling interest in net assets
Investment in Subsidiary

BV entry A                                            11/22/2010                                                       Page 5
Acct 415/515                                                                                  Prof. Teresa Gordon

Pebble & Stone                        A. Pebble sold 20% of its holdings of Stone Co. Stock
EQUITY METHOD
For the Year Ended                      Pebble      Stone         Adjustments & Elimination      Consolidated
December 31, 20X3                                       80%       Debits            Credits        Statement

INCOME STATEMENT:

Revenue (sales)                        700,000     300,000                                        1,000,000
Less COGS                             (400,000)   (150,000)                                        (550,000)
Expenses (other)                      (200,000)    (70,000)                                        (270,000)

Share of Stone Income                   64,000                                                                0

Net Income:                            164,000      80,000                                          180,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:                  177,000      40,000                                          177,000
Add: Net Income                        164,000      80,000                                          164,000
Less: Dividends Declared               (50,000)    (40,000)                                         (50,000)
R/E December 31, 20X3:                 291,000      80,000                                          291,000

BALANCE SHEET:
Cash                                    35,000     20,000                                            55,000
Other Current Accounts                 320,000    102,000                                           422,000

Property Plant & Equipment             780,000    500,000                                         1,280,000
Accumulated Depreciation              (430,000)   (60,000)                                         (490,000)

Investment in Company S                112,000                                                                0

Total assets         817,000    562,000                                         1,267,000
Liabilities                           226,000    422,000                                           648,000

NCI in net assets                            0             0                                         28,000
Capital Stock Pebble                   300,000                                                      300,000
Capital Stock Stone                                 60,000                                                0
APIC                                                     0                                                0
R/E December 31, 20X3:                  291,000      80,000                                          291,000

Total liabilities & equity       817,000    562,000                                         1,267,000

Proof of postings:

A Yr 3 Equity                                        11/22/2010                                           Page 6
Accgt 415/515                                                                               Prof. Teresa Gordon

Pebble & Stone                      A. Pebble sold 20% of its holdings of Stone Co. Stock
EQUITY METHOD
For the Year Ended                    Pebble      Stone         Adjustments & Elimination      Consolidated
December 31, 20X4                                     80%       Debits            Credits        Statement

INCOME STATEMENT:

Revenue (sales)                      800,000     390,000                                        1,190,000
Less COGS                           (450,000)   (210,000)                                        (660,000)
Expenses (other)                     (23,000)    (80,000)                                        (103,000)

Share of Stone Income                 80,000                                                                0

Net Income:                          407,000    100,000                                           427,000
Less NCI in net income
CI in net income                                                                                  407,000

R/E BEGINNING BALANCE:                291,000     80,000                                           291,000
Add: Net Income                      407,000    100,000                                           407,000
Less: Dividends Declared             (60,000)   (50,000)                                          (60,000)
R/E December 31, 20X4:               638,000    130,000                                           638,000

BALANCE SHEET:
Cash                                  50,000     22,000                                            72,000
Other Current Accounts               360,000    135,000                                           495,000

Property Plant & Equipment           880,000    500,000                                         1,380,000
Accumulated Depreciation            (470,000)   (95,000)                                         (565,000)

Investment in Company S              152,000                                                                0

Total assets     972,000    562,000                                         1,382,000
Liabilities                          34,000    372,000

NCI in net assets                          0             0
Capital Stock Pebble                 300,000
Capital Stock Stone                              60,000
APIC                                                  0
R/E December 31, 20X4:                638,000    130,000

Total liabilities & equity     972,000    562,000

Proof of postings:

A Yr 4 Equity                                      11/22/2010                                           Page 7
Accgt 415/515                                                                             Prof. Teresa Gordon

Pebble & Stone                   A. Pebble sold 20% of its holdings of Stone Co. Stock
EQUITY METHOD
For the Year Ended                 Pebble       Stone         Adjustments & Elimination      Consolidated
December 31, 20X5                                   80%       Debits            Credits        Statement

