Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 12

Note: Problems 1 through 37 assume the use of the acquisition method.Problems 38 through 40 assume the use of the purchase method.
The Krause Corporation acquired 80 percent of the 100,000 outstanding voting shares of Leahy, Inc., for $6.30 per share on January 1, 2011.The remaining 20 percent of Leahy's shares also traded actively at $6.30 per share before and after Krause's acquisition.An appraisal made on that date determined that all book values appropriately reflected the fair values of Leahy's underlying accounts except that a building with a 5-year life was undervalued by $45,000 and a fully amortized trademark with an estimated 10-year remaining life had a $60,000 fair value.At the acquisition date,
Leahy reported common stock of $100,000 and a retained earnings balance of $280,000.
Following are the separate financial statements for the year ending December 31, 2012:
a.Prepare a worksheet to consolidate these two companies as of December 31, 2012.
b.Prepare a 2012 consolidated income statement for Krause and Leahy.
c.If instead the noncontrolling interest shares of Leahy had traded for $4.85 surrounding Krause's acquisition date, how would the consolidated statements change