ACCT 3041 ADVANCED ACOUNTING

ASSIGNMENT # 1

COMPEHENSIVE PROBLEM 1

WEIGHT 10% OF FINAL GRADE

DUE WEDNESDAY OCT 11 AT 11: 55 PM EC TIME

This is an individual problem solving effort.

Palate Company acquires an 80% interest in Suntan Company for $250,000in cash on January 1, 2015, when Suntan Company has the following balance sheet:

Assets	Amount	Liabilities and Equity	Amount
Current Assets	$100,000	Current Liabilities	$50,000
Depreciable Property Plant & Equipment	200,000	Common Stock ($10 Par)	100,000
		Retained Earnings	150,000
Total Assets	$300,000	Total Liabilities and Equity	$300,000

Any excess of the price paid over book value is attributable only to the fixed assets, which have a 10 years remaining life. Palate Company uses the simple equity method to record its investment in Suntan.

The following trial balances of the two companies are prepared on December 1 2015:

	PALATE	SUNTAN
Current Assets	$60,000	$130,000
Depreciable Property Plant & Equipment	400,000	200,000
Accumulated Depreciation	(106,000)	(20,000)
Investment in Suntan	266,000
Current Liabilities	(60,000)	(40,000)
Common Stock ($10 par0	(300,000)	(100,000)
Retained Earnings January 1, 2015	(200,000)	(150,000)
Sales	(150,000)	(100,000)
Expenses	110,000	75,000
Subsidiary Income	(20,000)
Dividends Declares		5,000
Totals	0	0

Required:

Prepare all the eliminations and adjustments that would be made on the 2015 consolidated worksheet.

Calculate the goodwill arising on the acquisition of Suntan at January 1, 2015

Calculate the carrying amount of the investment in Suntan at December 31, 2015, before the impairment test.

Prepare the consolidated Statement of Financial Position of the Palate Group for the year ended December 31, 2015/

You may use either the consolidated worksheet approach or the tabular approach. However, your final solution must be presented in accordance with IAS 1 Presentation of Financial Statements

NB: You are required to apply IFRS 3 (Revised) Business Combinations and IFRS 10 Consolidated Financial Statements where necessary.