Postum Company

Consolidated Income Statement

for the year ended 31 December 2017
Net sales 950,000
Cost of good sold (530,000)
Gross profit 420,000
Operating expenses (232,500)
Gain on liability for contingent consideration 11,000
Net income 198,500

Net income attributable to

Parent 181,000
Non-controlling interests 17,500
198,500

Postum Company
Consolidated Balance Sheet
as at 31 December 2017
Assets
Inventory 100,000
Other current assets 310,000
Investment in AFS/FVOCI 30,000
Land 140,000
Building and equipment 670,000
Accumulated depreciation (175,000)
Goodwill 141,000
Total assets 1,216,000

Liabilities and Shareholders' Equity

Current liabilities 190,000
Liability for contingent consideration 25,000
Bonds payable 50,000
Other long-term liabilities 100,000
Total liabilities 365,000

Common stock 100,000

Other paid-in capital 200,000
Retained earnings 441,000
Unrealized gain/loss - AFS/FVOCI 8,000
Non-controlling interest 102,000
Total shareholders' equity 851,000
Total liabilities and shareholders' equity 1,216,000
Postum Company - General Journal Dr Cr

Date of Acquisition (January 1, 2016)

Investment in Scriptum 352,000
Cash 100,000 440,000
Building 216,000
Liability for contingent consideration 36,000

Remeasurement adjustment (December 1, 2016)

Investment in Scriptum 84,000
Gain on remeasurement of fair value 84,000

Reporting date (December 31, 2017)

Liability for contingent consideration 11,000
Gain on liability for contingent consideration 11,000

Investment in Scriptum 4,000

Unrealized gain/loss - AFS/FVOCI 4,000
 Postum Scriptum WPEE 1 WPEE 2

Income statement
Net sales (550,000) (400,000)
Cost of goods sold 320,000 210,000
Operating expense 130,000 100,000
Dividend income (16,000)
Gain/loss on contingent consideration (11,000)
Net income (127,000) (90,000)

Net income to Parent (127,000) (72,000)

Net income to non-controlling interest (18,000)

Changes in equity
Retained earnings, beginning (284,000) (230,000) 190,000
Net income (127,000) (90,000)
Dividends declared 50,000 20,000
Retained earnings, ending (361,000) (300,000)

Non-controlling interest, beginning (70,000) (5,000)

Net income
Dividends declared
Non-controlling interest, ending

Balance sheet
Inventory 60,000 40,000 5,000
Other current assets 150,000 160,000
Investment in Scriptum 440,000 (280,000) (20,000)
Investment in AFS/FVOCI 30,000
Land 60,000 80,000
Building and equipment 350,000 300,000 20,000
Accumulated depreciation (120,000) (50,000)
Goodwill
Total assets 940,000 560,000

Current liabilities (150,000) (40,000)

Liability for contingent consideration (25,000)
Bonds payable (50,000)
Other long-term liabilities (100,000)
Total liabilities (275,000) (90,000)

Common stock (100,000) (40,000) 40,000

Other paid-in capital (200,000) (120,000) 120,000
Retained earnings (361,000) (300,000)
Unrealized gain/loss - AFS/FVOCI (4,000) (10,000)
Non-controlling interest
Total equity (665,000) (470,000)
Total liabilities and equity (940,000) (560,000)

Parity check - -
 WPEE 5
WPEE 3 WPEE 0.5 WPEE 2.1 WPEE 2.2 WPEE 4
PAOCI

2,500
16,000

2,000 16,000
500

4,000 2,000

(20,000)

(5,000) 1,000 500 (2,000)

4,000

(5,000)

(136,000) (4,000)

(5,000)
141,000

4,000 2,000
PARE-B Consolidated

(950,000)
530,000
232,500
-
(11,000)
(198,500)

(181,000)
(17,500)

8,000 (310,000)
(181,000)
50,000
(441,000)

(8,000) (88,500)
(17,500)
4,000
(102,000)

100,000
310,000
-
30,000
140,000
670,000
(175,000)
141,000
1,216,000

(190,000)
(25,000)
(50,000)
(100,000)
(365,000)

(100,000)
(200,000)
(441,000)
(8,000)
(102,000)
(851,000)
(1,216,000)

-
Postum Company - WPEEs for 31 December 2017 Dr Cr

WPEE 1 - subsidiary's shareholders' equity

Retained earnings 190,000
Common stock 40,000
Other paid-in capital 120,000
Investment in Scriptum 280,000
Non-controlling interest 70,000

