Do you guys have the answers to the attachment? I need help with it please.

ACCT 4455 Assignment 2 (55 marks) Question 1 (18 marks) On January 1, Year 4, Cat Corporation purchased common shares of Mouse Limited for $2,000,000. On that date the net assets of Mouse had a carrying value of $6,000,000 and all of the individual assets of Mouse had fair values that were equal to their book values except for: Fair Value Carrying value Machine (remaining life of 5 years) $1,000,000 $ 500,000 The following relates to Mouse since the acquisition date: Year 4 5 Net Income $ 220,000 190,000 Dividends paid $ 170,000 180,000 In Year 5, there was a goodwill impairment loss equal to 10% of the goodwill created at acquisition date. On January 15, Year 6, because of negative market indicators, Cat's investment in Mouse was tested for impairment and it was determined that the recovery amount was $1,500,000. Required: Prepare all the journal entries that Cat should make regarding this investment in Mouse for Years 4, 5 and on January 15, Year 6 assuming the following two independent cases: a) Cat owns 30% of common shares of Mouse (13 marks) b) Cat owns 30% of common shares of Mouse. There is only one other shareholder who owns 70% of the Mouse common shares. (5 marks) Round to the nearest dollar. Show all work and schedules Hint: Acquisition differential = $200,000. You must prepare the AD schedule based only on % (see pg. 167) as under the equity method, you show the impact of all consolidation-type adjustments. Try and review solution to chapter 2 extra homework question in Ch 2 class notes prior to completing this question. ACCT 4455 Fall 2017 Question 2 (37 marks) On January 1, Year 1, Par Ltd. purchased 80% of the outstanding common shares of Son Company for $90,000 in cash. On the date of the purchase, Son had common shares of $38,000 and retained earnings of $26,000. Son has a new patent that is not recorded in its books but has a fair value of $15,000. The patent rights extend for another 3 years. The carrying values of Son's assets and liabilities were equal to their fair value except for the following items: Carrying value Inventory Equipment Bond payable 40,000 60,000 30,000 Fair value 35,000 70,000 38,000 The equipment in Son's books has an expected remaining useful life of 10 years and the bond payable matures December 31 Year 4. Due to economic changes the annual goodwill impairment tests resulted in a $1,000 loss in Year 2 and $2,000 loss in Year 3. At December 31, Year 3, Son owed Par $20,000 in an interest bearing note at 5% (note was issued in Year 2). During Year 3, Par paid $20,000 in dividends and Son paid $10,000 in dividends. The balance sheets and income statements for both companies for the year ended Year 3 are as follows: Balance Sheets At December 31, Year 3 Par Ltd. Son Company Assets Cash $ 50,000 $ 35,000 Accounts receivable 100,000 40,000 Notes receivable 80,000 Inventory 90,000 80,000 Land 60,000 50,000 Equipment 600,000 298,000 Accumulated depreciation 100,000 50,000 Investment in Son (cost basis) 90,000 Liabilities & Shareholders' equity Accounts payable Notes payable Bonds payable Common shares Retained earnings $ 970,000 $ 453,000 $ 70,000 $ 200,000 500,000 200,000 50,000 30,000 270,000 38,000 65,000 $ 970,000 $ 453,000 2 ACCT 4455 Fall 2017 Income Statements For the year ended December 31, Year 3 Par Ltd. Son Company Sales Other income Cost of goods sold Depreciation/amortization expense Administration expense Other expenses Income tax expense $ 798,000 10,000 500,000 98,000 48,000 60,000 26,000 $ 500,000 Net income $ $ 76,000 270,000 50,000 30,000 90,000 20,000 40,000 Required a. Prepare the calculation and allocation of the acquisition differential and the AD amortization/impairment schedules b. Calculate the consolidated net income for Year 3 c. Calculate the consolidated retained earnings at January 1, Year 3 d. Prepare the three (3) consolidated financial statements for Par, December 31, Year 3, using the direct method (in good format and write out all words completely) Hints: Goodwill = $36,500. AD left December 31, Year 3 = $38,500. Total Consolidated Assets = $1,353,500. Given 2 separate lines for Equipment less accumulated depreciation on Cons B/S hence cannot net. Notes Only 4 columns for AD amort./loss schedule (in proper sequence) Good format so include proper title with proper dates (3 lines and all words fully written out) Non-controlling interest is at the end of equity All calculations must be shown (i.e. for NCI, Cons. RE, etc) All #s must be given in brackets on Cons. Statements along with totals 3