INCOME STATEMENT:

Revenue (sales)                    950,000     450,000
Less COGS                         (500,000)   (250,000)
Expenses (other)                  (100,000)    (90,000)

Share of Stone Income              88,000

Net Income:                       438,000     110,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:             638,000     130,000
Less: Dividends Declared          (75,000)    (55,000)
R/E December 31, 20X5:          1,001,000     185,000

BALANCE SHEET:
Cash                               37,000      21,000
Other Current Accounts            480,000     145,000

Property Plant & Equipment 1,285,000           500,000
Accumulated Depreciation    (500,000)         (110,000)

Investment in Company S           196,000

Total assets 1,498,000    556,000
Liabilities                       197,000    311,000

NCI in net assets                       0              0
Capital Stock Pebble              300,000
Capital Stock Stone                            60,000
APIC                                                0
R/E December 31, 20X5:           1,001,000     185,000

Total liabilities & equity 1,498,000    556,000

Proof of postings:

A Yr 5 Equity                                    11/22/2010                                           Page 8
Acct 415/515                                                                                 Prof.Teresa Gordon

Workpaper elimination entries
A. Pebble sold 20% of its holdings of Stone Co. Stock
Pebble & Stone                                                       Year 3
COST METHOD                                                          Case A
For the Year Ended
December 31, 20X3                                        Debit           Credit

1 Basic elimination entry - values at acquisition (always the same)
Common stock                                                48,000
Investment in sub                                                            48,000
48,000            48,000

2 Interompany dividend elimination entry
Dividend income                                             32,000
Dividends declared                                                          32,000

3 The NCI display entry (minority interest % of sub's accounts)
20% Common stock                                              12,000
Retained earnings (beginning - minority share)              8,000
Noncontrolling interest in sub's earnings                 16,000
Dividends declared                                                             8,000
Noncontrolling interest in net assets                                         28,000
36,000               36,000

Workpaper elimination entries
A. Pebble sold 20% of its holdings of Stone Co. Stock
Pebble & Stone                                                       Year 4
COST METHOD                                                          Case A
For the Year Ended
December 31, 20X4                                        Debit           Credit

1 Basic elimination entry - values at acquisition (always the same)
Common stock                                                48,000
Investment in sub                                                            48,000
48,000            48,000

2 Interompany dividend elimination entry
Dividend income                                             40,000
Dividends declared                                                          40,000

3 The NCI display entry (minority interest % of sub's accounts)
20% Common stock                                              12,000
Retained earnings (beginning - minority share)            16,000
Noncontrolling interest in sub's earnings                 20,000
Dividends declared                                                            10,000
Noncontrolling interest in net assets                                         38,000
48,000               48,000

efd0ab75-cdce-4f65-b142-845788304254.xls          11/22/2010                                            Page 9
Acct 415/515                                                                                           Prof. Teresa Gordon

Pebble & Stone                             A. Pebble sold 20% of its holdings of Stone Co. Stock

COST METHOD
For the Year Ended                           Pebble       Stone            Adjustments & Elimination   Consolidated
December 31, 20X3                                             80%          Debits            Credits    Statement

INCOME STATEMENT:

Revenue (sales)                              700,000      300,000                                        1,000,000
Less COGS                                   (400,000)    (150,000)                                        (550,000)
Expenses (other)                            (200,000)     (70,000)                                        (270,000)

Dividend Income                               32,000                                                             0

Net Income:                                  132,000      80,000                                           180,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:
Pebble Corp.                              145,000                                                       177,000
Stone Inc.                                              40,000                                                0
Add: Net Income                              132,000       80,000                                          164,000
Less: Dividends Declared                     (50,000)     (40,000)                                         (50,000)
R/E December 31, 20X3:                       227,000       80,000                                          291,000

Cash                                          35,000      20,000                                            55,000
Other Current Accounts                       320,000     102,000                                           422,000

Property Plant & Equipment                   780,000     500,000                                         1,280,000
Accumulated Depreciation                    (430,000)    (60,000)                                         (490,000)

