Business combinations accounting

Shinra Power Company operates in Canada and operates an exporting business in the country of Midgar. The country of Midgar primarily uses the "GIL" currency. The Midgar subsidiary, which was acquired on January 1, 1986, provided the following financial statements in GIL to the Canadian parent company. SHINRA POWER COMPANY, Midgar Branch Statement of Comprehensive Income Year Ended December 31, 2020 Sales GIL 2,300,000 Cost of goods sold (1,200,000) Depreciation expense (300,000) Other expenses (300.000) Comprehensive income GIL 500.000 SHINRA POWER COMPANY, Midgar Branch Statement of Changes in Equity-Partial-Retained Earnings section Year Ended December 31, 2020 Retained earnings-January 1 GIL 850,000 Comprehensive income for the year 500,000 Less: Dividends declared and paid, December 31 (200.000) Retained earnings-December 31 GIL1,150,000 SHINRA POWER COMPANY, Midgar Branch Statement of Financial Position December 31, 2020 Assets 2020 2019 Cash and receivables GIL 1,150,000 GIL 520,000 Merchandise inventory 450,000 380,000 Property, plant, and equipment 3.450.000 3.750.000 Total GIL 5,050.000 GIL 4.650,000 Current liabilities GIL 700,000 GIL 600,000 Long-term notes due December 31, 2024 1,200,000 ,200,000 Capital stock 2,000,000 2,000,000 Retained earnings 1.150,000 850,000 Total GIL5,050,000 GIL4,650,000 Shinra Power Company was incorporated on January 1, 1984, at which time an amount of property, plant, and equipment with a present (December 31, 2020) net book value of GIL3,000,000 was purchased. Additional equipment was purchased December 31, 2019 (20% of depreciation expense relates to this new equipment). The long-term notes were issued, to replace financing provided by the parent, on January 1, 2019.Other Information: 0 During 2019, Sky sold $90,000 worth of inventory to Phoenix, 50% of which was sold to outsiders during the year. During 2020, Sky sold inventory to Phoenix for $120,000. 80% of this inventory was resold by Phoenix to outside parties in 2020- 0 In 2019, Sky sold a lot of Land to Phoenix for $40,000. The land was recorded at cost of $24,000 on Sky's book prior to the sale. Phoenix has not yet sold the land. - All intercompany inventory sales as well as sales to outsiders are priced to generate a gross prot of 20% of sales. The effective tax rate for both companies is 40%. 0 On January 1, 2019, Sky sold equipment to Phoenix at a gain of $100,000. The remaining useful life of the equipment is 5 years. Required (Please use the Fair Value Enterprise Method (Entity Method) for the below) A) Prepare the purchase price allocation. (3.5 Points) B) Prepare the amortization of the acquisition differential schedule as at December 31, 2020. Please show movements from December 31 2017 to December 31, 2020. (3 Points) C) What is the unrealized equipment gain as at December 31, 2019 and December 31, 2020? What is the realized equipment gain for the year ended December 31, 2020? (2.5 Points) For parts D-G, calculate the balances as they would appear on the consolidated income statement for the year ended December 31, 2020: D) Other revenues (1 Point) E) Cost of goods sold (4 Points) F) Depreciation and amortization expense (3 Points) G) Income tax expense (3 Points) For parts 1-1-1, calculate the balances as they would appear on the consolidated balance sheet as at December 31, 2020: H) Net Equipment (2 Points) 1) Non-Controlling Interest (5.5 Points) I) What three criteria must be met for the patents to be recorded on the consolidated nancial statements as at the date of the acquisition? Explain each criteria in no more than 1-2 sentences (2.5 points)