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Problem 5-12* Hways LO1, 2, 3, 4 Foxx Corp. purchased Non-controlling intere purchased 75% of the outstanding shares of Rabb Ltd. on January 1 Year 3. at a cost of $117.000 rolling interest was valued at $35.000 by an independent business valuator at the date of acquisition. On Dabb had common shares of $50,00%) and retained earnings of $30.000. Fair values were equal to carrying unts for all the net assets except the following: thar date. Rabb had Inventory Equipment Software Carrying Amount $30,000 45,00 Fair Value $19.000 69,000 15.000 aunty 1 Year 3, and the MARTERS for i m amiwilile of six year. Juary 1 Year martid over en was uses the method to account for its lovement The te December 31 Year vided the following for S RODO 30.000 Year 6. Amortization expense is groupe The impamentos on these assets under are expenses and impairment is regnup with miscellaneous penses. The parent's sh will noted above is 516,364 The following are the financial statements of Foxx Cup and its subsidiary Rabbid for Yes BALANCE SHEETS At D er 31 Yeart Rabb. Par Care 30.00 BOX Investmesi Rabb 1000 60,000 Bank indeledress Acable Notes payable Common shares Retained earnings 150.000 243,000 5591,000 STATEMENTS OF RETAINED EARNINGS Year ended December 31. Year 6 Retained earnings, January 1 Year 6 $153,000 Nel income 120,000 Dividends 130,000 Related earnings, December 31, Year $ 92.000 48.000 (20.000 $120.000 Investment income Cost of sales Administrative expenses Miscellaneous expenses Income taxes INCOME STATEMENTS For the year ended December 31, Year 6 5821,000 15.000 836.000 480,000 30. 116.000 80,000 716.000 $120.00 $320,000 3.000 323,600 200.000 12.00 31.000 32.00 Net income Additional Information The notes payable are intercompany. 292 CHAPTERS Consolation begun to carton Date PE Required a Prepare the Year 6 consolidated financial statements Calculate goodwill impairment loss and non-controlling interest in the consolidated income statement for the wear ended December 31, Year 6, under the identifiable net assets method If Foxx used the identifiable net assets method rather than the fair value enterprise method, how would this affect the debt-to-equity ratio at the end of Year 6! *Problem 5-13 LO2, 3, 4,8 Problem 5-12* Hways LO1, 2, 3, 4 Foxx Corp. purchased Non-controlling intere purchased 75% of the outstanding shares of Rabb Ltd. on January 1 Year 3. at a cost of $117.000 rolling interest was valued at $35.000 by an independent business valuator at the date of acquisition. On Dabb had common shares of $50,00%) and retained earnings of $30.000. Fair values were equal to carrying unts for all the net assets except the following: thar date. Rabb had Inventory Equipment Software Carrying Amount $30,000 45,00 Fair Value $19.000 69,000 15.000 aunty 1 Year 3, and the MARTERS for i m amiwilile of six year. Juary 1 Year martid over en was uses the method to account for its lovement The te December 31 Year vided the following for S RODO 30.000 Year 6. Amortization expense is groupe The impamentos on these assets under are expenses and impairment is regnup with miscellaneous penses. The parent's sh will noted above is 516,364 The following are the financial statements of Foxx Cup and its subsidiary Rabbid for Yes BALANCE SHEETS At D er 31 Yeart Rabb. Par Care 30.00 BOX Investmesi Rabb 1000 60,000 Bank indeledress Acable Notes payable Common shares Retained earnings 150.000 243,000 5591,000 STATEMENTS OF RETAINED EARNINGS Year ended December 31. Year 6 Retained earnings, January 1 Year 6 $153,000 Nel income 120,000 Dividends 130,000 Related earnings, December 31, Year $ 92.000 48.000 (20.000 $120.000 Investment income Cost of sales Administrative expenses Miscellaneous expenses Income taxes INCOME STATEMENTS For the year ended December 31, Year 6 5821,000 15.000 836.000 480,000 30. 116.000 80,000 716.000 $120.00 $320,000 3.000 323,600 200.000 12.00 31.000 32.00 Net income Additional Information The notes payable are intercompany. 292 CHAPTERS Consolation begun to carton Date PE Required a Prepare the Year 6 consolidated financial statements Calculate goodwill impairment loss and non-controlling interest in the consolidated income statement for the wear ended December 31, Year 6, under the identifiable net assets method If Foxx used the identifiable net assets method rather than the fair value enterprise method, how would this affect the debt-to-equity ratio at the end of Year 6! *Problem 5-13 LO2, 3, 4,8