Investment in Company S                       48,000            0                                                0

Goodwill                                           0                                                             0
Total assets        753,000     562,000                                         1,267,000
Liabilities                                 226,000     422,000

NCI in net assets
Capital Stock Pebble                         300,000
Capital Stock Stone                                       60,000
APIC                                                 0          0
R/E December 31, 20X3:                        227,000      80,000
Total liabilities & equity      753,000     562,000

Proof of postings:

A Yr 3 Cost                                                   11/22/2010                                          Page 10
Acct 415/515                                                                                           Prof. Teresa Gordon

Pebble & Stone                             A. Pebble sold 20% of its holdings of Stone Co. Stock

COST METHOD
For the Year Ended                           Pebble       Stone            Adjustments & Elimination   Consolidated
December 31, 20X4                                             80%          Debits            Credits    Statement

INCOME STATEMENT:

Revenue (sales)                              800,000      390,000                                        1,190,000
Less COGS                                   (450,000)    (210,000)                                        (660,000)
Expenses (other)                             (23,000)     (80,000)                                        (103,000)

Dividend Income                               40,000                                                             0

Net Income:                                  367,000     100,000                                           427,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:
Pebble Corp.                              227,000                                                       291,000
Stone Inc.                                             80,000                                                 0
Add: Net Income                              367,000     100,000                                           407,000
Less: Dividends Declared                     (60,000)    (50,000)                                          (60,000)
R/E December 31, 20X4:                       534,000     130,000                                           638,000

Cash                                          50,000      22,000                                            72,000
Other Current Accounts                       360,000     135,000                                           495,000

Property Plant & Equipment                   880,000     500,000                                         1,380,000
Accumulated Depreciation                    (470,000)    (95,000)                                         (565,000)

Investment in Company S                       48,000            0                                                0

Total assets        868,000     562,000                                         1,382,000
Liabilities                                  34,000     372,000
0          0
NCI in net assets
Capital Stock Pebble                         300,000
Capital Stock Stone                                       60,000
APIC                                                 0          0
R/E December 31, 20X4:                        534,000     130,000
Total liabilities & equity      868,000     562,000

Proof of postings:

A Yr 4 Cost                                                   11/22/2010                                          Page 11
Acct 415/515                                                                                           Prof. Teresa Gordon

Pebble & Stone                             A. Pebble sold 20% of its holdings of Stone Co. Stock

COST METHOD
For the Year Ended                           Pebble       Stone            Adjustments & Elimination   Consolidated
December 31, 20X5                                             80%          Debits            Credits    Statement

INCOME STATEMENT:

Revenue (sales)                              950,000      450,000
Less COGS                                   (500,000)    (250,000)
Expenses (other)                            (100,000)     (90,000)

Dividend Income                               44,000

Net Income:                                  394,000     110,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:
Pebble Corp.                              534,000
Stone Inc.                                            130,000
Less: Dividends Declared                     (75,000)    (55,000)
R/E December 31, 20X5:                       853,000     185,000

Cash                                          37,000      21,000
Other Current Accounts                       480,000     145,000

Property Plant & Equipment                 1,285,000      500,000
Accumulated Depreciation                    (500,000)    (110,000)

Investment in Company S                       48,000            0

Total assets      1,350,000     556,000
Liabilities                                 197,000     311,000
0          0
NCI in net assets
Capital Stock Pebble                         300,000
Capital Stock Stone                                       60,000
APIC                                                 0          0
R/E December 31, 20X5:                        853,000     185,000
Total liabilities & equity    1,350,000     556,000

Proof of postings:

A Yr 5 Cost                                                   11/22/2010                                          Page 12
Acct 415/515                                                                                     Prof. Teresa Gordon

At the end of 20X2, Stone issues 15,000 shares in IPO
Transaction at                   Stone                Journal entry                      Revised
December 31, 20X2                              Debits              Credits              Statement
BALANCE SHEET:
Cash                             10,000
Other Current Accounts         100,000

