Identify which question you are answering. Round all decimals.

On January 1, Year 4 A purchased 80% of the outstanding common shares of B.

The acquisition differential of $20,000 was allocated as follows:

Equipment with a remaining useful life of 5 years $10,000

Goodwill to the parent company only $10,000

On this date B had a balance of common shares of $100,000 and retained earnings of $180, 000. Accumulated depreciation on B’s equipment on this date was $20,000.

On July 1, Year 5 B purchased 60% of the outstanding common shares of C. The acquisition differential of $5,000 was allocated to equipment with a remaining useful life of 5 years. On this date C had a balance of common shares of $100,000 and retained earnings of $90, 000. Accumulated depreciation on C’s equipment on this date was $8,000.

A and B use the cost method to account for their investments. All companies have a 40% tax rate and a December 31 fiscal year-end.

During Year 6 intercompany sales were as follows:

A selling to B $40,000

C selling to B $20,000

Beginning Inventory Profits:

A selling to B $5,000

C selling to B $3,000

Ending Inventory Profits:

A selling to B $8,000

C selling to B $4,000

On June 30, Year 4 A sold land to C and recorded a gain on sale of $10,000. This land was sold by C in Year 6.

On June 30, Year 5 A sold equipment to B and recorded a gain on sale of $5,000. The equipment had a remaining useful life at the time of the sale of 5 years.

B charged C $2,000 for management fees in Year 6. B records this as Sales and C records it as General expenses.

The recoverable amount of goodwill as of December 31, Year 6 was determined to be $7,000. The impairment was charged in Year 6. C declared dividends but has not paid them yet. All other dividends have been paid.

The separate income statements, statements of retained earnings and balance sheets for each company for Year 6 are:

1) Calculate consolidated net income attributable to A and NCI (13 marks)

2) Calculate consolidated retained earnings for January 1, Year 6 (10 marks)

3) Calculate consolidated retained earnings for December 31, Year 6 (do NOT simply use a statement of retained earnings, you must calculate it). (10 marks)

4) Calculate NCI for December 31, Year 6 (9 marks)

5) Prepare a consolidated income statement for year ended December 31, Year 6 (18 marks)

6) Prepare a consolidated balance sheet for December 31, Year 6 (23 marks)
 

Sales Other Revenue Gain on Sale of Land total revenues 285,200 152,400 Cost of Goods Sold Depreciation expense General expenses Other expenses total expenses A B 280,000 150,000 5,200 2,400 Income before tax Income Tax expense Net Income C 90,000 10,000 5,000 95,000 168,000 90,000 54,000 14,000 12,000 8,000 12,000 7,000 1,400 800 195,400 112,800 69,600 89,800 39,600 25,400 35,920 15,840 10,160 53,880 23,760 15,240 600