# ACC405 Milestone 1 Advance Accounting Calculations I need help understanding this problem, I’m having problem following the problem structure and knowing w

ACC405 Milestone 1 Advance Accounting Calculations I need help understanding this problem, I’m having problem following the problem structure and knowing where to begin. Problems are attached on the file and any help with explaining is appreciated. thanks Southern New Hampshire University
MILESTONE ONE (Due in Module Four)
Instructions Milestone One
1
Supporting Calculations
Calculate goodwill
Calculate investment balance
Calculate income assigned to
the noncontrolling interest
Calculate noncontrolling interest
Calculate the gain or loss on
retirement of bonds
2
Consolidating Entries
Create consolidation entries
3
Consolidation Worksheet
Prepare consolidation worksheet
FINAL PROJECT ONE (Due in Module Six)
Instructions Final Project
Make corrections to Milestone One
Prepare memo
Module Six)
Southern New Hampshire University
INSTRUCTIONS FOR MILESTONE ONE (Due in Module Four)
IMPORTANT NOTE:
Make sure to completely review the rubric for Milestone One
You might want to print out the financial information
Use the data from this milestone and begin working on your final project due in Module Six
ITEMS TO COMPLETE FOR THIS MILESTONE:
GENERAL
You are the accountant for Posey Company. Prepare computations, consolidation entries, and consolidation entries for the preparation of
consolidated financial statements for 20X7. Show your calculations.
SUPPORTING COMPUTATIONS
a. Compute the amount of the goodwill as of January 1, 20X7.
b. Compute the balance of Posey’s Investment in Stargell Stock account as of January 1, 20X7. (Do not round your intermediate
c. Compute the income that should be assigned to the noncontrolling interest in the 20X7 consolidated income statement. (Do not round
d. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your intermediate calculations. Round your
final answer to nearest whole dollar.)
e. Compute the gain or loss on the constructive retirement of Stargell’s bonds that should appear in the 20X7 consolidated income
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f. Present all consolidation entries that would appear in a three-part consolidation worksheet as of December 31, 20X7. (If no entry is
required for a transaction/event, select “No journal entry required” in the first account field. Do not round your intermediate
g. Prepare and complete a three-part worksheet for the preparation of consolidated financial statements for 20X7. (Values in the first two
columns (the “parent” and “subsidiary” balances) that are to be deducted should be indicated with a minus sign, while all values in the
“Consolidation Entries” columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all
debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount
and enter this amount in the credit column of the worksheet.)
FINANCIAL INFORMATION FOR THIS MILESTONE
Refer to Trial Balance 2017 information (red tab)
Posey Manufacturing Company acquired 90% of Stargell Corporation’s outstanding common stock on December 31, 20X5, for \$1,116,900. At that date, the fair
value of the noncontrolling interest was \$124,100, and Stargell reported common stock outstanding of \$487,000, premium on common stock of \$267,000, and
retained earnings of \$407,000. The book values and fair values of Stargell’s assets and liabilities were equal except for land, which was worth \$30,000 more than its
book value.
On April 1, 20X6, Posey issued at par \$200,000 of 10% bonds directly to Stargell; interest on the bonds is payable March 31 and September 30. On January 2, 20X7,
Posey purchased all of Stargell’s outstanding 10-year, 12% bonds from an unrelated institutional investor at 98. The bonds originally had been issued on January 2,
20X1, for 101. Interest on the bonds is payable December 31 and June 30.
Since the date it was acquired by Posey Manufacturing, Stargell has sold inventory to Posey on a regular basis. The amount of such intercompany sales totaled
\$67,000 in 20X6 and \$83,000 in 20X7, including a 30% gross profit. All inventory transferred in 20X6 had been resold by December 31, 20X6, except inventory for
which Posey had paid \$18,000 and did not resell until January 20X7. All inventory transferred in 20X7 had been resold at December 31, 20X7, except merchandise
for which Posey had paid \$16,667
As of December 31, 20X7, Stargell had declared but not yet paid its fourth-quarter dividend of \$12,750. Both Posey and Stargell use straight-line depreciation and
amortization, including the amortization of bond discount and premium. On December 31, 20X7, Posey’s management reviewed the amount attributed to goodwill
as a result of its purchase of Stargell common stock and concluded that an impairment loss in the amount of \$25,000 had occurred during 20X7 and should be
shared proportionately between the controlling and noncontrolling interests. Posey uses the fully adjusted equity method to account for its investment in Stargell.
On December 31, 20X7, trial balances for Posey and Stargell appeared as follows:
Item
Cash
Posey Manufacturing
Debit
Credit
\$
49,500
\$
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Stargell Corporation
Debit
39,000
Current Receivables
121,500
90,100
Inventory
Investment in
Stargell Stock
Investment in
Stargell Bonds
Investment in Posey
Bonds
Land
Buildings &
Equipment
Cost of Goods Sold
Depreciation &
Amortization
Other Expenses
Dividends Declared
317,000
364,900
Accumulated
Depreciation
Current Payables
Bonds Payable
Payable
Common Stock
Common Stock
Retained Earnings,
January 1
Sales
Other Income
Income from Stargell
Corp.
