Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The trial balances of Red Inc. and its subsidiary Bull Corp.on December 31, 2020 are shown below Red Bull Inventory $160,000 $100,000 Plant and Equipment

image text in transcribed
image text in transcribed
image text in transcribed
The trial balances of Red Inc. and its subsidiary Bull Corp.on December 31, 2020 are shown below Red Bull Inventory $160,000 $100,000 Plant and Equipment (net) $2,700,000 $700,000 Dividends Declared $200.000 $100,000 Investment in Bull $700,000 Cost of Goods Sold $650,000 590,000 Other Expenses $50,000 $10,000 Total Debits $4,460,000 $1,000,000 Uabilities $1,000,000 $150,000 Common Stock $1,660,000 $600,000 Retained Earnings- Opening $600,000 $100,000 Sales and Other Revenue $1,200,000 $150,000 Total Credits $4,460,000 $1,000,000 Other information: Red acquired Bull in three stages: January 1, 2017: Red purchased 10,000 shares for $100,000. Bull's Retained Earnings were $40,000 on that date. January 1, 2019: Red purchased 30,000 shares for $450,000. Bull's Retained Earnings were $80,000 on that date. January 1, 2020: Red purchased 20,000 shares for $150,000. Bull's Retained Earnings were $100,000 on that date. Bull was incorporated on January 1, 2015. On that date, Bull issued 100,000 voting shares. Any difference between the cost and book value for each acquisition is attributable entirely to trademarks, which are to be amortized over 5 years. The company has neither issued nor retired shares since the Date of Incorporation. Red sold depreciable assets to Bull at a loss of $20,000 on January 1, 2019. These assets had a ten year remaining life. Intercompany Sales of Inventory amounted to $250,000. Unrealized inventory profits for each company are shown below for 2020. The amounts indicate the amount of profit in each company's inventory. Other Information: Red acquired Bull in three stages: January 1, 2017 Red purchased 10,000 shares for $100,000. Bull's Retained Earnings were $40,000 on that date. January 1, 2019: Red purchased 30,000 shares for $450,000. Bull's Retained Earnings were $80,000 on that date. January 1, 2020: Red purchased 20,000 shares for $150,000. Bull's Retained Earnings were $100,000 on that date. Bull was incorporated on January 1, 2015. On that date, Bull issued 100,000 voting shares. Any difference between the cost and book value for each acquisition is attributable entirely to trademarks, which are to be amortized over 5 years. The company has neither issued nor retired shares since the Date of Incorporation. Red sold depreciable assets to Bull at a loss of $20,000 on January 1, 2019. These assets had a ten year remaining life. Intercompany Sales of Inventory amounted to $250,000. Unrealized inventory profits for each company are shown below for 2020. The amounts indicate the amount of profit in each company's inventory. Red January 1, 2020: December 31, 2020: $10,000 $20,000 Bull January 1, 2020: December 31, 2020: $20,000 $40,000 All inventories on hand at the start of 2020 were sold to outsiders during the year. The net Incomes of both companies are evenly earned throughout the year. Both companies are subject to an effective corporate tax rate of 20%. (1) Prepare an acquisition differential amortization table from Jan 1, 2017. Compute unamortized acquisition differential for each acquisition date. When should Red prepare consolidated financial statements? (ii) Compute consolidated trademarks for Red as at December 31, 2020. (iii) Compute consolidated inventory for Red as at December 31, 2020. (iv) Compute consolidated Cost of Goods Sold for 2020. (v) Compute consolidated Plant and Equipment (net) as at December 31, 2020 (vi) Compute the non-controling interest on Consolidated Statement of Financial Position as at December 31, 2020. The trial balances of Red Inc. and its subsidiary Bull Corp.on December 31, 2020 are shown below Red Bull Inventory $160,000 $100,000 Plant and Equipment (net) $2,700,000 $700,000 Dividends Declared $200.000 $100,000 Investment in Bull $700,000 Cost of Goods Sold $650,000 590,000 Other Expenses $50,000 $10,000 Total Debits $4,460,000 $1,000,000 Uabilities $1,000,000 $150,000 Common Stock $1,660,000 $600,000 Retained Earnings- Opening $600,000 $100,000 Sales and Other Revenue $1,200,000 $150,000 Total Credits $4,460,000 $1,000,000 Other information: Red acquired Bull in three stages: January 1, 2017: Red purchased 10,000 shares for $100,000. Bull's Retained Earnings were $40,000 on that date. January 1, 2019: Red purchased 30,000 shares for $450,000. Bull's Retained Earnings were $80,000 on that date. January 1, 2020: Red purchased 20,000 shares for $150,000. Bull's Retained Earnings were $100,000 on that date. Bull was incorporated on January 1, 2015. On that date, Bull issued 100,000 voting shares. Any difference between the cost and book value for each acquisition is attributable entirely to trademarks, which are to be amortized over 5 years. The company has neither issued nor retired shares since the Date of Incorporation. Red sold depreciable assets to Bull at a loss of $20,000 on January 1, 2019. These assets had a ten year remaining life. Intercompany Sales of Inventory amounted to $250,000. Unrealized inventory profits for each company are shown below for 2020. The amounts indicate the amount of profit in each company's inventory. Other Information: Red acquired Bull in three stages: January 1, 2017 Red purchased 10,000 shares for $100,000. Bull's Retained Earnings were $40,000 on that date. January 1, 2019: Red purchased 30,000 shares for $450,000. Bull's Retained Earnings were $80,000 on that date. January 1, 2020: Red purchased 20,000 shares for $150,000. Bull's Retained Earnings were $100,000 on that date. Bull was incorporated on January 1, 2015. On that date, Bull issued 100,000 voting shares. Any difference between the cost and book value for each acquisition is attributable entirely to trademarks, which are to be amortized over 5 years. The company has neither issued nor retired shares since the Date of Incorporation. Red sold depreciable assets to Bull at a loss of $20,000 on January 1, 2019. These assets had a ten year remaining life. Intercompany Sales of Inventory amounted to $250,000. Unrealized inventory profits for each company are shown below for 2020. The amounts indicate the amount of profit in each company's inventory. Red January 1, 2020: December 31, 2020: $10,000 $20,000 Bull January 1, 2020: December 31, 2020: $20,000 $40,000 All inventories on hand at the start of 2020 were sold to outsiders during the year. The net Incomes of both companies are evenly earned throughout the year. Both companies are subject to an effective corporate tax rate of 20%. (1) Prepare an acquisition differential amortization table from Jan 1, 2017. Compute unamortized acquisition differential for each acquisition date. When should Red prepare consolidated financial statements? (ii) Compute consolidated trademarks for Red as at December 31, 2020. (iii) Compute consolidated inventory for Red as at December 31, 2020. (iv) Compute consolidated Cost of Goods Sold for 2020. (v) Compute consolidated Plant and Equipment (net) as at December 31, 2020 (vi) Compute the non-controling interest on Consolidated Statement of Financial Position as at December 31, 2020

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economic Development Finance

Authors: Karl F Seidman

1st Edition

0761927093, 9780761927099

More Books

Students also viewed these Accounting questions

Question

What steps will Sara need to take to conduct a benefit audit?

Answered: 1 week ago