Property Plant & Equipment            500,000
Accumulated Depreciation              (60,000)

Total assets      550,000
Liabilities                          450,000

Capital Stock                          60,000
APIC                                        0
R/E December 31, 20X2                   40,000

Total liabilities & equity      550,000

Proof of postings:

Pebble's Investment in Stone Inc.
Book Value before IPO =                                      100%
Book Value AFTER IPO =                                        80%
Increase

Journal entry needed on Pebble Corporation's (Parent) Books
Assuming Equity Method of Accounting is Used
Debit      Credit
Investment in Stone Inc.
Gain on Sale of Stone Inc. Stock

From Stone's sale of     15,000 s/s           \$9.00 Mkt

What is the equivalent grain if the investment is accounted for using cost method?

B Stone IPO                                           11/22/2010                                            Page 13
Acct 415/515                                                                              Prof. Teresa Gordon

Pebble & Stone                  Created Subsidiary with minority interest

Pebble Corporation created a wholly-owned subsidiary (Stone Inc.) in 19X8 by
investing \$60,000 to acquire 60,000 shares of Stone's \$1 par value stock.

Pebble can sell a 20% interest in Stone Inc. in one of two ways.
A. Pebble could sell 12,000 of its 60,000 shares at \$9 per share.
B. Stone Inc. could issue another 15,000 shares of its stock at \$9 per share

Either way, Pebble Corporation would own an 80% interest in Stone Inc.

Pebble & Stone
Conceptual Analyis                                            Print version
Parent's
Method B - Stone sells 15,000                                   Common                    Retained
NCI        Investment                      APIC
shares to public                                           Stock                    Earnings
Account
Percentage               20%           80%
Balances at 12/31/X2                      0         100,000         60,000            0      40,000
Record sale of stock
Equity in net income
To parent
To NCI
Dividends declared
To parent
To NCI
Balances at 12/31/X3
Equity in net income
To parent
To NCI
Dividends declared
To parent
To NCI
Balances at 12/31/X4
Equity in net income
To parent
To NCI
Dividends declared
To parent
To NCI
Balances at 12/31/X5

Con Anal B                                         11/22/2010                                         Page 14
Acct 415/515                                         Pebble Stone                                  Prof. Teresa Gordon

Pebble & Stone                              Created Subsidiary with minority interest
Parent's
Method B - Stone sells 15,000                                                             Retained
NCI          Investment Common Stock         APIC
shares to public                                                                    Earnings
Account
Percentage            20%             80%
Adjusted balance at 12/31/X2      47,000           188,000    75,000           120,000            40,000
Equity in net income
To parent                                         64,000                                         64,000
To NCI                          16,000                                                           16,000
Dividends declared
To parent                                        (32,000)                                    (32,000)
To NCI                          (8,000)                                                       (8,000)
Balances at 12/31/X3             55,000           220,000         75,000       120,000         80,000

EQUITY METHOD                                                              Case B        Year 3
For year ended December 31, 20X3
1 Basic elimination - book value element                         Debit                        Credit
Common stock                                                    75,000
Retained earnings (beginning)                                   40,000
Equity in earnings of sub                                       64,000
Noncontrolling interest in earnings          new                16,000
Dividends declared                                                                           40,000
Noncontrolling interest in net assets       new                                              55,000
Investment in Subsidiary                                                                    220,000
315,000                      315,000

Parent's
Method B - Stone sells 15,000                                                             Retained
NCI          Investment Common Stock         APIC
shares to public                                                                    Earnings
Account
Balances at 12/31/X3             55,000            220,000    75,000           120,000            80,000
Equity in net income
To parent                                         80,000                                         80,000
To NCI                          20,000                                                           20,000
Dividends declared
To parent                                        (40,000)                                    (40,000)
To NCI                          (10,000)                                                     (10,000)
Balances at 12/31/X4              65,000          260,000         75,000       120,000        130,000

For year ended December 31, 20X4                              Case B        Year 4
1 Basic elimination - book value element                         Debit                        Credit
Common stock
Retained earnings (beginning)
Equity in earnings of sub
Noncontrolling interest in earnings
Dividends declared
Noncontrolling interest in net assets
Investment in Subsidiary

BV entry B                                            11/22/2010                                                Page 15
Acct 415/515                                                                                    Prof. Teresa Gordon

Pebble & Stone                      B. Stone sells 15,000 shares in public offering
EQUITY METHOD
For the Year Ended                    Pebble       Stone          Adjustments & Elimination         Consolidated
December 31, 20X3                                       80%       Debits              Credits        Statement

INCOME STATEMENT:

Revenue (sales)                       700,000     300,000                                            1,000,000
Less COGS                            (400,000)   (150,000)                                            (550,000)
Expenses (other)                     (200,000)    (70,000)                                            (270,000)

Share of Stone Income                  64,000                                                                   0

Net Income:                           164,000      80,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:                 177,000      40,000                                              177,000
Add: Net Income                       164,000      80,000                                              164,000
Less: Dividends Declared              (50,000)    (40,000)                                             (50,000)
R/E December 31, 20X3:                291,000      80,000                                              291,000

BALANCE SHEET:
Cash                                   35,000      20,000                                               55,000
Other Current Accounts                320,000     102,000                                              422,000

Property Plant & Equipment            780,000     500,000                                            1,280,000
Accumulated Depreciation             (430,000)    (60,000)                                            (490,000)

Investment in Company S               220,000                                                                   0

Total assets      925,000     562,000                                            1,267,000
Liabilities                          334,000     287,000                                              621,000

NCI in net assets                           0             0                                             55,000
Capital Stock Pebble                  300,000                                                          300,000
Capital Stock Stone                                75,000                                                    0
APIC                                              120,000                                                    0
R/E December 31, 20X3:                 291,000      80,000                                              291,000

Total liabilities & equity      925,000     562,000                                            1,267,000

Proof of postings:

B Yr 3 Equity                                       11/22/2010                                             Page 16
Pebble & Stone                     B. Stone sells 15,000 shares in public offering
EQUITY METHOD
For the Year Ended                    Pebble        Stone            Adjustments & Elimination    Consolidated
December 31, 20X4                                        80%         Debits            Credits     Statement

INCOME STATEMENT:

Revenue (sales)                      800,000       390,000                                         1,190,000
Less COGS                           (450,000)     (210,000)                                         (660,000)
Expenses (other)                     (23,000)      (80,000)                                         (103,000)

Share of Stone Income                 80,000                                                                  0

Net Income:                          407,000       100,000                                           427,000
Less NCI in net income
CI in net income                                                                                     407,000

R/E BEGINNING BALANCE:                291,000        80,000                                           291,000
Add: Net Income                      407,000       100,000                                           407,000
Less: Dividends Declared             (60,000)      (50,000)                                          (60,000)
R/E December 31, 20X4:               638,000       130,000                                           638,000

BALANCE SHEET:
Cash                                  50,000        22,000                                            72,000
Other Current Accounts               360,000       135,000                                           495,000

Property Plant & Equipment           880,000       500,000                                         1,380,000
Accumulated Depreciation            (470,000)      (95,000)                                         (565,000)

Investment in Company S              260,000                                                                  0

Total assets 1,080,000         562,000                                         1,382,000
Liabilities                       142,000         237,000

NCI in net assets                          0               0
Capital Stock Pebble                 300,000
Capital Stock Stone                                 75,000
APIC                                               120,000
R/E December 31, 20X4:                638,000       130,000

Total liabilities & equity 1,080,000         562,000

Proof of postings:

11/22/2010 11:17 AM
efd0ab75-cdce-4f65-b142-845788304254.xls B Yr 4 Equity                                           T. Gordon - Page 17
Pebble & Stone                    B. Stone sells 15,000 shares in public offering
EQUITY METHOD
For the Year Ended                   Pebble         Stone              Adjustments & Elimination       Consolidated
December 31, 20X5                                       80%            Debits            Credits        Statement

