On January 1, Year 1, X Co. purchased 70% of the outstanding voting shares of Y Co. for $700,000. On that date, Y Co. had common shares of $400,000 and retained earnings of $210,000. NCI was valued at $201,000 at this date. Relevant information regarding Y Co. on the date of acquisition is as follows: The fair value of plant and equipment was $17,000 more than the carrying amount. Y Co.'s accumulated depreciation on the plant and equipment was $35,000 on the date of acquisition. At the acquisition date, the plant and equipment had an expected remaining useful life of 10 years. The fair value of inventories was $12,000 less than the carrying amounts. This inventory was sold in Year 1. The fair value of a parcel of land owned by Y was $30,000 greater than the carrying amount. Y Co. had internally generated patents with an estimated market value of $25,000 and a 5 year remaining useful life. All other identifiable assets and liabilities had fair values equal to their carrying amounts. The Financial Statements as at December 31, Year 5 for the two companies are as follows: Cash Statements of Financial Position X Co. December 31, Year 5 Y Co. $100,000 $15,000 Receivables $30,000 Inventories 440,000 270,000 Investment in Y Co. 700,000 Plant and equipment 1,900,000 1,380,000 Accumulated -800,000 -700,000 depreciation Land 620,000 Total Assets $2,990,000 $1,265,000 Current liabilities $150,000 $105,000 Long-term liabilities 640,000 60,000 Common Shares 1,000,000 Retained Earnings 1,200,000 400,000 700,000 300,000 Sales Income Statements For the Year Ending December 31, Year 5 X Co. $1,300,000 55,000 Y Co. $400,000 150,000 Investment income and other Total income Cost of goods sold Other expenses Income taxes Total expenses Net Income Additional Information: $1,355,000 $550,000 $705,000 170,000 100,000 30,000 50,000 50,000 $855,000 $250,000 $500,000 $300,000 Sales of inventory from X Co. to Y Co. totalled $150,000 in Year 4 and $250,000 in Year 5. Y Co.'s December 31, Year 4 inventory contained $3,000 of profit from these sales; the December 31, Year 5 inventory contained $25,000 of profit. Sales of inventory from Y Co. to X Co. were $130,000 in Year 4 and $140,000 in Year 5. X Co.'s December 31, Year 4 inventory contained $15,000 of profit from these sales; the December 31, Year 5 inventory contained $10,000 of profit. The inventories of both companies are typically sold within 6 months. In Year 5, there was a goodwill impairment charge of $40,000 (this was the only impairment of goodwill since acquisition). X Co. declared and paid dividends of $90,000 in Year 5. Y Co. declared and paid $65,000 of dividends in Year 5. On June 1, Year 3, X Co. sold a parcel of land to Y Co. for $120,000. X Co. had initially purchased this land for $80,000. Y still has this land. X Co.'s investment in Y Co. is accounted for in accordance with the cost method. In Year 5 X Co. loaned $30,000 to Y Co. Y paid $1,800 in interest to X in year 5. This amount remains outstanding from Y Co. as at December 31, Year 5. Assume a 40% tax rate on all applicable items. Required: a) Calculate Goodwill on the date of acquisition (3 marks). b) Calculate consolidated Net Income for December 31, Year 5, showing the amounts attributable to X Co. and non-controlling interest (10 marks). aly source was downloaded by 100000832904119 from Couseller.com on 10-15-2022 12:52:44 GMT-05:00 www.coursehero.com/file/68929422 Ron-ACCT-4220-Term-2A-W18-REVIEW-version e) Calculate non-controlling interest as it would appear on the Consolidated Balance Sheet as at December 31, Year 5 (5 marks). Calculate consolidated retained earnings as at December 31, Year 5. f) Prepare a Consolidated Balance Sheet as at December 31, Year 5 (12 marks).