On January 1, Year 5, Green Inc. purchased 100% of the common shares of Mansford Corp. for $353,000. Green's balance sheet data on this date just prior to this acquisition were as follows:

The balance sheet and other related data for Mansford are as follows:

Additional Information:

• As at January 1, Year 5, the estimated useful lives of the building and equipment were 15 years and 4 years, respectively, and the term to maturity was 10 years for the noncurrent liabilities.

• There has been no goodwill impairment since the date of acquisition.

• For both companies, the income tax rate is 35%. Deferred income taxes are recognized on the consolidated financial statement pertaining to the temporary differences arising from the acquisition differential.

Required:

(a) Prepare a consolidated balance sheet at January 1, Year 5.

(b) Prepare a schedule of amortization/impairment of the acquisition differential for the period from January 1, Year 5, to December 31, Year 8.

(c) Prepare the consolidated balance sheet using the worksheet approach.

Transcribed Image Text:

Carrying Amount $ 355,300 Тах Base $ 355,300 Cash Accounts receivable 168,100 -0- Inventory 275,920 275,920 Land 327,700 327,700 252,700 150,000 Buildings (net) Equipment (net) 79,900 $1,459,620 46,200 $1,155,120 $ 137,500 $ 137,500 Current liabilities Deferred tax liability 106,575 Noncurrent liabilities Common shares 387,200 Retained earnings 828,345 $1,459,620 MANSFORD CORP.-BALANCE SHEET At January 1, Year 5 Carrying Amount Fair Value Tax Base Cash $ 54,300 $ 54,300 $ 54,300 Accounts receivable 64,150 64,150 64,150 Inventory 128,000 135,800 128,000 Land 93,000 228,000 93,000 Buildings (net) 39,000 42,000 16,800 Equipment (net) 27,800 26,800 15,600 $406,250 $551,050 $371,850 Current liabilities $ 43,815 $ 43,815 $ 43,815 Noncurrent liabilities 153,600 155,000 153,600 Deferred tax liability 12,040 Common shares 105,400 Retained earnings 91,395 $406,250