Question
ACCT 3041 ADVANCED ACOUNTING ASSIGNMENT # 1 COMPEHENSIVE PROBLEM 1 WEIGHT 10% OF FINAL GRADE DUE WEDNESDAY OCT 11 AT 11: 55 PM EC TIME
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.
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