P Inc purchased 80 of the voting shares of S Inc for $800,000 cash on January 1, Year 4 On that date, Ss Common Stock and Retained Earnings were valued at $100,000 and $500,000 respectively P uses the cost method to account for its investment Ss fair values approximated its carrying values with the following exception The equipment previously expensed by S had a fair value of $ 40,000, with an estimated remaining useful life of 8 years and no salvage value Ss current liabilities to third party had a fair value $10,000 less than book value This liability was paid in Year 4 The Financial Statements of P S for the Year ended December 31, Year 8 are shown below Income Statements P Inc S Inc Sales $1,600,000 $900,000 Other Revenues 120,000 260,000 Less Expenses Cost of Goods Sold 800,000 500,000 Depreciation Amortization Expense 60,000 50,000 Other Expenses 350,000 340,000 Income Tax Expense 170,000 200,000 Net Income $340,000 $70,000 Retained Earnings Statements Balance, Jan 1, Year 8 1,200,000 970,000 Net Income 340,000 70,000 Less Dividends (200,000) (100,000) Retained Earnings $1,340,000 $940,000 Balance Sheets P Inc S Inc Cash 180,000 $220,000 Accounts Receivable 390,000 360,000 Inventory 280,000 200,000 Investments 800,000 10,000 Land 180,000 280,000 Equipment (net) 270,000 170,000 Total Assets $2,100,000 $1,240,000 Current Liabilities 160,000 200,000 Common Shares 600,000 100,000 Retained Earnings 1,340,000 940,000 Total Liabilities and Equity $2,100,000 $1,240,000 Other Information During Year 5, S sold a parcel of land to P for $150,000 cash S had purchased this land in 2013 for $100,000 P sold the land to third party in Year 8 During December Year 7, P sold inventory to S for $100,000 cash, the cost of the inventory to P was $70,000 20 of these goods remained in Ss inventory at the end of Year 7 The inventory was sold to a third party during Year 8 On December 30 th , Year 8, P sold inventory to S for $100,000, the cost of the inventory to P was $75,000 All the inventory remained in Ss inventory at the end of Year 8 S paid $60,000 cash on delivery and the remaining $40,000 on March 2 nd , Year 9 The Common Shares of P S did not change since the date of acquisition Both companies use straight line amortization exclusively for all assets and liabilities The effective tax rate for both companies is 40 P has recorded the investment in S at Cost For Consolidation P uses the FVE method Q1 Calculate Goodwill at time of acquisition Q2 Calculate Consolidated NI Q3 On the Consolidated Income Statements for year 8, what is Consolidated Sales Q4 On the Consolidated Income Statements for year 8, what is Consolidated COGS Q5 On the Consolidated Income Statements for year 8, what is Consolidated Other Income Q6 On the Consolidated Income Statements for year 8, what is Consolidated Depreciation Expense Q7 On the Consolidated Income Statements for year 8, what is Consolidated value for Equipment (net) Q8 On the Consolidated Balance Sheet as at year end 8, what is Consolidated Inventory Q9 On the Consolidated Balance Sheet as at year end 8, what is the NCI amount Q10 On the Consolidated Balance Sheet as at year end 8, what is Consolidated DIT

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P Inc. purchased 80% of the voting shares of S Inc. for $800,000 cash on January 1, Year 4. On that date, Ss Common Stock

P Inc. purchased 80% of the voting shares of S Inc. for $800,000 cash on January 1, Year 4. On that date, Ss Common Stock and Retained Earnings were valued at $100,000 and $500,000 respectively. P uses the cost method to account for its investment.

Ss fair values approximated its carrying values with the following exception:

The equipment previously expensed by S had a fair value of $ 40,000, with an estimated remaining useful life of 8 years and no salvage value.

Ss current liabilities to third party had a fair value $10,000 less than book value. This liability was paid in Year 4.

The Financial Statements of P & S for the Year ended December 31, Year 8 are shown below:

Income Statements

P Inc. S Inc.

Sales $1,600,000 $900,000

Other Revenues 120,000 260,000

Less: Expenses:

Cost of Goods Sold: 800,000 500,000

Depreciation & Amortization Expense 60,000 50,000

Other Expenses 350,000 340,000

Income Tax Expense 170,000 200,000

Net Income $340,000 $70,000

Retained Earnings Statements

Balance, Jan 1, Year 8 1,200,000 970,000

Net Income 340,000 70,000

Less: Dividends (200,000) (100,000)

Retained Earnings $1,340,000 $940,000

Balance Sheets

P Inc. S Inc.

Cash 180,000 $220,000

Accounts Receivable 390,000 360,000

Inventory 280,000 200,000

Investments 800,000 10,000

Land 180,000 280,000

Equipment (net) 270,000 170,000

Total Assets $2,100,000 $1,240,000

Current Liabilities 160,000 200,000

Common Shares 600,000 100,000

Retained Earnings 1,340,000 940,000

Total Liabilities and Equity $2,100,000 $1,240,000

Other Information:

During Year 5, S sold a parcel of land to P for $150,000 cash. S had purchased this land in 2013 for $100,000. P sold the land to third party in Year 8.

During December Year 7, P sold inventory to S for $100,000 cash, the cost of the inventory to P was $70,000. 20% of these goods remained in Ss inventory at the end of Year 7. The inventory was sold to a third party during Year 8.

On December 30^th, Year 8, P sold inventory to S for $100,000, the cost of the inventory to P was $75,000. All the inventory remained in Ss inventory at the end of Year 8. S paid $60,000 cash on delivery and the remaining $40,000 on March 2^nd, Year 9.