can someone please help
1) On January 1, Yr 1, Parent Co. purchased 70% of the outstanding common shares of Sub Co. for $10,000. On that date, Sub's shareholders' equity consisted of common shares of $550, retained earnings of $5,800; and Sub had accumulated depreciation of $725. 2) In negotiating the purchase price at the date of acquisition, the fair values of all of Sub's assets and liabilities were equal to their carrying values, except for inventory having a fair value that was $100 lower... 3) ...and a patent (with no carrying value) with a fair value of $400. The remaining useful life of the patent was 10 years at that time. 4) Goodwill from Sub acquisition is regularly assessed for impairment and was written down by $500 in Yr 3. 5) During Yr 3, product sales from Parent to Sub were $850 5) Sub's inventory contained product purchased from Parent for $180 at the end of Yr 2 and $140 at the end of Yr 3. Parent earns a gross profit of 40% on these sales. 7 ) Also, at the end of Yr 3, $60 is still owed to Parent from Sub from these sales. 8) On Jan 1, Yr 2, Sub sold land to Parent and recorded a gain of $465 before taxes. The land is still held by Parent at the end of Yr 3. 9) Parent also has $300 of Yr3 dividend revenue from Sub included in other revenue. The cost method is used by Parent to record Sub on their books. Fair value enterprise method is used to value non-controlling interest. Both companies are subject to an income tax rate of 25%. The entity financial statements for Parent and Sub for Yr 3 are presented below in columns C&D. Required: SHOW work below each required. Add rows as needed. ROUND amounts to the nearest dollar. 1) Use the spreadsheet provided below for this question where by your adjustments will be in columns that tie to the # references above. Modify the spreadsheet as needed. Show any calculations in Part 2 below so that they agree to the spreadsheet. If we cannot follow your calculations easily outside the cells, cannot award part marks. Prepare a consolidated statement of income for the year ended December 31, Yr 3. b ) Prepare the consolidated statement of financial position at December 31, Yr 3. 1A) Income statement for Year 3: Adjustments Inv Patent Goodwill Sales InvProfits Balances Land Dividends Yr 3 Parent Sub 1 - Day 1 2 3 5 6 8 9 CONSOLIDATED Sales 28,00 8,800 36,800 Other revenue 900 900 Total revenue 28,900 3,800 0 0 0 0 0 0 o 0 37,700 Cost of sales 14,800 5,785 20,585 Dep & amort expense 940 520 1,460 Other expenses 3,455 2,450 5,905 Income tax expense 2,400 10 2,410 Total expenses 21,595 8,765 0 0 30,360 o o oo O o oo Net income 7,305 35 o 0 7,340 Attributable to - Parent 0 (2b) - NCI 0 (2c)1B) Balance Sheet at Dec 31, Yr 3: Inv LandProfit Dividends Parent Sub 1 - Day 1 2 8 9 CONSOLIDATED Cash 2,000 800 2,800 Accounts Receivable 4,200 1,950 6,150 Inventory 5,930 4,100 10,030 Land 3,000 780 3,780 PP&E - cost 8,000 3,450 11,450 accum depreciation (2,865) (1,320) (4,185) Investment in Sub 10,000 10,000 0 0 0 0 Total 30,265 9,760 0 0 0 0 0 0 0 0 0 40,025 Accounts payable 2,100 940 3,040 Other liabilities 2,250 1,540 3,790 Common shares 2,000 550 2,550 Retained earnings 23,915 6,730 30,645 (2d) Non-controlling interest 0 (2e) Total 30,265 9,760 0 0 0 0 0 0 40,025 not required to break out R/E & NCI calculations here if show in part 2(d) & (e)
