| Course | ACCT 402 Consolidations and Advanced Accounting Topics (ACCT402) |
|---|---|
| Module/Week | 6 |
| Assignment | Excel Spreadsheet Project |
| Paper type | Excel consolidation worksheet with explanation |
| Length | about 567 words, 2 double-spaced pages plus title page and references. Course guide: a two-part Excel spreadsheet illustrating the consolidation process when the parent applies the equity method, partial equity method or initial value method to its investment in a subsidiary, presented here as tables with each entry explained |
| Format | APA 7 student paper |
| Points | 200 |
| School | Liberty University Online |
| Program | BS in Accounting |
| Where it sits | Module/Week 6 in Liberty's published ACCT 402 course guide; current sections can differ |
| Updated | October 2026 |
Free sample paper for ACCT 402 Week 6
Consolidating Pine Corporation and Spruce Company Two Years After Acquisition Under the Equity, Partial Equity and Initial Value Methods
[Student Name]
School of Business, Liberty University
ACCT 402: Consolidations and Advanced Accounting Topics
Excel Spreadsheet Project
[Instructor Name]
[Date]
The companies and figures are a composite written for this sample; the textbook's Computer Project supplies its own data, and the textbook cited is real.
Consolidating Pine Corporation and Spruce Company Two Years After Acquisition Under the Equity, Partial Equity and Initial Value Methods
Acquisition Facts and Excess Allocation
On January 1, 2024, Pine Corporation acquired all of Spruce Company's stock for $950,000 in cash. Spruce's book value was $750,000, consisting of $300,000 of common stock and $450,000 of retained earnings. Following the acquisition method described by Hoyle et al. (2018), which replaced pooling of interests in 2001 after a standard-setting fight that Ramanna (2008) traces partly to political pressure over goodwill, the $200,000 excess was assigned to identifiable assets at fair value, with the remainder to goodwill:
| Item | Excess | Life | Annual amortization |
|---|---|---|---|
| Equipment, fair value above book value | 60,000 | 5 years | 12,000 |
| Customer relationships (unrecorded) | 50,000 | 10 years | 5,000 |
| Goodwill | 90,000 | indefinite | none |
| Total | 200,000 | 17,000 |
Spruce reported net income of $120,000 and paid dividends of $40,000 in 2024, and net income of $140,000 with dividends of $50,000 in 2025. Spruce's retained earnings were therefore $530,000 on January 1, 2025. Shalev (2009) found that buyers say less about an acquisition when goodwill absorbs an abnormally big part of what they paid, so the workbook shows every component of the excess on its own line, where a reader can see that less than half of the premium is goodwill.
Pine's Investment Account Under Each Method
| Balance | Equity | Partial equity | Initial value |
|---|---|---|---|
| Investment, January 1, 2024 | 950,000 | 950,000 | 950,000 |
| 2024 income recognized from Spruce | 103,000 | 120,000 | 40,000 (dividend income) |
| 2024 dividends received | (40,000) | (40,000) | none |
| Investment, December 31, 2024 | 1,013,000 | 1,030,000 | 950,000 |
| 2025 income recognized from Spruce | 123,000 | 140,000 | 50,000 (dividend income) |
| 2025 dividends received | (50,000) | (50,000) | none |
| Investment, December 31, 2025 | 1,086,000 | 1,120,000 | 950,000 |
| Pine retained earnings, January 1, 2025 | 1,600,000 | 1,617,000 | 1,537,000 |
Under the equity method, Pine's income from Spruce is its share of Spruce's income less excess amortization, $140,000 less $17,000, or $123,000, so Pine's own retained earnings already equal consolidated retained earnings. The partial equity method skips amortization, overstating Pine's beginning retained earnings by 2024's $17,000. The initial value method records only dividends, understating them by $63,000: Spruce's $120,000 of 2024 income, less $17,000 of amortization and the $40,000 already recorded as dividend income.
