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may I get some help with this please? Cuent to Acquisition Date LO2, 3, old during : that date, Fazli's retained earnings were $200,000. All
may I get some help with this please?
Cuent to Acquisition Date LO2, 3, old during : that date, Fazli's retained earnings were $200,000. All of Fazli's assets and liabilities had fair values equal to carrying On January 1, Year 4, Cyrus Inc. paid $964,000 in cash to acquire all of the ordinary shares of Fazli Company. On amounts except for an investment in bonds, which was worth $12,988 more than carrying amount and will mature on December 31, Year 8. The recoverable amount for goodwill was $220,000 at the end of Years 4 and 5. and declared no dividends. In Year 4, Fazli reported net income of $80,000 and paid a $30,000 cash dividend. Cyrus In Year 4, Cyrus reported net income from its own operations (exclusive of any income from Fazli) of $125,000 or discounts on investment in bonds. The amortization of the acquisition differential pertaining to the investment in uses the cost method to report its investment in Fazli and uses the effective interest method to amortize premiums bonds was $2,351 in Year 4 and $2,468 in Year 5. The financial statements for Cyrus and Fazli for the year ended December 31, Year 5, were as follows: Revenues and investment income Expenses Profit Retained earnings, 1/1/Year 5 Profit Dividends paid Retained earnings, 12/31/Year 5 Equipment (net) Investment in Fazli Investment in bonds Receivables and inventory Cash Total assets Ordinary shares Retained earnings Liabilities Total equities and liabilities Cyrus $ 928.000 674.000 $ 254,000 $ 814,000 254.000 (104,000) $ 964,000 714,000 914,000 Fazli $ 844.000 710.000 $ 134.000 $ 250,000 134,000 (42,000) $ 342.000 314,000 414,000 94,000 $2,136,000 $ 558,000 964,000 614.000 $2,136,000 300.000 484,000 152,000 $1,250,000 $ 484.000 342.000 424,000 $1,250,000 Required (a) Prepare a schedule of changes to the acquisition differential for Years 4 and 5. b) Calculate investment in bonds and goodwill for the consolidated balance sheet at the end of Year 5. c) Calculate investment income from Fazli and investment in Fazli account balances for Cyrus's separate entity financial statements for Year 5, assuming Cyrus uses the (i) Cost method (ii) Equity method (d) How does the parent's method of accounting for its investment in Fazli affect the amount reported for expenses in its December 31, Year 5, consolidated income statement? (e) How does the parent's method of accounting for its investment in Fazli affect the amount reported for investment in bonds in its December 31, Year 5, consolidated balance sheet? (0) What is Cyrus's January 1, Year 5, retained earnings account balance on its separate entity financial statements assuming Cyrus accounts for its investment in Fazli using the (i) cost method? (ii) equity methodStep by Step Solution
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