Question 1: (12 marks) On January 1, 2015, Par Company purchased 8,000 shares of Sub Inc. (local shares ssued 10.000) for $500,000 and uses the equity method to account for its investment in Sub Inc. On the acquisition date, acquisition differential totaled $60,000 all alocated to capital assets with a remaining useful leol five years. During 2015, Sub had net income al S180,000 (earned evenly over the year) and on May 1, 2015, paid dividends of $50,000. On September 1, 2015. Par sold 2.000 of the 8,000 shares that it held in Sud for proceeds of $145,000. Required: Show all work for full marks a) Prepare the Par's journal entry for the sale of the shares on September 1, 2015 b) What wil the balance in the investment account be at December 31, 2015? Question 2: (18 marks) On January 1, 2015, Port Imports Inc. acquired 90% of the common shares of Spanish Imports Lid in exchange for a new issue of its own shares valued at $4 320,000. At that date the shareholders' equity section of Spanish Imports Ltd's balance sheet was as follows: Preferred shares S 500,000 Common shares 3,000,000 Retained earnings 1.800.000 Total shareholders' equity $5,100,000 The preferred shares were cumulative and non-participating with a dividend rate of 5% per year and were redeemable at 104. Dividends had not been paid for 2014. Any acquisition differential was allocated to goodwil. During 2015, goodwil was tested and there was an impairment loss of S40,000 During 2015, Port Sports Ld. had a net income of $2,100,000 and paid dividents of $620,000 and Spanish Imports Lid. had a net incorre of $440,000 and paid dividends of $180,000. The only transaction between the two companies was the sale of a parcel of land from Spanish Imports to its parent company. The land was sold for S500,000 and had cost Spanish Imports $450,000 when originally purchased. The gain was taxable at the capital gains rate of 25% Required: a. What is the amount of the non-controlling interest shown on the consolidated balance sheet of Portuguese Imports Inc, es at December 31, 2015? For NCIS, show the calculations for common and preferred shareholders separately. (10 marks) b. Calculate consolidated net income for year ending December 31, 2015. You MUST show the net income attributable to the parere, NCI common and NCI preferred. Assume Port does not an any of the preferred shares of Spanish (8 marcs) Hint: Acquisition differential - $260,000 Question 3.30 marks The following balance sheets have been prepared on December 31, Year 13 for Barbara Corp. and Joeling. Balance Sheets Barbara Joel Cash $30.000 550,000 Accounts Receivable $180,000 $100,000 Inventory $70,000 S30,000 Investment in Joel $100,000 Property, Plant and Equipment S600.000 $140,000 Accumulated Depreciation 1$280.000 1$40.000 Total Assets $700,000 $280,000 Includes land Current Liabilities $120,000 $30,000 Long-Term Debt S400,000 S20,000 Common shares $90.000 S40,000 Retained Earnings SSKOCIDO $190,000 Liabilities and Equity $700,000 $280,000 Adrenalinfomation: Barbara uses the cost method to account for its 50% interest in Joel, which it acquired on January 1, Year 10 for $100,000. On that date, Joel's retained earrings were $20,000 and common shares $40,000. The acquisition differential was fully amortized by the end of Year 13. Barbara sold Land to Joel during Year 12 and recorded a $15,000 gain on the sale. Al December 31. Year 13, Barbara's inventory contained $50,000 of merchandise purchased from Joel of which S20,000 remained unpaid at year end. Joel charges a 20% profit margin Both companies are subject to a tax rate of 20% Required: a. Prepare a Consolidated Balance Sheet for Barbara in good formar on December 31, Year 13 assuming that Barbara's investment in Janis a control investment b. Prepare a Balance Sheet for Barbara on December 31, Year 13 assuming that Barbara's Investment in Joal is a joint venture investment Show calculations for Consolidated REs for parts a. and b. For part b. show calculation for Investment in Joel Hints: Total Assets a S940,000; b. $705,000 Question 1: (12 marks) On January 1, 2015, Par Company purchased 8,000 shares of Sub Inc. (total shares issued 10,000) for $500,000 and uses the equity method to account for its investment in Sub Inc. On the acquisition date, acquisition differential totalled $60,000 all allocated to capital assets with a remaining useful life of five years. During 2015, Sub had net income of $180,000 (earned evenly over the year) and on May 1, 2015, paid dividends of $50,000. On September 1, 2015. Par sold 2,000 of the 8,000 shares that it held in Sub for proceeds of $145,000. Required: Show all work for full marks (a) Prepare the Par's journal entry for the sale of the shares on September 1, 2015, (b) What will the balance in the investment account be at December 31, 2015? Question 2: (18 marks) On January 1, 2015. Port Imports Inc. acquired 90% of the common shares of Spanish Imports Ltd. in exchange for a new issue of its own shares valued at $4,320,000. At that date the shareholders equity section of Spanish Imports Ltd's balance sheet was as follows: Preferred shares $ 500,000 Common shares 3,000,000 Retained earnings 1,600,000 Total shareholders' equity $5.100.000 The preferred shares were cumulative and non-participating with a dividend rate of 8% per year and were redeemable at 104. Dividends had not been paid for 2014. Any acquisition differential was allocated to goodwill. During 2015, goodwill was tested and there was an impairment loss of $40,000 During 2015, Port Imports Ltd. had a net income of $2,100,000 and paid dividends of $620,000 and Spanish Imports Ltd. had a net income of $440,000 and paid dividends of $180,000. The only transaction between the two companies was the sale of a parcel of land from Spanish Imports to its parent company. The land was sold for $500,000 and had cost Spanish Imports $450,000 when originally purchased. The gain was taxable at the capital gains rate of 25% Required: a. What is the amount of the non-controlling interest shown on the consolidated balance sheet of Portuguese Imports Inc, as at December 31, 2015? For NCIS, show the calculations for common and preferred shareholders separately. (10 marks) b. Calculate consolidated net income for year ending December 31, 2015. You MUST show the net income attributable to the parent, NCI common and NCI preferred. Assume Port does not own any of the preferred shares of Spanish (8 marks) Hint: Acquisition differential = $260,000 Question 3. 30 marks The following balance sheets have been prepared on December 31, Year 13 for Barbara Corp. and Joel Inc. Balance Sheets Barbara Joel Cash $30,000 $50,000 Accounts Receivable $180,000 $100,000 Inventory $70,000 $30,000 Investment in Joel $100,000 Property, plant and Equipment $600,000 $140,000 Accumulated Depreciation ($280.000) ($40,000) Total Assets $700,000 $280,000 Includes land Current Liabilities $120,000 $30,000 Long-Term Debt $400,000 $20,000 Common shares $90,000 $40,000 Retained Earnings $90,000 $190,000 Liabilities and Equity $700,000 $280,000 Additional Information Barbara uses the cost method to account for its 50% interest in Joel, which it acquired on January 1, Year 10 for $100,000. On that date, Joel's retained earnings were $20,000 and common shares $40,000. The acquisition differential was fully amortized by the end of Year 13 Barbara sold Land to Joel during Year 12 and recorded a $15,000 gain on the sale. At December 31, Year 13, Barbara's Inventory contained $50,000 of merchandise purchased from Joel of which $20,000 remained unpaid at year end. Joel charges a 20% profit margin Both companies are subject to a tax rate of 20%. Required: a. Prepare a Consolidated Balance Sheet for Barbara in good format on December 31. Year 13 assuming that Barbara's investment in Joel is a control investment b. Prepare a Balance Sheet for Barbara on December 31, Year 13 assuming that Barbara's Investment in Joel is a joint venture investment Show calculations for Consolidated REs for parts a, and b. For part b, show calculation for Investment in Joel. Hints: Total Assets a $840,000; b. $705,000 