INCOME STATEMENT:

Revenue (sales)                      950,000      450,000
Less COGS                           (500,000)    (250,000)
Expenses (other)                    (100,000)     (90,000)

Share of Stone Income                 88,000

Net Income:                          438,000      110,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:                638,000      130,000
Less: Dividends Declared             (75,000)     (55,000)
R/E December 31, 20X5:             1,001,000      185,000

BALANCE SHEET:
Cash                                  37,000       21,000
Other Current Accounts               480,000      145,000

Property Plant & Equipment 1,285,000              500,000
Accumulated Depreciation    (500,000)            (110,000)

Investment in Company S              304,000

Total assets 1,606,000        556,000
Liabilities                       305,000        176,000

NCI in net assets                          0               0
Capital Stock Pebble                 300,000
Capital Stock Stone                                75,000
APIC                                              120,000
R/E December 31, 20X5:              1,001,000      185,000

Total liabilities & equity 1,606,000        556,000

Proof of postings:

11/22/2010 11:17 AM
efd0ab75-cdce-4f65-b142-845788304254.xls B Yr 5 Equity                                             T. Gordon - Page 18
Acct 415/515                                                                                     Prof.Teresa Gordon

Workpaper elimination entries
B. Stone sells 15,000 shares in public offering
Pebble & Stone                                                          Year 3
COST METHOD                                                             Case B
For the Year Ended
December 31, 20X3                                           Debit           Credit

1 Basic elimination entry - values at acquisition (always the same)
Common stock                                                60,000
Investment in sub                                                                60,000
60,000                60,000

2 Interompany dividend elimination entry
Dividend income                                                32,000
Dividends declared                                                              32,000

3 The NCI display entry (minority interest % of sub's accounts)
20% Common stock                                               15,000
Retained earnings (beginning - minority share)              8,000
Retained earnings (parent's share of APIC)                                         96,000
Noncontrolling interest in sub's earnings                  16,000
Dividends declared                                                                 8,000
Noncontrolling interest in net assets                                             55,000
159,000                 159,000

Workpaper elimination entries
B. Stone sells 15,000 shares in public offering
Pebble & Stone                                                          Year 4
COST METHOD                                                             Case B
For the Year Ended
December 31, 20X4                                           Debit           Credit

1 Basic elimination entry - values at acquisition (always the same)
Common stock                                                60,000
Investment in sub                                                                60,000
60,000                60,000

2 Interompany dividend elimination entry
Dividend income                                                40,000
Dividends declared                                                              40,000

3 The NCI display entry (minority interest % of sub's accounts)
20% Common stock                                               15,000
Retained earnings (beginning - minority share)             16,000
Retained earnings (parent's share of APIC)                                         96,000
Noncontrolling interest in sub's earnings                  20,000
Dividends declared                                                                10,000
Noncontrolling interest in net assets                                             65,000
171,000                 171,000

efd0ab75-cdce-4f65-b142-845788304254.xls             11/22/2010                                            Page 19
Acct 415/515                                                                                             Prof. Teresa Gordon

Pebble & Stone                             B. Stone sells 15,000 shares in public offering

COST METHOD
For the Year Ended                           Pebble       Stone              Adjustments & Elimination   Consolidated
December 31, 20X3                                             80%            Debits            Credits    Statement

INCOME STATEMENT:

Revenue (sales)                              700,000      300,000                                           1,000,000
Less COGS                                   (400,000)    (150,000)                                           (550,000)
Expenses (other)                            (200,000)     (70,000)                                           (270,000)

Dividend Income                               32,000                                                                   0

Net Income:                                  132,000       80,000                                             180,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:
Pebble Corp.                               49,000                                                          177,000
Stone Inc.                                              40,000                                                   0
Add: Net Income                              132,000       80,000                                             164,000
Less: Dividends Declared                     (50,000)     (40,000)                                            (50,000)
R/E December 31, 20X3:                       131,000       80,000                                             291,000

