Putty Adventures Inc. (PAl) is a Canadian public company. On December 31, 2021, PAl acquired common shares of Silly Strings he. (SSI). Below are three independent questons based on different scenarios for the number of shares acquired and how the shares are acquired. All the scenarios share the same inital financial data. SSfs comparafve statement of financial posifion as at December 31, 2022, and its statement of comprehensive income for the year ended December 31,2022 are as follows: silly Strings Inc. Statement of financial position As at December 31 Silly Strings Inc. Statement of comprehensive income For the year ended December 31, 2022 (in 000s ) The fair value of each of SSrs identiable net assets at time of acquisition is as follows: (in $000s ) (Assume that all assets have no residual values at the end of their useful inves.) Addifional information: 1. Both companies pay income tax at a rate of 40%. 2. Both companies use the straight-line method of depreciation and both companies use first in, first out (FIFO) to value their inventories. 3. Assume any fair value diflerence on the long-lerm debt is amortzed using the straight tine method. 4. PA establiched that SSI is a cash-generating unit (COU) subject bo impairment lesting. 5. On September 30, 2022, SSI sold land to PAI for $60,000. SSI's book value of the land at time of sale was $40,000, which was the same as the estmated fair value at acquistion date of the associate. The gain was recorded as ofver income. In consideration of the transfer, PAI paid $20,000 cash and signed a nole payable to SS1 for the $40,000 balance. The note is payable in full on Sephember 30, 2037. Interest a 8% is payable annually with the first payment due on September 30, 2023. 6. During 2022, PAl sold goods b SSI for $80,000 induding a 40% gross profit margin; 30\% of these goods remained unsold by SSi as at December 31,2022. 7. During 2022, SSI sold goods io PAl for $60,000 induding a 50% gross profit margin;20\% of hese goods remained unsold by PAl as at December 31, 2022. 8. During 2022, SSI incurred management fee expense from PAl at a total cost of $35,000. This amount remained unpaid at year end. SSI recorded this as an SGBA expense while PAl recorded it as other income. 9. On Apri 1, 2022, PAl sold equipment to SSI for $40,000cash. PAfs carrying value of the equipment, which had a remaining useful life of ten years, was $30,000. The gah was recorded in other income. 10.Both PAI and SSI paid dividends during the year ended December 31, 2022. 11.PAl and SSI only prepare adpusting entries at year end. Question 3 (800 marks) Now assume that on December 31, 2021, PAl paid $1,020,000 cash to acquire 80% of SSI's outstanding common shares. (No additonal costs were incurred.) PAl tested the CGU for impairment on December 31, 2022. Goodwill was found to be impaired by $52,000. PAfs non-consolidated comparafie statement of fnancial positon as at December 31, 2022, and its non-consolidaled statement of comprehensive income for the yeat ended December 31, 2022, are set out below: Required: a) Use the acquisition method to allocate the acquisition differental and determine goodwill arising on aoquisition, assuming that PAl uses the deentifable net assets (INA) method to value the non-controlling interest (NCI). (5 marks) b) Use the acquisition method to allocate the acquisiton differental and determine goodwill arising on acquisition, assuming that PA uses the fair value enterprise (FVE) method to value the NCl. (5 marks) For all remaining parts of the question assume that PAl uses the FVE method. c) Prepare an aoquisition differental and impairment schedule for 2022. Provide references for each line in the AD schedule that will be used to reference through to the consolidated financid statements. (10 marks) d) Prepare a list of all intercompany transactions and balanoes that are pertinent to the case facts and thould be eliminaled upon consolidation. (4 marks) e) Calculate all unrealized and realized interoompany profits. include a calculation of the botal deferred tax assethilibility. (12 marks) f) Prepare PAl's consolidated statement of comprehentive inoome for the year ended December 31, 2022. Show the allocation between the parent and the NCl. (18 marks) 9) Prepare PAl's consolidated stalement of retained eamings for the year ended December 31, 2022. (4 marks) h) Caloulate the NCl on the statement of fnancial position as at December 31, 2022. (4 marks) i) Prepare PAl's consolidated statement of financial position as at December 31, 2022. (18 