Scenario:

AlWatya Advance Car Company (AACC) is an internationally listed manufacturer and services of many Car products and services based in Muscat. They rewarded many product patents through their research and development. They export different products to different countries like GCC, Pakistan, Malaysia, and Romania. However, The Sale and Marketing Department proposes to the board of governance to spin off or acquire subsidiaries in Dubai or in Romania. They are so attracted by their customer-based, cheaper raw material, and pool of skilled laborers. That works to enhance the firms strategy and growth sustainability. Due to COVID-19, the demand in the local Omani market is stagnant and competition has increased manifold. However, the finance department is concerned about financial, and political uncertainty in Romania, and anti-money laundering laws in Europe, they object to the proposal raised by the Sale and Marketing department. But they agreed to acquire the Al-Bahja Company in Dubai. That is because the risk is less in Dubai, although it is considered a tax heaven country based on the recent European Tax-Have List released last month. Further, Dubai's currency is pegged to USD. This will reduce currency exposure compared to other currencies. Investing in Romania will create various issues like the requirement of new employees law, a lot of capital expenditure, and risk exposure in these foreign markets. After listening to both departments, the board of directors plans to open both subsidiaries of 40% of Al-Bahja Company based in Dubai, and 60% of Rahmanoof Auto-Mobile Products Company. Based on the above information

Rahmanoof LLCs equipment was actually $ 70,000 and patented technology was $ 95,000. The fair value of receivables and inventory for Rahmanoof LLC was $ 145,000. While the liabilities are valued to be $ 40000 AACC LLC acquired all common stock of Rahmanoof LLC by issuing 22,000 shares of $ 1 par value and having $ 19 as fair value and taking a loan of $ 45,000. Any undervalued noncurrent assets should be amortized spanning a five-year period. Any access of consideration transferred over fair value should be amortized over ten years.

Requirement:

Task1:

1. Calculate goodwill from the above information. Show goodwill calculation with both methods of the accounting equation.

2. Prepare a statement of consolidated retained earnings (for years 2021 & 2022).

3. Prepare the balance sheet for AACC LLC (for the year ending 31 Dec 2020).