Q2 (30 marks) On January 1, 2017, Company P acquired a 60% interest in Company S. There was no control premium in the acquisition transaction. This is the only investment made by Company P. At January 1, 2017, the fair value of Company S's identifiable net assets was equal to its book value except for a land that was undervalued by $850,000, a building that was undervalued by $ 700,000 and an equipment that was overvalued by $400,000. Assuming no intra-entity transfers occurred during 2017. Assume further that Company P uses the initial value method to account for the Investment in Company Saccount. Company S did not issue any new common stock during 2017, The relevant financial items for Companies and P at 31 December 2017 are as follows: AR Item Revenues Expenses Dividends Income Retained Earnings @ January 1, 2017 Dividends for 2017 Cash and Receivables Investment in Company S Land Buildings Equipment Accounts Payable Bonds Payable Common Stock Retained Earnings @ 31 December 2017 Company P ($) 298,000,000 271,000,000 1,800,000 2,500,000 5,000,000 29,100,000 12,000,000 1,500,000 5,600,000 3,100,000 3,100,000 0 21,900,000 ?? Company S ($) 103,750,000 95,800,000 0 100,000 ?? 20,800,000 0 1,700,000 2,360,000 2,960,000 4,900,000 1,000,000 16,870,000 ?? CORE Required: Using a worksheet format, prepare the consolidated Income Statement, the consolidated Statement of Retained Earnings, and the consolidated Statement of Financial Position for the year 2017. (clearly show the consolidation entries labels on the worksheet] Q2 (30 marks) On January 1, 2017, Company P acquired a 60% interest in Company S. There was no control premium in the acquisition transaction. This is the only investment made by Company P. At January 1, 2017, the fair value of Company S's identifiable net assets was equal to its book value except for a land that was undervalued by $850,000, a building that was undervalued by $ 700,000 and an equipment that was overvalued by $400,000. Assuming no intra-entity transfers occurred during 2017. Assume further that Company P uses the initial value method to account for the Investment in Company Saccount. Company S did not issue any new common stock during 2017, The relevant financial items for Companies and P at 31 December 2017 are as follows: AR Item Revenues Expenses Dividends Income Retained Earnings @ January 1, 2017 Dividends for 2017 Cash and Receivables Investment in Company S Land Buildings Equipment Accounts Payable Bonds Payable Common Stock Retained Earnings @ 31 December 2017 Company P ($) 298,000,000 271,000,000 1,800,000 2,500,000 5,000,000 29,100,000 12,000,000 1,500,000 5,600,000 3,100,000 3,100,000 0 21,900,000 ?? Company S ($) 103,750,000 95,800,000 0 100,000 ?? 20,800,000 0 1,700,000 2,360,000 2,960,000 4,900,000 1,000,000 16,870,000 ?? CORE Required: Using a worksheet format, prepare the consolidated Income Statement, the consolidated Statement of Retained Earnings, and the consolidated Statement of Financial Position for the year 2017. (clearly show the consolidation entries labels on the worksheet]
