Foxx Corp. purchased 75% of the outstanding shares of Rabb Ltd. on January 1, Year 3, at a cost of $121,680. Non-controlling interest was valued at $41,000 by an independent business valuator at the date of acquisition. On that date, Rabb had common shares of $53,000 and retained earnings of $33,000. Fair values were equal to carrying amounts for all the net assets except the following: Carrying Amount $ 33,000 45,600 Inventory Equipment Software Fair Value $ 20,500 70,500 16,500 The equipment had an estimated remaining useful life of six years on January 1, Year 3, and the software was to be amortized over ten years. Foxx uses the cost method to account for its investment. The testing for impairment at December 31, Year 6, yielded the following fair values: Software Goodwill $ 8,600 34,493 The impairment loss on these assets occurred entirely in Year 6. Amortization expense is grouped with administrative expenses, and impairment losses are grouped with miscellaneous expenses. The parent's share of the goodwill noted above is $25,632. The following are the financial statements of Foxx Corp. and its subsidiary Rabb Ltd. for Year 6: Rabb Ltd. $ 10,300 33,000 43,000 47,000 79,000 33,000 BALANCE SHEETS At December 31, Year 6 Foxx Corp. Cash $ Accounts receivable 43,000 Note receivable Inventory 69,000 Equipment, net 235,000 Land 165,000 Investment in Rabb 121,680 $633,680 Bank indebtedness $105,000 Accounts payable 73,000 Notes payable 43,000 Common shares 153,000 Retained earnings 259,680 $633,680 $ 245,300 $ 63,000 53,000 129,309 $ 245,300 STATEMENTS OF RETAINED EARNINGS Year ended December 31, Year 6 Foxx Corp. Retained earnings, January 1, Year 6 $ 168,000 Net income 125,775 Dividends (34,095) Retained earnings, December 31, Year 6 $ 259, 680 Rabb Ltd. $ 107,000 48,000 (25,700) $ 129,300 INCOME STATEMENTS For the year ended December 31, Year 6 Foxx Corp. Sales $824,000 Investment income 19,275 843, 275 Cost of sales 483,000 Administrative expenses 41,500 Miscellaneous expenses 119,000 Income taxes 74,000 717,500 Net income $125,775 Rabb Ltd. $ 329,000 5,100 334,100 203,000 13,500 34,600 35,000 286, 100 $ 48,000 Additional Information The notes payable are intercompany. Required: (a) Prepare the Year 6 consolidated financial statements. (Input all values as positive numbers. Leave no cells blank - be certain to enter "0" wherever required. Round your intermediate computations to nearest whole dollar value. Omit $ sign in your response. The balance sheet total may vary due to rounding.) Foxx Corp. Consolidated Income Statement For the year ended December 31, Year 6 HEYulicu. (a) Prepare the Year 6 consolidated financial statements. (Input all values as positive numbers. Leave no cells blank - be certain to enter "O" wherever required. Round your intermediate computations to nearest whole dollar value. Omit $ sign in your response. The balance sheet total may vary due to rounding.) Foxx Corp. Consolidated Income Statement For the year ended December 31, Year 6 Attributable to: Foxx's shareholders Non-controlling interest Foxx Corp. Statement of Consolidated Retained Earnings Year ended December 31, Year 6 (Click to select) $ (Click to select) (Click to select) (Click to select) $ Foxx Corp. Consolidated Balance Sheet At December 31, Year 6 Assets Liabilities and Equity (b) Calculate goodwill impairment loss and non-controlling interest on the consolidated income statement for the year ended December 31, Year 6, under the identifiable net assets method. (Round intermediate calculations and final answers to whole number. Omit $ sign in your response.) $ Goodwill impairment loss NCI - identifiable net assets method (c) Not available in Connect. Prov 2 of 2 HH Neyt
