P4-18 Incomplete Data with Purchase Differential
P4-18 Incomplete Data with Purchase Differential
Kasper Coporation acquired controlling interest over Timmin Company on January 1, 20X7, and a
consolidated balance was prepared. Partial balance sheet data for Kasper, Timmin, and the consolidated
entity follow:
KASPER COPORATION AND TIMMIN COMPANY
Partial Balance Sheet Data
January 1, 20X7
Item Kasper Corporation Timmin Company Consolidated Entity
Cash and Accounts Receivable $180,000 $60,000 $240,000
Inventory 200,000 100,000 300,000
Land 100,000 50,000 150,000
Building and Equipment (net) 400,000 150,000 550,000
Investments in Timmin Stock ?
Total ? $360,000 $1,240,000
Accounts Payable $70,000 $40,000 $110,000
Bonds Payable 300,000 0 300,000
Common Stock ? 150,000 250,000
Retained Earnings 567,000 170,000 ?
Noncontrolling Interest
Total ? $360,000 $1,323,000
The fair value of Timmin's land was $80,000, and the fair value of its buildings and equipment was
$220,000 at the date of acquisition.
Required
a What amount of retained earnings is reported in the consolidated balance sheet?
b What percentage ownership of Timmin does Kaper hold?
c What is the fair value of inventory held by Timmin at January 1, 20X7?
d What is the fair value of Timmin's net assets at January 1, 20X7?
e What amount did Kasper pay to acquire its ownership in Timmin?
f Give all eliminating entries needed to prepare the consolidated balance sheet for Kasper and Timmin.
a. $567,000
b. 70%
c. $128,000
d. $448,000
e. $457,000
f. Common Stock – Timmin Co. $300,000
Retained Earnings $170,000
Differential $83,000
Investment in Timmin Co. Stock $457,000
Noncontrolling Interest $96,000
Inventory $28,000
Land $17,000
Buildings and Equipment (net) $38,000
Differential $83,000
