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On January 1, Year 1, Jacklin Corporation (JC) acquired 60 percent (60,000 shares of $2 par...

On January 1, Year 1, Jacklin Corporation (JC) acquired 60 percent (60,000 shares of $2 par common stock) of Mantz Corporation (MC) for $2,500,000 in cash. The acquisition date fair value of the noncontrolling interest’s shares (40 percent) was $40 per share. JC uses the Initial Value Method for its internal accounting.

At the time of the acquisition MC has the following asset and liability accounts:

Book Value Fair Value Difference

Current Assets $ 500,000 $ 500,000 $ 0

PPE (25-year life) 800,000 1,000,000 200,000

Patents (10–year life) 400,000 900,000 500,000

Land 500,000 800,000 300,000

Liabilities (200,000) (200,000)                    0

   Total Net Assets $2,000,000 $3,000,000 $1,000,000

Information about Mantz Corporation’s Retained earnings account for the years 1 to 6 are shown below.

Mantz Dividends Increase in Ending

Year Net Income Paid Book Value Retained Earnings

   1 200,000 50,000 150,000 650,000

   2 200,000 100,000 100,000 750,000

   3 250,000 150,000 100,000 850,000

   4 250,000 200,000 50,000 900,000

   5 300,000 200,000 100,000 1,000,000

   6      300,000 200,000 100,000 1,100,000

   $1,500,000 900,000 600,000


Use the information on the previous page and the Jacklin Corporation-Mantz Corporation worksheet to provide consolidated financial statements for Jacklin Corporation for year 6. There are $40,000 of Mantz’s liabilities included in the worksheet that is an accounts payable to Jacklin Corporation. No goodwill impairments have occurred since JC acquired MC.

Information about Mantz Corporation’s Retained earnings account for the years 1 to 6 are shown below.


Mantz Dividends Increase in Ending

Year Net Income Paid Book Value Retained Earnings

   1 200,000 50,000 150,000 650,000

   2 200,000 100,000 100,000 750,000

   3 250,000 150,000 100,000 850,000

   4 250,000 200,000 50,000 900,000

   5 300,000 200,000 100,000 1,000,000

   6      300,000 200,000 100,000 1,100,000

   $1,500,000 900,000 600,000


Use the information on the previous page and the Jacklin Corporation-Mantz Corporation worksheet to provide consolidated financial statements for Jacklin Corporation for year 6. There are $40,000 of Mantz’s liabilities included in the worksheet that is an accounts payable to Jacklin Corporation. No goodwill impairments have occurred since JC acquired MC.

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