AutoSave OF AAP 2G ... Book7 Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments X C. [ Calibri (Body) v 12 ~ A V v General w HIP Insert 2. Delete v Format v AYO O v Paste I U 7 Ar Y = = = S%) : 93 Conditional Format Cell Formatting as Table Styles Sort & Filter Find Select Analyze Data Sensitivity y D4 fy P C D E . J L M N 0 P 1 On January 1, 2015, Dew Inc. (Dew), purchased 245,000 of the 350,000 outstanding common shares of cry Co. (Berry) by issuing 10 years bonds. The bords had a coupon rate of 6% and par value of $2,100,000. At the time the bonds were issued the market rate of interest was 5.5%. The stere purchase agreement included a clause whereby if Berry's earnings reached certain specified levels in the two years subsequent to acquisition, Dew would be required ta make an additional cash payment of $72,000 to Berry's old shareholders. At the date of acquisition the likelihood that earrings would reach the levels specified in the agreement was assessed at 60%. Dew uses the cost method to account for its Investment in Herry. In the days following acquisition, Berry's shares were trading at $8.50 per share. On the date of acquisition, the financial statements of ecrry indicated that the book values of common stock and retained earnings were $2,000,000 and $550,000 respectively. At this time, appraisals indicated that the following balance sheet items had market values different from fair values: 2 3 4 PPF (1) 5 Trademark (2) goak value Fair value 6010000 1000000 331000 300000 1) The remained useful life of PPE is 10 years. 8 21 The useful life of trademark is 5 years 9 Because Berry's earrings, curing 2015 and 2016, had reached the levels specified in the share purchase agreement, Dew made the payment, as set out in the agreement, to Berry's old shareholders on January 1, 2017. The legal entity income statements and balance sheets for Dew and Berry for the year ended December 31, 2018 as well as information about diderds are as follows: 10 11 Income Statementsfor the year ended December 31, 2018 12 13 Revenue 14 Cost of sales 15 Gross profit 16 Selling, general and administration exerse 17 Interest expense 18 Depreciation expense 19 Other (Incomel expense 20 Net income 21 22 Ralance Sheets as at December 31, 2018 Sheet1 Ready Dew 3200000 24010000 800000 200000 190005 120003 75003 215000 Berry 2950000 20165000 385000 195.000 100000 95000 -100000 605000 + 100% AutoSave OF AAP 2G ... Book7 Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments X C. [G Calibr (Body v 12 ~ A V v General w HIP I YO Insert 2. Delete v Format v 0 v Paste A = = = S%) Y 4:8 -13 Sort & Filter Conditional Format Cell Formatting as Table Styles Sensitivity Analyze Data Find Select y D4 fx D E F G H J L M N 0 P Dew 495000 965000 338000 3600000 8440000 Herry 365000 890000 3525000 1300000 6120000 A 22 Balance Sheets as at December 31, 2018 23 24 Cash & Accounts receivable 25 Inventary 26 Property, Plant & Equipment (net) 27 Long-term Investments (11 28 Tatal Assets 29 30 A/P and accrued liabilities 31 Long-term Debt (2) 32 Common Stock 33 Retained Earnings 34 Total Liabilities and Equity 35 (1) Dew's investment account includes Dew's imestment in Berry's shares as well as investments in bonds of other companies. Berry's investment account includes investments in 26 bands of other companies. 37 (2) Any discounts or premiums related to bond liabilities are included in this account 38 39 Dividends declared during 2018 40 Dividends paid during 2018 41 42 All dividends declared during 2017 were paid during 2017, 825000 3100000 2140000 2375000 8440000 765000 1930000 2000000 1425000 6120000 Dew 15000 125000 Berry 12001 90000 Additional Information: On January 1, 2017, Berry sold a patent, with a remaining useful life of 9 years, to Dew for $195,000. The book value of the patent at the time of the sale was $240,000. Assume that the patent is included in long term investments During 2017, Dew seld merchandise to Berry for $250,000. The gross profit percentage on these sales was 30%. None of the merchandise was sold by Berry in 2017, hut 75% of it was sold