Question
On December 31, Year 3, Tim Corp. acquired 80% of the outstanding shares of Hortins Inc. for a total cost of $245,000. The carrying amount
On December 31, Year 3, Tim Corp. acquired 80% of the outstanding shares of Hortins Inc. for a total cost of $245,000. The carrying amount of Hortinss assets, liabilities, and equity was equal to fair value except for the following:
| Carrying Amount | Fair Value |
Inventory | $ 60,500 | $ 69,000 |
Equipment, net | 275,000 | 281,000 |
Patent |
| 41,000 |
Long-term debt | 185,000 | 161,000 |
Common shares | 180,000 |
|
Retained earnings | 43,000 |
|
As at December 31, Year 3, the equipment and patent had an estimated useful life of six and eight years, respectively. The long-term debt is due on January 1, Year 9. There was a goodwill impairment loss of $3,000 in Year 5. There were no other impairment losses.
Tim uses the cost method to account for its investment in Hortins. The book values of selected accounts for the year ended December 31, Year 7 were as follows:
|
| Tim |
| Hortins |
Dividend income | $ | 12,500 |
|
|
Net income |
| 63,000 | $ | 27,000 |
Common shares |
| 102,500 |
| 180,000 |
Retained earnings |
| 260,000 |
| 120,000 |
Show a schedule of changes to the acquisition differential for the four year period ending December 31, Year 7.
Also how do you Calculate consolidated net income attributable to the parent, ending retained earnings and non-controlling interest at December 31, Year 7.
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