Question 1: (12 marks) On January 1, 2015, Par Company purchased 8,000 shares of Sub Inc. (local shares ssued 10.000) for $500,000 and uses the equity method to account for its investment in Sub Inc. On the acquisition date, acquisition differential totaled $60,000 all alocated to capital assets with a remaining useful leol five years. During 2015, Sub had net income al S180,000 (earned evenly over the year) and on May 1, 2015, paid dividends of $50,000. On September 1, 2015. Par sold 2.000 of the 8,000 shares that it held in Sud for proceeds of $145,000. Required: Show all work for full marks a) Prepare the Par's journal entry for the sale of the shares on September 1, 2015 b) What wil the balance in the investment account be at December 31, 2015? Question 2: (18 marks) On January 1, 2015, Port Imports Inc. acquired 90% of the common shares of Spanish Imports Lid in exchange for a new issue of its own shares valued at $4 320,000. At that date the shareholders' equity section of Spanish Imports Ltd's balance sheet was as follows: Preferred shares S 500,000 Common shares 3,000,000 Retained earnings 1.800.000 Total shareholders' equity $5,100,000 The preferred shares were cumulative and non-participating with a dividend rate of 5% per year and were redeemable at 104. Dividends had not been paid for 2014. Any acquisition differential was allocated to goodwil. During 2015, goodwil was tested and there was an impairment loss of S40,000 During 2015, Port Sports Ld. had a net income of $2,100,000 and paid dividents of $620,000 and Spanish Imports Lid. had a net incorre of $440,000 and paid dividends of $180,000. The only transaction between the two companies was the sale of a parcel of land from Spanish Imports to its parent company. The land was sold for S500,000 and had cost Spanish Imports $450,000 when originally purchased. The gain was taxable at the capital gains rate of 25% Required: a. What is the amount of the non-controlling interest shown on the consolidated balance sheet of Portuguese Imports Inc, es at December 31, 2015? For NCIS, show the calculations for common and preferred shareholders separately. (10 marks) b. Calculate consolidated net income for year ending December 31, 2015. You MUST show the net income attributable to the parere, NCI common and NCI preferred. Assume Port does not an any of the preferred shares of Spanish (8 marcs) Hint: Acquisition differential - $260,000 Question 3.30 marks The following balance sheets have been prepared on December 31, Year 13 for Barbara Corp. and Joeling. Balance Sheets Barbara Joel Cash $30.000 550,000 Accounts Receivable $180,000 $100,000 Inventory $70,000 S30,000 Investment in Joel $100,000 Property, Plant and Equipment S600.000 $140,000 Accumulated Depreciation 1$280.000 1$40.000 Total Assets $700,000 $280,000 Includes land Current Liabilities $120,000 $30,000 Long-Term Debt S400,000 S20,000 Common shares $90.000 S40,000 Retained Earnings SSKOCIDO $190,000 Liabilities and Equity $700,000 $280,000 Adrenalinfomation: Barbara uses the cost method to account for its 50% interest in Joel, which it acquired on January 1, Year 10 for $100,000. On that date, Joel's retained earrings were $20,000 and common shares $40,000. The acquisition differential was fully amortized by the end of Year 13. Barbara sold Land to Joel during Year 12 and recorded a $15,000 gain on the sale. Al December 31. Year 13, Barbara's inventory contained $50,000 of merchandise purchased from Joel of which S20,000 remained unpaid at year end. Joel charges a 20% profit margin Both companies are subject to a tax rate of 20% Required: a. Prepare a Consolidated Balance Sheet for Barbara in good formar on December 31, Year 13 assuming that Barbara's investment in Janis a control investment b. Prepare a Balance Sheet for Barbara on December 31, Year 13 assuming that Barbara's Investment in Joal is a joint venture investment Show calculations for Consolidated REs for parts a. and b. For part b. show calculation for Investment in Joel Hints: Total Assets a S940,000; b. $705,000 Question 1: (12 marks) On January 1, 2015, Par Company purchased 8,000 shares of Sub Inc. (total shares issued 10,000) for $500,000 and uses the equity method to account for its investment in Sub Inc. On the acquisition date, acquisition differential totalled $60,000 all allocated to capital assets with a remaining useful life of five years. During 2015, Sub had net income of $180,000 (earned evenly over the year) and on May 1, 2015, paid dividends of $50,000. On September 1, 2015. Par sold 2,000 of the 8,000 shares that it held in Sub for proceeds of $145,000. Required: Show all work for full marks (a) Prepare the Par's journal entry for the sale of the shares on September 1, 2015, (b) What will the balance in the investment account be at December 31, 2015? Question 2: (18 marks) On January 1, 2015. Port Imports Inc. acquired 90% of the common shares of Spanish Imports Ltd. in exchange for a new issue of its own shares valued at $4,320,000. At that date the shareholders equity section of Spanish Imports Ltd's balance sheet was as follows: Preferred shares $ 500,000 Common shares 3,000,000 Retained earnings 1,600,000 Total shareholders' equity $5.100.000 The preferred shares were cumulative and non-participating with a dividend rate of 8% per year and were redeemable at 104. Dividends had not been paid for 2014. Any acquisition differential was allocated to goodwill. During 2015, goodwill was tested and there was an impairment loss of $40,000 During 2015, Port Imports Ltd. had a net income of $2,100,000 and paid dividends of $620,000 and Spanish Imports Ltd. had a net income of $440,000 and paid dividends of $180,000. The only transaction between the two companies was the sale of a parcel of land from Spanish Imports to its parent company. The land was sold for $500,000 and had cost Spanish Imports $450,000 when originally purchased. The gain was taxable at the capital gains rate of 25% Required: a. What is the amount of the non-controlling interest shown on the consolidated balance sheet of Portuguese Imports Inc, as at December 31, 2015? For NCIS, show the calculations for common and preferred shareholders separately. (10 marks) b. Calculate consolidated net income for year ending December 31, 2015. You MUST show the net income attributable to the parent, NCI common and NCI preferred. Assume Port does not own any of the preferred shares of Spanish (8 marks) Hint: Acquisition differential = $260,000 Question 3. 30 marks The following balance sheets have been prepared on December 31, Year 13 for Barbara Corp. and Joel Inc. Balance Sheets Barbara Joel Cash $30,000 $50,000 Accounts Receivable $180,000 $100,000 Inventory $70,000 $30,000 Investment in Joel $100,000 Property, plant and Equipment $600,000 $140,000 Accumulated Depreciation ($280.000) ($40,000) Total Assets $700,000 $280,000 Includes land Current Liabilities $120,000 $30,000 Long-Term Debt $400,000 $20,000 Common shares $90,000 $40,000 Retained Earnings $90,000 $190,000 Liabilities and Equity $700,000 $280,000 Additional Information Barbara uses the cost method to account for its 50% interest in Joel, which it acquired on January 1, Year 10 for $100,000. On that date, Joel's retained earnings were $20,000 and common shares $40,000. The acquisition differential was fully amortized by the end of Year 13 Barbara sold Land to Joel during Year 12 and recorded a $15,000 gain on the sale. At December 31, Year 13, Barbara's Inventory contained $50,000 of merchandise purchased from Joel of which $20,000 remained unpaid at year end. Joel charges a 20% profit margin Both companies are subject to a tax rate of 20%. Required: a. Prepare a Consolidated Balance Sheet for Barbara in good format on December 31. Year 13 assuming that Barbara's investment in Joel is a control investment b. Prepare a Balance Sheet for Barbara on December 31, Year 13 assuming that Barbara's Investment in Joel is a joint venture investment Show calculations for Consolidated REs for parts a, and b. For part b, show calculation for Investment in Joel. Hints: Total Assets a $840,000; b. $705,000