Cash                                          35,000       20,000                                              55,000
Other Current Accounts                       320,000      102,000                                             422,000

Property Plant & Equipment                   780,000      500,000                                           1,280,000
Accumulated Depreciation                    (430,000)     (60,000)                                           (490,000)

Investment in Company S                       60,000            0                                                      0

Total assets        765,000      562,000                                           1,267,000
Liabilities                                 334,000      287,000

NCI in net assets
Capital Stock Pebble                         300,000
Capital Stock Stone                                        75,000
APIC                                                 0    120,000
R/E December 31, 20X3:                        131,000       80,000
Total liabilities & equity      765,000      562,000

Proof of postings:

B Yr 3 Cost                                                     11/22/2010                                          Page 20
Acct 415/515                                                                                           Prof.Teresa Gordon

Pebble & Stone                             B. Stone sells 15,000 shares in public offering

COST METHOD
For the Year Ended                           Pebble       Stone            Adjustments & Elimination   Consolidated
December 31, 20X4                                             80%          Debits            Credits    Statement

INCOME STATEMENT:

Revenue (sales)                              800,000      390,000                                        1,190,000
Less COGS                                   (450,000)    (210,000)                                        (660,000)
Expenses (other)                             (23,000)     (80,000)                                        (103,000)

Dividend Income                               40,000                                                             0

Net Income:                                  367,000     100,000                                          427,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:
Pebble Corp.                              131,000                                                      291,000
Stone Inc.                                             80,000                                                0
Add: Net Income                              367,000     100,000                                          407,000
Less: Dividends Declared                     (60,000)    (50,000)                                         (60,000)
R/E December 31, 20X4:                       438,000     130,000                                          638,000

Cash                                          50,000      22,000                                           72,000
Other Current Accounts                       360,000     135,000                                          495,000

Property Plant & Equipment                   880,000     500,000                                         1,380,000
Accumulated Depreciation                    (470,000)    (95,000)                                         (565,000)

Investment in Company S                       60,000            0                                                0

Total assets        880,000     562,000                                         1,382,000
Liabilities                                 142,000     237,000
0          0
NCI in net assets
Capital Stock Pebble                         300,000
Capital Stock Stone                                        75,000
APIC                                                 0   120,000
R/E December 31, 20X4:                        438,000     130,000
Total liabilities & equity      880,000     562,000

Proof of postings:

B Yr 4 Cost                                                   11/22/2010                                         Page 21
Acct 415/515                                                                                           Prof. Teresa Gordon

Pebble & Stone                             B. Stone sells 15,000 shares in public offering

COST METHOD
For the Year Ended                           Pebble       Stone            Adjustments & Elimination   Consolidated
December 31, 20X5                                             80%          Debits            Credits    Statement

INCOME STATEMENT:

Revenue (sales)                              950,000      450,000
Less COGS                                   (500,000)    (250,000)
Expenses (other)                            (100,000)     (90,000)

Dividend Income                               44,000

Net Income:                                  394,000     110,000
Less NCI in net income
CI in net income

R/E BEGINNING BALANCE:
Pebble Corp.                              438,000
Stone Inc.                                            130,000
Less: Dividends Declared                     (75,000)    (55,000)
R/E December 31, 20X5:                       757,000     185,000

Cash                                          37,000      21,000
Other Current Accounts                       480,000     145,000

Property Plant & Equipment                 1,285,000      500,000
Accumulated Depreciation                    (500,000)    (110,000)

Investment in Company S                       60,000            0

Total assets      1,362,000     556,000
Liabilities                                 305,000     176,000
0          0
NCI in net assets
Capital Stock Pebble                         300,000
Capital Stock Stone                                        75,000
APIC                                                 0   120,000
R/E December 31, 20X5:                        757,000     185,000
Total liabilities & equity    1,362,000     556,000

Proof of postings:

B Yr 5 Cost                                                   11/22/2010                                          Page 22

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