2025 Consolidation Worksheet, Equity Method
| Account | Pine | Spruce | Debit | Credit | Consolidated |
|---|---|---|---|---|---|
| Revenues | (2,400,000) | (900,000) | (3,300,000) | ||
| Expenses | 1,850,000 | 760,000 | (E) 17,000 | 2,627,000 | |
| Equity in Spruce earnings | (123,000) | (I) 123,000 | 0 | ||
| Net income | (673,000) | (140,000) | (673,000) | ||
| Retained earnings, January 1 | (1,600,000) | (530,000) | (S) 530,000 | (1,600,000) | |
| Net income | (673,000) | (140,000) | (673,000) | ||
| Dividends declared | 200,000 | 50,000 | (D) 50,000 | 200,000 | |
| Retained earnings, December 31 | (2,073,000) | (620,000) | (2,073,000) | ||
| Cash | 310,000 | 120,000 | 430,000 | ||
| Receivables | 420,000 | 180,000 | 600,000 | ||
| Inventory | 600,000 | 260,000 | 860,000 | ||
| Investment in Spruce | 1,086,000 | (D) 50,000 | (S) 830,000; (A) 183,000; (I) 123,000 | 0 | |
| Equipment, net | 1,250,000 | 480,000 | (A) 48,000 | (E) 12,000 | 1,766,000 |
| Land | 500,000 | 200,000 | 700,000 | ||
| Customer relationships | (A) 45,000 | (E) 5,000 | 40,000 | ||
| Goodwill | (A) 90,000 | 90,000 | |||
| Total assets | 4,166,000 | 1,240,000 | 4,486,000 | ||
| Accounts payable | (380,000) | (160,000) | (540,000) | ||
| Long-term debt | (713,000) | (160,000) | (873,000) | ||
| Common stock | (1,000,000) | (300,000) | (S) 300,000 | (1,000,000) | |
| Retained earnings, December 31 | (2,073,000) | (620,000) | (2,073,000) | ||
| Total liabilities and equity | (4,166,000) | (1,240,000) | (4,486,000) |
Credits appear in parentheses. Entry S removes Spruce's beginning equity, $830,000, against the investment. Entry A records the excess still unamortized at the start of 2025: equipment of $60,000 less one year's $12,000, customer relationships of $50,000 less $5,000, and goodwill of $90,000, a total of $183,000. Entry I removes the equity income Pine recorded, and entry D removes the dividends Spruce paid to Pine, which Pine had credited to its investment. Entry E records 2025 amortization of $17,000 as consolidated expense. The investment account starts at $1,086,000 and ends at exactly zero, which is the first test of a correct worksheet.
Partial Equity and Initial Value Versions
Under the partial equity method, Pine's investment is $1,120,000 and its equity in Spruce earnings is $140,000. The worksheet first records conversion entry C, debiting Pine's beginning retained earnings and crediting the investment for 2024's $17,000 of unrecorded amortization. Entries S, A and D are unchanged, and entry I eliminates $140,000 instead of $123,000. Under the initial value method, the investment is still $950,000 and Pine recorded $50,000 of dividend income. Entry C debits the investment and credits Pine's beginning retained earnings for $63,000, the 2024 increase in Spruce's retained earnings less 2024 amortization. Entry I then debits dividend income and credits Spruce's dividends declared for $50,000, and there is no separate entry D because the investment never recorded the dividends. Hoyle et al. (2018) present this sequence so that students can see that the parent's bookkeeping choice disappears in consolidation. In the spreadsheet, the three worksheets sit on separate tabs, and each pulls the same Spruce balances so that only Pine's investment, income and retained earnings differ.
Verification
| Check | Equity | Partial equity | Initial value |
|---|---|---|---|
| Investment after eliminations | 0 | 0 | 0 |
| Consolidated net income | 673,000 | 673,000 | 673,000 |
| Consolidated retained earnings, December 31, 2025 | 2,073,000 | 2,073,000 | 2,073,000 |
| Consolidated total assets | 4,486,000 | 4,486,000 | 4,486,000 |
In the spreadsheet, each check is a formula comparing the method's consolidated column with the equity method version, and a nonzero difference turns the cell red. Consolidated net income of $673,000 is Pine's separate income of $550,000 plus Spruce's $140,000 less the $17,000 of excess amortization. Pine's separate income excludes anything recorded from Spruce, so the same figure applies under every method.
References
Hoyle, J. B., Schaefer, T. F., & Doupnik, T. S. (2018). Advanced accounting (13th ed.). McGraw-Hill Education.
