Problem 1-28

This template can be used to complete the identified problem. Note that "??" indicates you should fill
Schedule 1: Allocation of acquisition price and related amortization
Acquisition price
Book value of net assets
Payment in excess of book value

$ 210,000
160000
$
50,000

Excess payment identified

with specific assets
Annual
Amount Life (yrs.) Amortization
16000
10
1600
34000
20
1700
3300

Building (40,000 x 40%)

Royalty Agreement 85000X40%
Total Annual Amortization

Schedule 2: Deferral of Unrealized Gain2012

Inventory remaining at end of year
Gross profit percentage
0.33333
Gross profit remaining in inventory
Ownership %
Unrealized gain to be deferred until 2013

15000
33.33%
5000
40%
2000

Schedule 3: Deferral of Unrealized Gain2013

Inventory remaining at end of year
Gross profit percentage
30000/80000
Gross profit remaining in inventory
??
Unrealized gain to be deferred until 2014

24,000

0.375
9000
40%
3600

Journal Entries (note all entries should have an appropriate description)

Date
Account
1/1/2008 Investment in Stokes Co.
Cash
To record initial Investment

DR
210000

CR
210000

During 2008 Cash 10000*40%

Investment in Stockes Co.

4000
4000

To record dividend received

12/31/2012 Equity in Stokes IncomeLoss
Equity in Stokes Income
Investment in Stokes Co.

16000
16000

To record loss income

12/31/2012 Extra ordinary loss
Investment in Stokes Co.

8000
8000

Extra ordinary loss

12/31/2012 Equity in Stokes IncomeLoss
Investment in stokes Co.

3300
3300

To record Amortization
12/31/2012 Equity in Stokes Co.-loss
Investment in Stokes Co.

2000
2000

To eliminate unrealized intra entity sale

12/31/2013 Investment in Stokes
Equity in Stokes Income
Payment in excess of book value

12/31/2013 Equity in Stokes Income

Investment in Stokes Co.

??
??

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12/31/2013 Investment in Stokes Co.
Equity in Stokes Income

??
??

<INSERT DESCRIPTION>
12/31/2013 Equity in Stokes Income
Investment in Stokes Co.
<INSERT DESCRIPTION>

??
??

" indicates you should fill in an appropriate answer.

Problem 1-30

This template can be used to complete the identified problem. Note that "??" indicates you should fill
Schedule 1: Acquisition Price Allocation and Amortization
Acquisition price
Book value acquired
Payment in excess of book value

??
??
??

Excess payment identified with specific assets:

Equipment
Copyright
Goodwill
Total annual amortization

Amount
??
??
??

Life
7
5
??

Annual
Amortization
??
??
??
$
-

Schedule 2: Deferral of Unrealized Intercompany Gain

Inventory remaining at year end
Gross profit percentage
Total markup
Investor ownership percentage
Unrealized intercompany gain

??
40%
#VALUE!
35%
??

Part a.
Equity income2011
Basic equity (income) accrual
Amortization
Equity income2011

??
(??)
0

Equity income2012
Basic equity (income) accrual
Amortization
Deferral of unrealized gain
Equity income2012

??
(??)
(??)
0

Equity income2013
Basic equity (income) accrual
Amortization
Recognition of deferred gain
Equity income2013

??
(??)
??
0

Part b.
Acquisition price
2011 equity income
2011 dividends received
2012 equity income
2012 dividends received
2013 dquity income
2013 dividends received
Investment in Miller12/31/13

??
??
(??)
??
(??)
??
(??)
0

icates you should fill in an appropriate answer.