On March 1st 2020, Pinnacle made an offer to acquire 100% of the common shares of Sushi Ltd.

Pinnacle was unsuccessful to acquire 100% but was able to acquire 85% of the common shares of Sushi Ltd.

for $13.6 million. The transaction closed on March 31st, 2020. Sushi's closing balance sheet at

March 31, 2020 is as follows:

Balance Sheet at March 21, 2020

Sushi Ltd. Book Value FMV

Cash 340,000 340,000

A/R 1,800,000 1,950,000

Inventory 2,200,000 2,000,000

PPE 4,000,000 6,000,000

Patents - 1,750,000

8,340,000 12,040,000

A/P 700,000 700,000

Acc Liab. 1,200,000 1,500,000

Common Shares 2,000,000

Retained Earning 4,440,000

8,340,000

Pinnacle's motivation for the acquisition was primarily to obtain a patent held by Sushi that was independently appraised at

$1,750,000 and had a remaining useful life of 14 years. A/R, Inventory, A/P all turnover in 2020. PPE had a remaining life of 10 years.

The accrued liabilities would amortize over 3 years.

Other Information:

a. Shiraz Charania was the Controller of Pinnacle and understood that the Equity Method to account for the acquisition was the preferred method,

but he felt it would be to difficult and as Pinnacle was using ASPE as its accounting framework he elected to record the investment using the

cost method.

b. Both Companies have a December 31st year end

c. In 2023, Pinnacle declared and paid a dividend of $250,000 to its shareholders and Sushi declared and

paid dividend of $125,000 to its shareholders.

d. At December 31, 2023 Pinnacle performed a Goodwill impairment test from the acquisition of Sushi and determined the Goodwill

was overstated by 10%. 2023 was the first year the Goodwill from acquisition was ever impaired. Shiraz blames this on COVID-22.

e. Pinnacle had an intercompany receivable of $50,000 from Sushi at December 31, 2023

f. The financial statements of both companies at December 31, 2023 are presented below:

Income Statement Pinnacle Sushi

Sales $ 7,300,000 $ 1,450,000

COGS 3,145,000 942,500

Gross Margin 4,155,000 507,500

Dividend Income 106,250 -

TOTAL REVENUE 4,261,250 507,500

Amortization - patent 75,000 -

Depreciation 126,250 405,000

General & Admin 550,000 100,000

751,250 505,000

Net Income $ 3,510,000 $ 2,500

Balance Sheet - Dec 31, 2023 Pinnacle Sushi

Cash $ 660,000 $ 1,290,000

A/R 710,000 655,000

Inventory 725,000 335,000

PPE 975,000 2,500,000

Patents 830,000 -

Investment in Sushi 13,600,000 -

$ 17,500,000 $ 4,780,000

A/P $ 305,000 $ 380,000

Acc Liab. 2,500,000 150,000

Common Shares 5,000,000 2,000,000

Retained Earnings 7,445,000 2,250,000

Other Comprehensive Income 2,250,000 -

$ 17,500,000 $ 4,780,000

Required:

Prepare Consolidated Financial Statements for Pinnacle at December 31, 20