during 2018. Dew made additional sales to Berry during 2018 of $120,000. The gross profit percentage reported on these sales was 25% and 20% of this merchandise was sold by Berry during 2018 On June 30, 2018, Berry sold equipment with an original cost of $200,000 and accumulated depreciation of $110,000 to Dew for $145,000. At the time of sale this equipment had a remaining useful life of 11 years. Bath Dew and Berry have income tax rate 40%. Required: (for all parts in this question round all amounts to the rearest dollar) Sheet1 Ready + 100% AutoSave OF AA 2 O... Book7 Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments Calibri (Body v 12 ~ A V X C. IR v General w HE Insert 2. Delete v Format v I'ru O o v Paste 7 Av = = = S% Y 4.93 Conditional Format Cell Formatting as Table Styles Sort & Filter Find Select Analyze Data Sensitivity D4 fx A B C D E G . J K L M N O P Required: (for all parts in this question round all amounts to the rearest dollar) 43 44 1. Calculate the total consideration paid by Dew (3 marks) 45 46 2. Calculate the goodwill attributed to NCI. (5 maries) 47 3. Complete the following table to analyze the fair value differentials on the equipment and 48 the trademark (5 mark) 49 4. Determine the intercompany profits or losses in opening and ending inventory for Berry in 50 2018 13 marks) 51 5. For the 2017 intercompany sale of patert, determine the unrealized gain or loss at the end 52 of 2017 and 2018. (3 marks! 53 6. For the 2018 intercompany sale of equipment, determine the unrealized gain or loss at the 54 end of 2018 (9 marks) 55 56 7. Determine cansalidated retained carnings as at December 31, 2017 (beginning of the 57 current year), (12 marks) 58 8. Determine total consolidated net income and the income attributable to both Dew and the Nd for the year ended December 31, 2018. (10 marks) 60 61 9. Using the direct method, prepare the consolidated balance sheet of Dew Berry for the year 62 ended December 31, 2018.(18 marks) 63 64 GS 66 67 68 69 70 71 72 73 74 Sheet1 + Ready + 100% AutoSave OF AAP 2G ... Book7 Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments X C. [ Calibri (Body) v 12 ~ A V v General w HIP Insert 2. Delete v Format v AYO O v Paste I U 7 Ar Y = = = S%) : 93 Conditional Format Cell Formatting as Table Styles Sort & Filter Find Select Analyze Data Sensitivity y D4 fy P C D E . J L M N 0 P 1 On January 1, 2015, Dew Inc. (Dew), purchased 245,000 of the 350,000 outstanding common shares of cry Co. (Berry) by issuing 10 years bonds. The bords had a coupon rate of 6% and par value of $2,100,000. At the time the bonds were issued the market rate of interest was 5.5%. The stere purchase agreement included a clause whereby if Berry's earnings reached certain specified levels in the two years subsequent to acquisition, Dew would be required ta make an additional cash payment of $72,000 to Berry's old shareholders. At the date of acquisition the likelihood that earrings would reach the levels specified in the agreement was assessed at 60%. Dew uses the cost method to account for its Investment in Herry. In the days following acquisition, Berry's shares were trading at $8.50 per share. On the date of acquisition, the financial statements of ecrry indicated that the book values of common stock and retained earnings were $2,000,000 and $550,000 respectively. At this time, appraisals indicated that the following balance sheet items had market values different from fair values: 2 3 4 PPF (1) 5 Trademark (2) goak value Fair value 6010000 1000000 331000 300000 1) The remained useful life of PPE is 10 years. 