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Business Combination VIEs Consolidation statements, Hambly

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Please treat (1) (2) and (3) as separate units:
(1)
Hambly Corp. owned 80% of the voting common stock of Stroban Co. During 2011, Stroban sold a parcel fo land to Hambly. The land ad a book value of $82,000 and was sold to Hambly for $145,000. Stroban's reported net income for 2011 was $119,000. What was the noncontrolling interest's share of Stroban Co.'s net income?

(2)
On January 1, 2011, Bast Co. had a net book value of $2,100,000 as follows:
Preferred stock, 2,000 shares $70 par value,
cumulative, nonparticipating, nonvoting ..............................$ 140,000
Common stock 22,400 shares $50 par value.......................1,120,000
Retained earnings................................................................. 840,000
Total shareholders' equity.....................................$2,100,000
Fisher Co. acquired all of the outstanding preferred shares for $148,000 and 60% of the common stock for $1,281,000. Fisher believed that one of Bast's buildings, with a twelve-yearlife, was undervalued on the company's financial records by $70,000. What is the amount of goodwill to be recognized from the purchase?

(3)
Fargus Corporation owned 51% of the voting common stock of Sanatee, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition price.
On January 1, 2010, Senatee sold $1,400,000 in ten-year bonds to the public at 108. The bonds pay a 10% interest rate every December 31. Fargus acquired 40% of these bonds on January 1, 2012, for 95% of the face value. Both companies utilized the straight-line method of amortization.

What balances would need to be considered in order to prepare the consolidation entry in connection with these intra-entity bonds at December 31, 2012, the end of the first year of the intra-entity investment? Prepare schedules to show numerical answers for balances that would be needed for the entry.

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Solution Summary

Your schedules illustrating how to approach these problems is attached in Excel. It doesn't ask for the consolidating entry but I gave it so you could see why you needed the amounts computed.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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