WPEE 2 - fair market value differences

Inventory 5,000
Building and equipment 20,000
Investment in Scriptum 20,000
Non-controlling interest 5,000

WPEE 3 - recognition of goodwill

Goodwill 141,000
Investment in Scriptum 136,000
Non-controlling interest 5,000

WPEE 0.5 - cancellation of investment gain

Unrealized gain/loss - AFS/FVOCI 4,000
Investment in Scriptum 4,000

WPEE 2.1 - realization of inventory FMV difference

Retained earnings 4,000
Non-controlling interest 1,000
Inventory 5,000

WPEE 2.2 - amortization of building FMV difference

Retained earnings 2,000
Non-controlling interest 500
Operating expense 2,500
Accumulated depreciation 5,000

WPEE 4 - cancellation of intercompany dividends

Dividend income 16,000
Non-controlling interest 4,000
Retained earnings 20,000

WPEE 5 - post-acquistion OCI

Unrealized gain/loss - AFS/FVOCI 2,000
Non-controlling interest 2,000

Post-acquisition retained earnings, beginning

Retained earnings 8,000
Non-controlling interest 8,000
 Date of Acquisition (January 1, 2016)
Scriptum Company - FVNIA
Common stock 40,000
Additional paid-in capital 120,000
Retained earnings 190,000
Fair market value differences
Inventory 5,000
Building (provisional amount) 15,000
Total FVNIA 370,000

Acquisition price paid

Cash 100,000
Land (provisional amount) 216,000
Liability for contingent consideration 36,000
Total acquisition price 352,000

Goodwill computation Parent NCI Total

Fair value of acquisition 352,000 80,000 432,000
Fair value of net identifiable assets 296,000 74,000 370,000
Goodwill 56,000 6,000 62,000

Remeasurement adjustment (December 1, 2016)

Updated acquisition price
Cash 100,000
Land (final amount) 300,000
Liability for contingent consideration 36,000
Total acquisition price 436,000

Updated goodwill computation Parent NCI Total

Fair value of acquisition 436,000 80,000 516,000
Fair value of net identifiable assets 296,000 74,000 370,000
Goodwill 140,000 6,000 146,000

Gain to be realized
Final FMV of land 300,000
Provisional FMV of land 216,000
Gain to be realized in profit or loss 84,000

WPEE Computation
Non-controlling
WPEE 1 Parent (80%) Total
interest (20%)
Acquisition date values
Common stock 32,000 8,000 40,000
Other paid-in capital 96,000 24,000 120,000
Retained earnings 152,000 38,000 190,000
280,000 70,000 350,000

Non-controlling
WPEE 2 Parent (80%) Total
interest (20%)
Inventory 4,000 1,000 5,000
Building 16,000 4,000 20,000
20,000 5,000 25,000

Non-controlling
WPEE 3 Parent (80%) Total
interest (20%)
Fair value at acquisition 436,000 80,000 516,000
Fair value of net identifiable assets
Common stock 32,000 8,000 40,000
 Other paid-in capital 96,000 24,000 120,000
Retained earnings 152,000 38,000 190,000
Fair market value differences
Inventory 4,000 1,000 5,000
Building (final amount) 16,000 4,000 20,000
Goodwill 136,000 5,000 141,000

Non-controlling
WPEE 2.1 - Inventory Parent (80%) Total
interest (20%)
Realization of FMV excess of inventory
Prior year/s 4,000 1,000 5,000
Current year - - -
4,000 1,000 5,000

WPEE 2.2 - Building

Excess fair market value 20,000
Useful life 8
Annual amortization 2,500
Non-controlling
Parent (80%) Total
interest (20%)
Amortization
Prior year/s 2,000 500 2,500
Current year 2,000 500 2,500
4,000 1,000 5,000

Non-controlling
WPEE 4 - Dividend cancellation Parent (80%) Total
interest (20%)
Dividends declared by Scriptum 16,000 4,000 20,000

Non-controlling
WPEE 5 - PAOCI Parent (80%) Total
interest (20%)
Post-acquisition UGL-AFS/FVOCI 2,000 10,000
Acquisition date UGL-AFS/FVOCI - -
Adjustment 2,000 10,000
set up in NCI

Non-controlling
PARE-B Parent (80%) Total
interest (20%)
Beginning retained earnings of Scriptum (2017) 46,000 230,000
Acquisition date retained earnings 38,000 190,000
Adjustment 8,000 40,000
set up in NCI