marks) Putty Adventures Inc. (PAl) is a Canadian public company. On December 31, 2021, PAl acquired common shares of Silly Strings he. (SSI). Below are three independent questons based on different scenarios for the number of shares acquired and how the shares are acquired. All the scenarios share the same inital financial data. SSfs comparafve statement of financial posifion as at December 31, 2022, and its statement of comprehensive income for the year ended December 31,2022 are as follows: silly Strings Inc. Statement of financial position As at December 31 Silly Strings Inc. Statement of comprehensive income For the year ended December 31, 2022 (in 000s ) The fair value of each of SSrs identiable net assets at time of acquisition is as follows: (in $000s ) (Assume that all assets have no residual values at the end of their useful inves.) Addifional information: 1. Both companies pay income tax at a rate of 40%. 2. Both companies use the straight-line method of depreciation and both companies use first in, first out (FIFO) to value their inventories. 3. Assume any fair value diflerence on the long-lerm debt is amortzed using the straight tine method. 4. PA establiched that SSI is a cash-generating unit (COU) subject bo impairment lesting. 5. On September 30, 2022, SSI sold land to PAI for $60,000. SSI's book value of the land at time of sale was $40,000, which was the same as the estmated fair value at acquistion date of the associate. The gain was recorded as ofver income. In consideration of the transfer, PAI paid $20,000 cash and signed a nole payable to SS1 for the $40,000 balance. The note is payable in full on Sephember 30, 2037. Interest a 8% is payable annually with the first payment due on September 30, 2023. 6. During 2022, PAl sold goods b SSI for $80,000 induding a 40% gross profit margin; 30\% of these goods remained unsold by SSi as at December 31,2022. 7. During 2022, SSI sold goods io PAl for $60,000 induding a 50% gross profit margin;20\% of hese goods remained unsold by PAl as at December 31, 2022. 8. During 2022, SSI incurred management fee expense from PAl at a total cost of $35,000. This amount remained unpaid at year end. SSI recorded this as an SGBA expense while PAl recorded it as other income. 9. On Apri 1, 2022, PAl sold equipment to SSI for $40,000cash. PAfs carrying value of the equipment, which had a remaining useful life of ten years, was $30,000. The gah was recorded in other income. 10.Both PAI and SSI paid dividends during the year ended December 31, 2022. 11.PAl and SSI only prepare adpusting entries at year end. Question 3 (800 marks) Now assume that on December 31, 2021, PAl paid $1,020,000 cash to acquire 80% of SSI's outstanding common shares. (No additonal costs were incurred.) PAl tested the CGU for impairment on December 31, 2022. Goodwill was found to be impaired by $52,000. PAfs non-consolidated comparafie statement of fnancial positon as at December 31, 2022, and its non-consolidaled statement of comprehensive income for the yeat ended December 31, 2022, are set out below: Required: a) Use the acquisition method to allocate the acquisition differental and determine goodwill arising on aoquisition, assuming that PAl uses the deentifable net assets (INA) method to value the non-controlling interest (NCI). (5 marks) b) Use the acquisition method to allocate the acquisiton differental and determine goodwill arising on acquisition, assuming that PA uses the fair value enterprise (FVE) method to value the NCl. (5 marks) For all remaining parts of the question assume that PAl uses the FVE method. c) Prepare an aoquisition differental and impairment schedule for 2022. Provide references for each line in the AD schedule that will be used to reference through to the consolidated financid statements. (10 marks) d) Prepare a list of all intercompany transactions and balanoes that are pertinent to the case facts and thould be eliminaled upon consolidation. (4 marks) e) Calculate all unrealized and realized interoompany profits. include a calculation of the botal deferred tax assethilibility. (12 marks) f) Prepare PAl's consolidated statement of comprehentive inoome for the year ended December 31, 2022. Show the allocation between the parent and the NCl. (18 marks) 9) Prepare PAl's consolidated stalement of retained eamings for the year ended December 31, 2022. (4 marks) h) Caloulate the NCl on the statement of fnancial position as at December 31, 2022. (4 marks) i) Prepare PAl's consolidated statement of financial position as at December 31, 2022. (18 marks)