i. ii. iv. V. vi. The following is ACE Corporation's comparative statement of financial position at December 31, 2018 and 2017. Property, Plant, and Equipment Accumulated Depreciation Equity investment (TWIN Corp.) Debt investment ACE Corporation Comparative Statement of Financial Position Inventories Accounts Receivable Cash Total Assets Share capital-ordinary, $1 par Retained Earnings Bonds payable Finance lease obligation Accounts Payable Income Taxes Payable Dividends Payable Total equity and liabilities The TT-fol- TT7 Tod:. QUESTION 1 (cont'd) Additional information: Page 2 December 31, 2018 $1,653,500 (582,500) 155,000 125,000 925,000 564,000 407,500 $3.247.500 $ 450,000 1,485,000 500,000 200,000 557,500 15,000 40,000 $3,247.500 December 31, 2017 $1,483,500 (520,000) 137,500 857,500 584,000 350,000 $2.892.500 $ 250,000 1,340,000 750,000 477,500 25,000 50,000 $2.892.500 TURN OVER On December 31, 2017, ACE Corporation acquired 25% of TWIN Co.'s common stock for $137,500. TWIN reported income of $70,000 for the year ended Dece er 31, 2018. No dividend was paid on TWIN's common stock during the year. During 2018, ACE loaned $150,000 to PAL Co., an unrelated company. PAL made the first semiannual principal repayment of $25,000, plus interest at 10%, on December 31, 2018. On January 2, 2018, ACE sold equipment costing $30,000, with a carrying amount of $19,000, for $20,000 cash. On December 31, 2018, ACE entered into a capital lease for a building. The annual rental payments is $200,000, which equals the fair value of the building. ACE made the first rental payment of $30,000 when due on January 2, 2019. Net income for 2018 was $185,000. ACE declared and paid cash dividends for 2018 and 2017 as shown below.

The following is ACE Corporation's comparative statement of financial position at December 31. 2018 and 2017. ACE Corporation Comparative Statement of Financial Position TURN OVER Page 2 QUESTION 1 (cont'd) Additional information: 1. On December 31, 2017, ACE Corporation acquired 25% of TWIN Co.'s common stock for $137,500. TWIN reported income of $70,000 for the year ended December 31,2018 . No dividend was paid on TWIN's common stock during the year. ii. During 2018, ACE loaned $150,000 to PAL Co., an unrelated company. PAL made the first semiannual principal repayment of $25,000, plus interest at 10%, on December 31,2018 . iii. On January 2,2018, ACE sold equipment costing $30,000, with a carrying amount of $19,000, for $20,000 cash. iv. On December 31, 2018, ACE entered into a capital lease for a building. The annual rental payments is $200,000, which equals the fair value of the building. ACE made the first rental payment of $30,000 when due on January 2, 2019. v. Net income for 2018 was $185,000. vi. ACE declared and paid cash dividends for 2018 and 2017 as shown below