Ramanna, K. (2008). The implications of unverifiable fair-value accounting: Evidence from the political economy of goodwill accounting. Journal of Accounting and Economics, 45(2-3), 253-281. https://doi.org/10.1016/j.jacceco.2007.11.006
Shalev, R. (2009). The information content of business combination disclosure level. The Accounting Review, 84(1), 239-270. https://doi.org/10.2308/accr.2009.84.1.239
What the ACCT 402 Week 6 instructions ask
ACCT 402's Excel Spreadsheet Project is submitted in two parts, Part 1 worth 80 points in Module/Week 5 and Part 2 worth 120 points in Module/Week 6, the week that covers chapter 4 of Hoyle et al. on consolidated statements and outside ownership along with Connect Homework 3 and Quiz 3. The project is the textbook's Computer Project. Students develop a spreadsheet that illustrates the consolidation process when a parent accounts for its investment in a subsidiary by the equity method, the partial equity method or the initial value method. The spreadsheet must show that consolidated figures do not depend on the method the parent uses internally.
How this ACCT 402 Week 6 example is built
The sample opens with the acquisition facts and an excess allocation schedule showing annual amortization. A second table rolls Pine's investment account and retained earnings forward under each method for 2024 and 2025. The core is a consolidation worksheet for 2025 under the equity method, with each company's balances, the five elimination entries and the consolidated column. A short section then shows how the worksheet changes under partial equity and initial value, through a conversion entry to Pine's beginning retained earnings and a different form of entry I. A closing check proves that the investment eliminates to zero and that consolidated totals agree in all three versions.
ACCT 402 Week 6 grading rubric: where the points go
Instructors grade the ACCT 402 Excel project on correct allocation and amortization of the acquisition-date excess, correct investment and income balances under each of the three internal methods, a worksheet whose elimination entries are complete and balanced and whose consolidated column agrees across methods, and the use of formulas linked to input cells. Part 2 carries more points than Part 1 because it contains the full worksheets. Workbooks lose points when the investment account does not eliminate to zero, when the conversion entry is missing or misstated under the initial value or partial equity method, or when current-year amortization is omitted from consolidated expenses.
ACCT 402 Week 6 help: mistakes that cost points
Start with an input sheet holding the acquisition price, book value, fair value differences and useful lives, and link everything else to it. Build the excess amortization schedule before any worksheet. Remember that under the partial equity method the parent records its share of subsidiary income but not amortization, and under the initial value method it records only dividends, so each needs a different conversion entry to beginning retained earnings in years after the first. Confirm that the consolidated bottom line matches what Pine reports under the equity method. Make every elimination entry balance on its own. An unbalanced entry hides errors elsewhere on the worksheet. Submit Part 1 on time in Module/Week 5 so the instructor's feedback can shape Part 2. Label each tab clearly by method.
Related ACCT 402 sample papers
Other ACCT 402 weeks
- ACCT 402 Week 1: Group Discussion Board Forum 1
- ACCT 402 Week 3: Group Discussion Board Forum 2
- ACCT 402 Week 5: Group Discussion Board Forum 3
- ACCT 402 Week 7: Group Discussion Board Forum 4
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ACCT 402 Week 6 questions, answered
What is the ACCT 402 Excel Spreadsheet Project?
The textbook's Computer Project, a two-part spreadsheet worth 200 points that consolidates a parent and subsidiary under the equity, partial equity and initial value methods.
Where can I find a free ACCT 402 Week 6 sample paper?
A complete ACCT 402 Week 6 consolidation sample sits on this page, with the excess schedule, investment balances under three methods and a full 2025 worksheet with entries S, A, I, D and E.
Why is consolidated net income the same under all three methods?
The parent's internal method affects only its separate books; the elimination and conversion entries remove those differences, so the consolidated statements reflect the same economic facts.
What is the *C entry in a consolidation worksheet?
A conversion entry that adjusts the parent's beginning retained earnings to what the equity method would show, needed in any year after the first when the parent keeps its books on a cost-based or partial equity basis.
What else is due in ACCT 402 Module/Week 6?
Connect Homework 3 and Quiz 3 are due with Part 2 of the Excel project, together with chapter 4 of the Hoyle text and the week's slides and handout.
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