Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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On January 1, 2015, Pam Corporation made a significant acquisition, purchasing 75 percent of Sam
Corporation's outstanding voting stock for a total of $4,200,000. Sam Corporation's stockholders'
equity at that time was made up of the following components (all values in thousands):
Capital stock with a par value of $10: $2,000
Additional paid-in capital: $1200
Total
The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10
percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to
underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent
to
Fast forward to December 31, 2019, and the comparative
Sam Corporation as follows:
Pam Sam
Other assets—net $5,845 $4500
Investment in Sam—75% 3,640 —
Expenses (including cost of sales) 5,285 800
Dividends 600 300
$15370 $5600
Capital stock, $10 par $4,000 $2,000
Additional paid-in capital 850 1200
Retained earnings 2,670 1500
Sales 7380 900
Income from Sam 470 —
$15370 $5600
Determine the amounts that would appear in the consolidated financial statements of Pam
Corporation and Sam for each of the following:
1. Goodwill at December 31, 2019
2. Non-controlling interest share for 2019
3. Consolidated retained earnings at December 31, 2018
4. Consolidated retained earnings at December 31, 2019
5. Consolidated net income for 2019
6. Non-controlling interest at December 31, 2018
7. Non-controlling interest at December 31, 2019
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