Paris Cosmetics wishes to secure a reliable source of a key component in its eyeshadows and its management is considering two alternative investments. Melonine produces 3 times the supply Paris Cosmetics needs but the only way to guarantee the supply it needs is to purchase the entire ordinary shares of Melonine. They can sell the rest to other manufacturers. JeanPaul produces twice as much of the component that Paris Cosmetics needs and Paris Cosmetics would only have to buy 40% of JeanPaul ordinary shares to insure it could buy 50% of JeanPaul's output. The table that follows gives the balance sheet information for all 3 companies, prior to the investment by Paris Cosmetics. For the questions below, assume Paris Cosmetics would be able to buy Melonine's shares at 830,000 and JeanPaul at $240,000. Melonine's plant assets were appraised at 200,000, with all of its remaining assets and liabilities being appraised at values approximating their book values. Produce consolidated balance sheet for Paris Cosmetics immediately after the acquisition of Melonine and JeanPaul (use the equity method).

Paris CosmeticsMelonineJeanPaul

Plant Assets400,000150,00050,000

Other Noncash Assets1,750,000980,000600,000

Investment

Cash2,000,000200,000100,000

Shareholder's equity2,950,000730,000600,000

Liabilities1,200,000600,000150,000

Purchase of Melanine

Paris CosmeticsParis Cosmetics MelanineConsolidatingParis Cosmetics

BeforeAfterEntriesConsolidated

Purchase of JeanPaul

Paris CosmeticsParis Cosmetics JeanPaul

BeforeAfter

On January 1, 2015, Paris Cosmetics buys a shop in London for 350,000. They only intend on owning it 5 years because they hope to move to a larger building which is currently being designed and built. They believe the shop they currently own will be worth 250,000 in 5 years. Every year, they reappraise the building. The building is determined to be worth 310,000 on Jan.1, 2016, 305,000 on Jan. 1, 2017, 300,000 on Jan. 1, 2018, 270,000 on Jan. 1, 2019, and is sold for 250,000 on Jan. 1, 2020.The estimates of the residual value and useful life have never changed over the life of the building. Show the effects of the building on both the balance sheet and income statement using the Reevaluation. Method Model.

Statement of Financial Position

2015

2016

2017

2018

2019

PPE

Accumulated Depreciation

Net PPE

Revaluation

Surplus

Retained Earnings

Income Statement

2015

2016

2017

2018

2019

Depreciation

Expense

Gain (Loss) on Fair Value

Net Income

OCI

Comprehensive

Income

Overall Effects

Depreciation Expense:

Gain (Loss):

Net Income:

OCI:

Comprehensive Income: