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(P5.1 Revised) 1. On 1 January 20x2, Fire Co (P) purchased 70% of Wall Co (S)'s ordinary shares. 2. At the date of acquisition, share
(P5.1 Revised) 1. On 1 January 20x2, Fire Co (P) purchased 70% of Wall Co (S)'s ordinary shares. 2. At the date of acquisition, share capital of S was $160,000 and retained earnings were $40,000. 3. The excess of the acquisition price over the underlying book value was assigned to: Buildings that had a fair value of $40,000 greater than book value and remaining useful life of 10 years from 1 January 20x2; and Goodwill. Goodwill impairment amounting to 20% of its original cost was recognized in 20x2. 4. Fair value of S as at acquisition date was $280,000. Non-controlling interests as at 1 January 20x2 had a proportionate share in the fair value of S at that date. 5. During 20x2, the following transactions arose: S purchased inventory for $64,000 and sold it to P for $96,000. P resold $54,000 of the inventory during 20x3, while the balance of $42,000 remained unsold as at 31 December 20x3. P sold the building that it originally purchased for $40,000 to S for $64,000. Accumulated depreciation at the date of sale was $8,000. Estimated useful life at date of original purchase was 10 years and at the date of resale was 8 years. S had recognized a full year's depreciation on the building in 20x2. 6. During 20x3, P sold inventory purchased for $120,000 to S for $180,000. S resold 40% of the inventory during 20x3. 7. The financial statements of P and S for the year ended 31 December 20x3 are shown in the Consolidation Worksheet on Page 2. 8. Assume tax rate was 20%. Required (Ignore all tax effects): 2. Complete the consolidation worksheet for the year ended 31 December 20x3
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