Enabled: Midterm Test 2 i Saved On January 1, Year 7, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share On that date, Devine had ordinary shares of $3,460,000, and retained earnings of $2,160,000. When acquired, Devine had inventories with fair values $40,000 less than carrying amount, a parcel of land with a fair value $260,000 greater than the carrying amount, and equipment with a fair value $260,000 less than carrying amount. There were also internally generated patents with an estimated market value of $460,000 and a five-year remaining life. A long-term liability had a market value $160,000 greater than carrying amount, this liability was paid off December 31, Year 10. All other identifiable assets and liabilities of Devine had fair values equal to their carrying amounts. Devine's accumulated depreciation on the plant and equipment was $560,000 at the date of acquisition. The year 11 financial statements for Vine and Devine were as follows: INCOME STATEMENTS For year ending December 31, Year 11 (in thousands of dollars) Vine Devine Sales $ 12, 800 $ 4,200 Dividends, investment income and gains 1, 600 2, 200 Total income 14, 400 6, 400 Cost of goods sold 9 , 800 2, 700 Other expenses 500 500 Income taxes 200 200 Total expenses (10, 500) ( oot'E ) Profit $ 3,900 $ 3, 000 STATEMENTS OF FINANCIAL POSITION December 31, Year 11 (in thousands of dollars) Vine Devine Land $ 6,000 $ 2,500 Plant and equipment 20, 000 13,000 Accumulated depreciation (4, 600) (3,800) Investment in Devine, cost 5,060 Inventories 5,800 3,600 Cash and current receivables 2, 140 1,500 Total assets $34, 400 $16,800 Ordinary shares $10, 000 $ 3, 460 Retained earnings 10, 800 5,800 Long-term liabilities 7, 806 2, 300 - - - <.prev. of next q search>