On January 1, Year 7, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share. On that date, Devine had ordinary shares of $3,460.000, and retained earnings of $2,160,000. When acquired, Devine had inventories with fair values $40,000 less than carrying amount, a parcel of land with a fair value $260,000 greater than the carrying amount, and equipment with a fair value $260,000 less than carrying amount. There were also internally generated patents with an estimated market value of $460,000 and a five-year remaining life. A long-term liability had a market value $160,000 greater than carrying amount; this liability was paid off December 31, Year 10. All other identifiable assets and liabilities of Devine had fair values equal to their carrying amounts. Devine's accumulated depreciation on the plant and equipment was $560,000 at the date of acquisition. The year 11 financial statements for Vine and Devine were as follows: INCOME STATEMENTS Sales For year ending December 31, Year 11 (in thousands of dollars) Vine $ 12,800 Dividends, investment Income and gains 1,600 14,400 Cost of goods sold 9,800 Other expenses 500 Income taxes 200 Total expenses (10,500) $ 3,900 Total income Devine $ 4,200 2,200 6,400 2,700 500 200 3,400) $ 3.000 Profit Devine $ 2,500 13,000 (3,000) STATEMENTS OF FINANCIAL POSITION December 31, Year 11 (in thousands of dollars) Vine Land $ 6,000 Plant and equipment 20,000 Accumulated depreciation (4,600) Investment in bevine, cost 5,060 5,800 cash and current receivables 2.140 $34,400 Ordinary shares $10,000 Retained earnings 10,800 Long-tern liabilities 7,800 Deferred Income taxe Current liabilities 4.400 Total equity and liabilities $34,400 Total assets 3,600 1,500 $16,800 $ 3, 460 5,800 2,300 100 5,140 $16,800 100 Additional Information . At the acquisition date, the equipment had an expected remaining useful life of ten years. Both companies use the straight-line method for all depreciation and amortization calculations and the FIFO inventory cost flow assumption. Assume a 40% income tax rate on all applicable items and that there were no impairment losses for goodwill. . On September 1, Year 11, Devine sold a parcel of land to Vine and recorded a total non-operating gain of $460,000. Sales of finished goods from Vine to Devine totalled $1,060,000 in Year 10 and $2,060,000 in Year 11. These sales were priced to provide a gross profit margin on selling price of 33 Vs% to the Vine Company. Devine's December 31, Year 10, inventory contained $318,000 of these sales, December 31, Year 11. Inventory contained $618,000 of these sales. Sales of finished goods from Devine to Vine were $860,000 in Year 10 and $1.260,000 in Year 11. These sales were priced to provide a gross profit margin on selling price of 40% to the Devine Company, Vine's December 31, Year 10, inventory contained $160,000 of these sales; the December 31, Year 11, inventory contained $560,000 of these sales. Vine's Investment in Devine's account is carried in accordance with the cost method and includes advances to Devine of There are no intercompany amounts other than those noted, except for the dividends of $500,000 (total amount) declared and paid by Devine $260,000, which are also included in current liabilities. Required: (a) The allocation of the acquisition cost at acquisition and the related changes to acquisition differential schedule. (Leave no cells blank.be certain to enter "o" wherever required. Enter your answers in dollars, not in thousands of dollars. Input all values as positive numbers. Do not round gross profit percentage for intermediate computations. Omit $ sign in your response.) Acquisition cost Allocation Acquisition January 1, Year 7 Cost Implied value of 100+ investment Current Assets: Ordinary Shares Retained Earnings $ Acquisition differential Life Allocation: Inventory Land Cr 1 Dr Equipment CE 10 Patents DE 5 Long - tern Liability CE 4 Subtotal Dr Balance: Goodwill Dr Dr Changes to Acquisition Differential Tablet Allocation Life Changes YR 7 - YR 10 Balance Dee. 3, YR 11 YR 11 Inventory Cr 1 Dr Land Dr Dr Equipment CE 10 Dr DY CK Patents Dr 5 : CE Cr Long - tern liability Cr Dr Goodwill Dr Dr Dr Cr Cr Dr (b) Prepare a consolidated income statement with expenses classified by function (Enter your answers in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations. Input all values as positive numbers.) Consolidated Income Statement for the Year Ending December 31, Year 11 0 Total expenses Attributable to: Shareholders of Vine Non-controlling interests (c) Calculate consolidated retained earnings at December 31, Year 11. (Enter your answer