Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please follow the format, and only answer if you are familiar with advanced accounting. thanks On January 1, Year 4, Cyrus inc, paid $931,000 in

please follow the format, and only answer if you are familiar with advanced accounting. thanks
image text in transcribed
image text in transcribed
image text in transcribed
On January 1, Year 4, Cyrus inc, paid $931,000 in cash to acquire all of the ordinary shares of Kelvin Compary, On that dote, Kolvin's tetalned eamings were $217,000. All of Kelvin's assets and llabilities had fair values equal to carrying amounts except for an investment in bonds, which was worth $13,204 more than canying amount and wil mature on Deceinber 31, rear 8 , The recoverable amount for goodwill was $40,000 at the end of Years 4 and 5 . In Year 4, Cyrus reported net income from its own operations (exclusive of any income fromi Kelvin) of 5142,000 and decfared oo dividends in Year 4, Kelvin reported net income of $107,000 and paid o 557,000 cash dividend. Cyrus uses the cost method to repont its lnvestment in Kelvin and uses the effectlve interest method to amortize pretilums or discounts on livestment in bonds, The amortization of the acquisition differential pertaining to the irvestment in bonds was $2.693 in Year 4 and $2,684 in Year 5 . The financial statements for Cyrus and Kelvin for the year ended December 31, Year 5 , were as tollowet Required: (a) Prepare os schedule of changes to the acquistion ditferental for Yeass 4 and 5 . (Leave no celts biank. Be centaln to eriter to" wherever required. Negativerbeductble amounts should be indicated by a minus sign. Omit $ sign in your respontes.) ) Calculate investment in bonds and goodwill for the consolidated balance sheet at the end of Year 5 . (Omit $ sign in your esponse.) (c) Calculate investment income from Kelvin and investment in Kelvin account balances for Cyrus's separate entity financial statements for Year 5 , assuming Cyrus uses the: (Omit $ sign in your response.) (i) Cost method (ii) Equity method (d) Whether the parent's method of accounting for its investment in KeWin affect the amount reported for expenses in its December 31. Year 5 , consolidated income statement? Yes No (e) Whether the parent's method of accounting for its investment in Kelvin affect the amount reported for invesiment in bonds in its December 31, year 5, consolidated baiance sheet? (f) What is Cyrus's January 1, Year 5 , retained earnings account balance on its separate entity financial statements assuming Cyrus accounts for its investment in Kelvin using the: (i) Cost method? (ii) Equity method? (Omit \$ sign in your response.) (g) What are consolidated retained earnings at January 1, Year 5, assuming Cyrus accounts for its investment in Kelvin using the: (i) Cost method? (ii) Equity method? (Omit $ sign in your response.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Oil And Gas Accounting

Authors: Rebecca A. Gallun, Ph.D. Wright, Charlotte J, Linda M. Nichols, John W. Stevenson

4th Edition

0878147934, 9780878147939

More Books

Students also viewed these Accounting questions

Question

LO5 Explain how to generate effective recruitment advertisements.

Answered: 1 week ago