ject-Axlsx The following balance sheets have been prepared as at December 31, Year 6. for Kay Corp. and Adams Ventures: Cash Accounts receivable Inventory Property and plant Investment in Adams 0 Kay Adams 78,000 $ 39,000 116,000 197,000 645,000 427,000 436.000 927,000 378,000 $ 2,653,000 $1,590,000 418,000 3 168,000 522.500 618.000 972.000 486,000 740,500 318,000 $ 2,653,000 $1,590,000 Current liabilities Bonds payable Common shares Retained earnings Additional Information Kay acquired its 40% interest in Adams for $378,000 in Year 2, when Adams's retained earnings amounted to $188,000. The acquisition differential on that date was fully depleted by the end of Year 6. In Year 5, Kay sold land to Adams and recorded a gain of $78,000 on the transaction. Adams is still using this land, The December 31, Year 6, Inventory of Kay contained a profit recorded by Adams amounting to $53,000. On December 31, Year 6, Adams owes Kay $47,000. Kay has used the cost method to account for its investment in Adams. Use income tax allocation at a rate of 40%, but ignore income tax on the acquisition differential Required: (a) Prepare three separate balance sheets for Kay as at December 31, Year 6. (0) Assuming that the investment in Adams is a control investment. (1) Assuming that the investment in Adams is a joint operation and is reported using proportionately adjusted financial statements Kay Corp. Consolidated Balance Sheet at December 31, Year 6 Liabilities and Equity Assuming that the investment in Adams is a significant influenc e ) Joint Operation Investment statement of Financial Position Cash Accounts receivable Inventory Investment in Adam Deferred Income taxes Property and plant Current liabilities Bonds payable Common shares Retained earnings Significant influence Invest ject-Axlsx The following balance sheets have been prepared as at December 31, Year 6. for Kay Corp. and Adams Ventures: Cash Accounts receivable Inventory Property and plant Investment in Adams 0 Kay Adams 78,000 $ 39,000 116,000 197,000 645,000 427,000 436.000 927,000 378,000 $ 2,653,000 $1,590,000 418,000 3 168,000 522.500 618.000 972.000 486,000 740,500 318,000 $ 2,653,000 $1,590,000 Current liabilities Bonds payable Common shares Retained earnings Additional Information Kay acquired its 40% interest in Adams for $378,000 in Year 2, when Adams's retained earnings amounted to $188,000. The acquisition differential on that date was fully depleted by the end of Year 6. In Year 5, Kay sold land to Adams and recorded a gain of $78,000 on the transaction. Adams is still using this land, The December 31, Year 6, Inventory of Kay contained a profit recorded by Adams amounting to $53,000. On December 31, Year 6, Adams owes Kay $47,000. Kay has used the cost method to account for its investment in Adams. Use income tax allocation at a rate of 40%, but ignore income tax on the acquisition differential Required: (a) Prepare three separate balance sheets for Kay as at December 31, Year 6. (0) Assuming that the investment in Adams is a control investment. (1) Assuming that the investment in Adams is a joint operation and is reported using proportionately adjusted financial statements Kay Corp. Consolidated Balance Sheet at December 31, Year 6 Liabilities and Equity Assuming that the investment in Adams is a significant influenc e ) Joint Operation Investment statement of Financial Position Cash Accounts receivable Inventory Investment in Adam Deferred Income taxes Property and plant Current liabilities Bonds payable Common shares Retained earnings Significant influence Invest