in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations. Omit $ sign in your response.) Consolidated retained earnings (d) Prepare a consolidated statement of financial position for Vine Company at December 31, Year 11. (Negative amounts should be indicated by a minus sign. Enter your answers in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations.) Consolidated Statement of Financial Position December 31, Year 11 Assets $ Equities and Liabilities $ (e) Assume that Devine's shares were trading at $75 per share shortly before and after the date of acquisition, and that this data was used to value non-controlling interest at the date of acquisition. Calculate goodwill and non-controlling interest at December 31, Year 11. (Enter your answers in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations. Omit $ sign in your response.) Non-controlling interest, December 31, Year 11 Goodwill at December 31, Year 11 (1) Prepare the consolidated financial statements using the worksheet approach. (Values in the first two columns and last column of the Balance Sheet (the "parent", "subsidiary" and "consolidated" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Entry" columns and Income Statement entry columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Leave no cells blank - be certain to enter "o" wherever required. Enter your answers in dollars. Round your answer to nearest whole dollars. Omit $ sign in your response.) Consolidated Financial Matement Morking Paper Vine Company Consolidated Financial statement December 31, Tear 11 In thousands of dollars Entries Vine Devine Dr. Cr. Consolidated Income statements Tear 31 Sales Dividend, Tnvestment Income and Gains Zotal income Cost of goods sold Other expense Income taxes Total expenses Pretat Attributable to Shareholders of Peter on controlling interest Total Year 11 roteised earnings statements Balance, January 1 Profit Dividende Balance, December 31 Statements of selal Position. December 31, Test 11 Land Flant and equipment Accumulated depreciation Patente Goodwill Investment in Devine, cont Detected in Inventarios Cash and current receivables Tocal asset Ordinary sharee Retained earning constelling interest Longtem liabilities Deferred in one taxes CHES Habilities Total shareholders in . Ilabilities On January 1, Year 7, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share. On that date, Devine had ordinary shares of $3,460.000, and retained earnings of $2,160,000. When acquired, Devine had inventories with fair values $40,000 less than carrying amount, a parcel of land with a fair value $260,000 greater than the carrying amount, and equipment with a fair value $260,000 less than carrying amount. There were also internally generated patents with an estimated market value of $460,000 and a five-year remaining life. A long-term liability had a market value $160,000 greater than carrying amount; this liability was paid off December 31, Year 10. All other identifiable assets and liabilities of Devine had fair values equal to their carrying amounts. Devine's accumulated depreciation on the plant and equipment was $560,000 at the date of acquisition. The year 11 financial statements for Vine and Devine were as follows: INCOME STATEMENTS Sales For year ending December 31, Year 11 (in thousands of dollars) Vine $ 12,800 Dividends, investment Income and gains 1,600 14,400 Cost of goods sold 9,800 Other expenses 500 Income taxes 200 Total expenses (10,500) $ 3,900 Total income Devine $ 4,200 2,200 6,400 2,700 500 200 3,400) $ 3.000 Profit Devine $ 2,500 13,000 (3,000) STATEMENTS OF FINANCIAL POSITION December 31, Year 11 (in thousands of dollars) Vine Land $ 6,000 Plant and equipment 20,000 Accumulated depreciation (4,600) Investment in bevine, cost 5,060 5,800 cash and current receivables 2.140 $34,400 Ordinary shares $10,000 Retained earnings 10,800 Long-tern liabilities 7,800 Deferred Income taxe Current liabilities 4.400 Total equity and liabilities $34,400 Total assets 3,600 1,500 $16,800 $ 3, 460 5,800 2,300 100 5,140 $16,800 100 Additional Information . At the acquisition date, the equipment had an expected remaining useful life of ten years. Both companies use the straight-line method for all depreciation and amortization calculations and the FIFO inventory cost flow assumption. Assume a 40% income tax rate on all applicable items and that there were no impairment losses for goodwill. . On September 1, Year 11, Devine sold a parcel of land to Vine and recorded a total non-operating gain of $460,000. Sales of finished goods from Vine to Devine totalled $1,060,000 in Year 10 and $2,060,000 in Year 11. These sales were priced to provide a gross profit margin on selling price of 33 Vs% to the Vine Company. Devine's December 31, Year 10, inventory contained $318,000 of these sales, December 31, Year 11. Inventory contained $618,000 of these sales. Sales of finished goods from Devine to Vine were $860,000 in Year 10 and $1.260,000 in Year 11. These sales were priced to provide a gross profit margin on selling price of 40% to the Devine Company, Vine's December 31, Year 10, inventory contained $160,000 of these sales; the December 31, Year 11, inventory contained $560,000 of these sales. Vine's Investment in Devine's account is carried in accordance with the cost method and includes advances to Devine of There are no intercompany amounts other than those noted, except for the dividends of $500,000 (total amount) declared and paid by Devine $260,000, which are also included in current liabilities. Required: (a) The allocation of the acquisition cost at acquisition and the related changes to acquisition differential schedule. (Leave no cells blank.be certain to enter "o" wherever required. Enter your answers in dollars, not in thousands of dollars. Input all values as positive numbers. Do not round gross profit percentage for intermediate computations. Omit $ sign in your response.) Acquisition cost Allocation Acquisition January 1, Year 7 Cost Implied value of 100+ investment Current Assets: Ordinary Shares Retained Earnings $ Acquisition differential Life Allocation: Inventory Land Cr 1 Dr Equipment CE 10 Patents DE 5 Long - tern Liability CE 4 Subtotal Dr Balance: Goodwill Dr Dr Changes to Acquisition Differential Tablet Allocation Life Changes YR 7 - YR 10 Balance Dee. 3, YR 11 YR 11 Inventory Cr 1 Dr Land Dr Dr Equipment CE 10 Dr DY CK Patents Dr 5 : CE Cr Long - tern liability Cr Dr Goodwill Dr Dr Dr Cr Cr Dr (b) Prepare a consolidated income statement with expenses classified by function (Enter your answers in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations. Input all values as positive numbers.) Consolidated Income Statement for the Year Ending December 31, Year 11 0 Total expenses Attributable to: Shareholders of Vine Non-controlling interests (c) Calculate consolidated retained earnings at December 31, Year 11. (Enter your answer in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations. Omit $ sign in your response.) Consolidated retained earnings (d) Prepare a consolidated statement of financial position for Vine Company at December 31, Year 11. (Negative amounts should be indicated by a minus sign. Enter your answers in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations.) Consolidated Statement of Financial Position December 31, Year 11 Assets $ Equities and Liabilities $ (e) Assume that Devine's shares were trading at $75 per share shortly before and after the date of acquisition, and that this data was used to value non-controlling interest at the date of acquisition. Calculate goodwill and non-controlling interest at December 31, Year 11. (Enter your answers in dollars, not in thousands of dollars. Do not round gross profit percentage for intermediate computations. Omit $ sign in your response.) Non-controlling interest, December 31, Year 11 Goodwill at December 31, Year 11 (1) Prepare the consolidated financial statements using the worksheet approach. (Values in the first two columns and last column of the Balance Sheet (the "parent", "subsidiary" and "consolidated" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Entry" columns and Income Statement entry columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Leave no cells blank - be certain to enter "o" wherever required. Enter your answers in dollars. Round your answer to nearest whole dollars. Omit $ sign in your response.) Consolidated Financial Matement Morking Paper Vine Company Consolidated Financial statement December 31, Tear 11 In thousands of dollars Entries Vine Devine Dr. Cr. Consolidated Income statements Tear 31 Sales Dividend, Tnvestment Income and Gains Zotal income Cost of goods sold Other expense Income taxes Total expenses Pretat Attributable to Shareholders of Peter on controlling interest Total Year 11 roteised earnings statements Balance, January 1 Profit Dividende Balance, December 31 Statements of selal Position. December 31, Test 11 Land Flant and equipment Accumulated depreciation Patente Goodwill Investment in Devine, cont Detected in Inventarios Cash and current receivables Tocal asset Ordinary sharee Retained earning constelling interest Longtem liabilities Deferred in one taxes CHES Habilities Total shareholders in . Ilabilities