Total
1,243,800
985,000
200,000
1,241,000
518,000
2,940,000
1,915,000
1,829,000
426,000
184,000
65,000
632,000
61,000
206,000
51,000
\$ 1,050,000
\$
597,000
699,190
200,000
213,000
1,000,000
910,000
487,000
610,000
267,000
2,848,950
457,000
3,010,000
143,000
801,000
50,000
3,000
132,660
\$ 9,603,800
\$ 9,603,800
\$
3,875,000
\$
3,875,000
10000000
-8000000
-1200000
Required:
a. Compute the amount of the goodwill as of January 1, 20X7.
Goodwill at acquisition
Goodwill as of January 1, 20X7:
common stock
FV of non controlling interest
Total FV
fair value of liabilities
Fair value of net assets
Goodwill at acquisition
1,116,900
124,100
1,241,000
1,703,000
2,944,000
(2,927,000)
129100
364900
518000
1915000
17,000
2927000
b. Compute the balance of Posey’s Investment in Stargell Stock account as of January 1, 20X7. (Do not
Balance in investment
Stargell stockholders’ equity, January
1, 20X7:
Balance in Investment in Stargell
Stock account,
January 1, 20X7
e. Compute the gain or loss on the constructive retirement of Stargell’s bonds that should appear in the
Gain
1216000
487000
1703000
Gain on constructive retirement of
Stargell’s bonds:
Gain on constructive retirement of
Stargell’s bonds
c. Compute the income that should be assigned to the noncontrolling interest in the 20X7 consolidated
whole dollar.)
Income to noncontrolling interest
Stargell’s 20X7 net income *
Income to noncontrolling interest
Net income calculations *
Net income
d. Compute the total noncontrolling interest as of December 31, 20X6. (Do not round your
Total noncontrolling interest
Total noncontrolling interest, December 31, 20X6:
Stargell’s stockholders’ equity, December
31, 20X6
Total noncontrolling interest, December
31, 20X6
Milestone One instructions
A
Record the basic consolidation entry.
Accounts
A
B
Record the amortized excess value differential entry.
C
Record the excess value (differential) reclassification entry.
D

Record the reversal of last year’s deferral.
B
E
Record the deferral of the 20X7 unrealized profits on the inventory transfer.
C
F
Record the elimination of the intercompany holdings of Posey’s bonds.
G
Record the entry to eliminate the intercompany interest receivables/payables.
D
H
Record the entry to eliminate the accrued interest on the intercompany bonds.
E
I
Record the entry to eliminate the intercompany holdings of Stargell’s bonds.
J
F
Record the entry to eliminate the intercompany dividend payable/receivable.
G
H
Debit
Credit
I
J
POSEY MANUFACTURING COMPANY AND SUBSIDIARY
Consolidated Financial Statement Worksheet
December 31, 20X7
Posey Co.
Income Statement
Sales
Other Income
Less: COGS
Less: Depr. & Amort. Expense
Less: Other Expenses
Goodwill Impairment Loss
Gain on Bond Retirement
Income from Stargell Corp.
Consolidated Net Income
NCI in Net Income
Controlling Interest in NI
Statement of Retained Earnings
Beginning Balance
Net Income
Less: Dividends Declared
Ending Balance
Balance Sheet
Assets
Cash
Current Receivables
Inventory
Land
Buildings & Equipment
Less: Accumulated Depreciation
Investment in Stargell Stock
Investment in Stargell Bonds
Investment in Posey Bonds
Goodwill
Total Assets
Liabilities & Equity
Current Payables
Bonds Payable
Common Stock
Retained Earnings
NCI in NA of Stargell Corp.
Total Liabilities & Equity
Stargell Corp.
The full content of this question did not transfer to your assignment. Please try again.
MIlestone 1 instructions
Consolidation Entries
DR
CR
Consolidated
Southern New Hampshire University
INSTRUCTIONS FOR FINAL
IMPORTANT NOTE:
Make sure to completely review the rubric for the final project.
This page contains new information that must be included in the final project but has not been the milestone.
ITEMS TO COMPLETE FOR THIS MILESTONE:
GENERAL
II. Final updated Excel Workbook and Memo
h. Prepare a memo outlining the unique calculations required on the consolidation worksheet and on t
flows if Posey also obtains an international subsidiary with non-US\$ functioning currency. [AC
Milestones
Final Submission: Consolidation Workbook and Memo
In Module Six, you will submit your final project. It should be a complete, polished artifact containing all of the c
final product. It should reflect the incorporation of feedback gained throughout the course. In addition to revisin
make sure that you include the following elements from the prompt above, which were not included in th
Prepare a memo outlining the unique calculations required on the consolidation worksheet and on the
flows if Posey also obtains an international subsidiary with non-US\$ functioning curren
This submission will be graded with the Final Project One Rubric.
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t been the milestone.
nsolidation worksheet and on the statement of cash
n-US\$ functioning currency. [ACC-405-02]
hed artifact containing all of the critical elements of the
ove, which were not included in the milestones:
olidation worksheet and on the statement of cash
with non-US\$ functioning currency.