8 21 The useful life of trademark is 5 years 9 Because Berry's earrings, curing 2015 and 2016, had reached the levels specified in the share purchase agreement, Dew made the payment, as set out in the agreement, to Berry's old shareholders on January 1, 2017. The legal entity income statements and balance sheets for Dew and Berry for the year ended December 31, 2018 as well as information about diderds are as follows: 10 11 Income Statementsfor the year ended December 31, 2018 12 13 Revenue 14 Cost of sales 15 Gross profit 16 Selling, general and administration exerse 17 Interest expense 18 Depreciation expense 19 Other (Incomel expense 20 Net income 21 22 Ralance Sheets as at December 31, 2018 Sheet1 Ready Dew 3200000 24010000 800000 200000 190005 120003 75003 215000 Berry 2950000 20165000 385000 195.000 100000 95000 -100000 605000 + 100% AutoSave OF AAP 2G ... Book7 Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments X C. [G Calibr (Body v 12 ~ A V v General w HIP I YO Insert 2. Delete v Format v 0 v Paste A = = = S%) Y 4:8 -13 Sort & Filter Conditional Format Cell Formatting as Table Styles Sensitivity Analyze Data Find Select y D4 fx D E F G H J L M N 0 P Dew 495000 965000 338000 3600000 8440000 Herry 365000 890000 3525000 1300000 6120000 A 22 Balance Sheets as at December 31, 2018 23 24 Cash & Accounts receivable 25 Inventary 26 Property, Plant & Equipment (net) 27 Long-term Investments (11 28 Tatal Assets 29 30 A/P and accrued liabilities 31 Long-term Debt (2) 32 Common Stock 33 Retained Earnings 34 Total Liabilities and Equity 35 (1) Dew's investment account includes Dew's imestment in Berry's shares as well as investments in bonds of other companies. Berry's investment account includes investments in 26 bands of other companies. 37 (2) Any discounts or premiums related to bond liabilities are included in this account 38 39 Dividends declared during 2018 40 Dividends paid during 2018 41 42 All dividends declared during 2017 were paid during 2017, 825000 3100000 2140000 2375000 8440000 765000 1930000 2000000 1425000 6120000 Dew 15000 125000 Berry 12001 90000 Additional Information: On January 1, 2017, Berry sold a patent, with a remaining useful life of 9 years, to Dew for $195,000. The book value of the patent at the time of the sale was $240,000. Assume that the patent is included in long term investments During 2017, Dew seld merchandise to Berry for $250,000. The gross profit percentage on these sales was 30%. None of the merchandise was sold by Berry in 2017, hut 75% of it was sold during 2018. Dew made additional sales to Berry during 2018 of $120,000. The gross profit percentage reported on these sales was 25% and 20% of this merchandise was sold by Berry during 2018 On June 30, 2018, Berry sold equipment with an original cost of $200,000 and accumulated depreciation of $110,000 to Dew for $145,000. At the time of sale this equipment had a remaining useful life of 11 years. Bath Dew and Berry have income tax rate 40%. Required: (for all parts in this question round all amounts to the rearest dollar) Sheet1 Ready + 100% AutoSave OF AA 2 O... Book7 Home Insert Draw Page Layout Formulas Data Review View Tell me Share Comments Calibri (Body v 12 ~ A V X C. IR v General w HE Insert 2. Delete v Format v I'ru O o v Paste 7 Av = = = S% Y 4.93 Conditional Format Cell Formatting as Table Styles Sort & Filter Find Select Analyze Data Sensitivity D4 fx A B C D E G . J K L M N O P Required: (for all parts in this question round all amounts to the rearest dollar) 43 44 1. Calculate the total consideration paid by Dew (3 marks) 45 46 2. Calculate the goodwill attributed to NCI. (5 maries) 47 3. Complete the following table to analyze the fair value differentials on the equipment and 48 the trademark (5 mark) 49 4. Determine the intercompany profits or losses in opening and ending inventory for Berry in 50 2018 13 marks) 51 5. For the 2017 intercompany sale of patert, determine the unrealized gain or loss at the end 52 of 2017 and 2018. (3 marks! 53 6. For the 2018 intercompany sale of equipment, determine the unrealized gain or loss at the 54 end of 2018 (9 marks) 55 56 7. Determine cansalidated retained carnings as at December 31, 2017 (beginning of the 57 current year), (12 marks) 58 8. Determine total consolidated net income and the income attributable to both Dew and the Nd for the year ended December 31, 2018. (10 marks) 60 61 9. Using the direct method, prepare the consolidated balance sheet of Dew Berry for the year 62 ended December 31, 2018.(18 marks) 63 64 GS 66 67 68 69 70 71 72 73 74 Sheet1 + Ready + 100%