After looking at the problem 4-2 ( p4-2) ( attached pictures) discuss the following questions:

1. When was the subsidiary formed?

2. As at what date do we need to prepare the consolidated statements?

3. There is a ton of eliminating entries required in this problem. How many can you identify?

4. Remember you need to eliminate the investment account, any intercompany transactions and any unrealized profit for intercompany sale

P4-2 (30 minutes, medium) OfficePlus Corporation is a retailer of office supplies and equipment in Vancouver. On March 5, 20X6, OfficePlus formed a new corporation in Calgary to operate the same type of busi- ness. OfficePlus invested $250,000 cash in exchange for 10,000 common shares in the new subsidiary, to be known as Plus Limited. During 20X6, Plus Limited commenced operations. Most of Plus's initial inventory came from OfficePlus. In total, goods that had cost OfficePlus $200,000 were sold to Plus at an assigned value of $300,000. These goods were re-priced by Plus to sell for $500,000 at retail. At year-end, 30% of the merchandise acquired from OfficePlus was still in Plus's inventory. OfficePlus also extended a loan to Plus to finance the start-up costs. A total of $150,000 was lent during the year, of which $90,000 was still owing at year-end. Interest of $10,000 on the loan had been accrued by both companies, of which only $5,000 had actually been paid during 20x6. Condensed statements of financial position and statements of comprehensive income of the two companies are presented below, as of December 31, 20x6. Required Prepare a consolidated SFP and SCI for OfficePlus Corporation at December 31, 20x6. Plus $ 40,000 150,000 60,000 400,000 (30,000) Statements of Financial Position December 31, 20X6 OfficePlus Cash $ 85,000 Accounts and other receivables 275,000 Inventories 440,000 Capital assets 500,000 Accumulated depreciation (200,000) Investment in Plus (at cost) 250,000 $ 1,350,000 Accounts and other payables $ 320,000 Long-term liabilities 300,000 Common shares 50,000 Retained earnings 680,000 $ 1,350,000 $ 620,000 $ 150,000 200,000 250,000 20,000 $ 620,000 Continued > Continued > Statements of Comprehensive Income Year Ended December 31, 20X6 OfficePlus Plus Sales $ 2,000,000 $ 600,000 Other income 70,000 2,070,000 600,000 Expenses 1,700,000 540,000 Net income and comprehensive income $ 370,000 $ 60,000 Statements of Changes in EquityRetained Earnings Section Year Ended December 31, 20X6 OfficePlus Plus Retained earnings, December 31, 20X5 $ 510,000 Comprehensive income 370,000 $ 60,000 Dividends (200,000) (40,000) Retained earnings, December 31, 20X6 $ 680,000 $ 20,000