Access the 2020 consolidated financial statements for Kirkland Lake Gold Ltd. (KL) by going to the investor relations section of the company’s website. Answer the questions below. Round percentages to one decimal point and other ratios to two decimal points. For each question, indicate where in the financial statements you found the answer and/or provide a brief explanation. 

Required 

(a) What method was used to account for business combinations? 

(b) Describe the most significant business acquisition during the year. Was it a purchase of net assets or shares? Was the acquisition paid for in cash or by issuing shares? 

(c) How much cash was received or paid for all business acquisitions during the year? 

(d) With regard to the acquisition cost for the most significant business acquisition, what amounts were allocated to 

(i) Intangible assets, 

(ii) Goodwill, 

(iii) Right-of-use assets? 

(e) For the most significant business acquisition, what amount was paid for acquisition related costs and how was it accounted for? 

(f) Using vertical analysis, identify the percentage of total assets at the end of the year represented by (i) mining interests, and plant and equipment, and (ii) intangible assets. 

(g) Using horizontal analysis, identify the expense/loss item that shows the most significant change from the previous year. 

(h) Assume that the company had paid 10% more for its most significant business acquisition and that the extra amount was paid in cash. How would this have affected the 

(i) Current ratio and 

(ii) Debt-to-equity ratio at the date of acquisition?

(i) Assume that the market capitalization of the KL’s shares (i.e., number of shares outstanding times market value per share) was double the carrying amount of KL’s shareholders’ equity on the date when the business acquisitions occurred, and that KL uses the new-entity method to account for business combinations. How would this likely affect the 

(i) Debt-to-equity ratio at the date of acquisition

(ii) The return on equity for the first year after the date of acquisition?