This question was of Financial Accounting and we have to prepare consolidated statements
On January 1. Year 4. Grant Corporation bought 8.000 (80% of the outstanding common shares of Loe Company for $70,000 cash Lee's shares were trading for $7 per share on the date of acquisition On that date, Lee had $25.000 of common shares outstanding and $30.000 retained earnings. Also on that date, the carrying amount of each of Lee's Identifiable assets and liabilities was equal to its fair value except for the following: Inventory Patent 550, Bee 18.ee Volue $55,000 20,000 The patent had an estimated useful life of five years at January 1, Yoar 4, and the entire Inventory was sold during Year 4 Grant uses the cost method to account for its Investment. The following are the separate entity financial statements of Grant and Lee as at December 31. Year 7: BALANCE SHEETS At December 31, Year Grant Lee Assets Accounts receivable venit try Sin Lee Equipe Paterte $ 5,000 $ 18, 185.000 82. 310,000 100,000 70.000 230,000 200.000 2.600 see,200 $ 407,630 abies and Sharwotowy ALGO bile Oleaca liabilities Dikable $ 199,200 $ 195, eee 60.ece se.ee 80.000 72.ee 178,000 20.00 Bedd 500.000 $ 47.00 INCOHE STATEMENT Yerinded December 31 G 9. $ INCONE STATEMENT Year ended December 31, Year 2 Grant sales $ 900,000 Cost of goods sold (340,000 Gross margin 560,00 Distribution expense (30,8) Other expenses (180,000 Income tax expense (120,000 Net Income $ 230,000 Lee 360,000 (240,000) 120,000 (25,8) (56,000 16.000 23, eee $ Additional Information - The recoverable amount for goodwill was determined to be $10,000 on December 31. Year 2 The goodwill impairment loss occurred In Year 7 Grant's accounts receivable contains $30,000 owing from Lee. Amortization expense is grouped with distribution expenses and impairment losses are grouped with other expenses. Required (a) Calculate consolidated retained earnings at December 31. Year 7. dinput all values as positive numbers. Omit:S sign in your response.) DS calculation of consolidated retained earnings Dec 31. Yeart Recline Gant Retina Lee ReLearnings en acquisition The 5 C. La cuisition different (bingere consolidated financial statement on vesiput all values a positive numbers.) Grant oration consoleted Income Statement Yearded De (b) Prepare consolidated financial statements for Year 7. (Input all values as positive numbers.) Grant Corporation Consolidated Income Statement Year ended December 31. Year Gross margin 0 Total 0 $ $ 0 Attributable to: Grant's shareholders Non-controlling interest Grant Corporation Consolidated Balance Sheet - December 31. Year 2 Assets 0 Attributable to: Grant's shareholders Non-controlling interest $ Grant Corporation Consolidated Balance Sheet - December 31. Year Assets Liabilities and Equity On January 1. Year 4. Grant Corporation bought 8.000 (80% of the outstanding common shares of Loe Company for $70,000 cash Lee's shares were trading for $7 per share on the date of acquisition On that date, Lee had $25.000 of common shares outstanding and $30.000 retained earnings. Also on that date, the carrying amount of each of Lee's Identifiable assets and liabilities was equal to its fair value except for the following: Inventory Patent 550, Bee 18.ee Volue $55,000 20,000 The patent had an estimated useful life of five years at January 1, Yoar 4, and the entire Inventory was sold during Year 4 Grant uses the cost method to account for its Investment. The following are the separate entity financial statements of Grant and Lee as at December 31. Year 7: BALANCE SHEETS At December 31, Year Grant Lee Assets Accounts receivable venit try Sin Lee Equipe Paterte $ 5,000 $ 18, 185.000 82. 310,000 100,000 70.000 230,000 200.000 2.600 see,200 $ 407,630 abies and Sharwotowy ALGO bile Oleaca liabilities Dikable $ 199,200 $ 195, eee 60.ece se.ee 80.000 72.ee 178,000 20.00 Bedd 500.000 $ 47.00 INCOHE STATEMENT Yerinded December 31 G 9. $ INCONE STATEMENT Year ended December 31, Year 2 Grant sales $ 900,000 Cost of goods sold (340,000 Gross margin 560,00 Distribution expense (30,8) Other expenses (180,000 Income tax expense (120,000 Net Income $ 230,000 Lee 360,000 (240,000) 120,000 (25,8) (56,000 16.000 23, eee $ Additional Information - The recoverable amount for goodwill was determined to be $10,000 on December 31. Year 2 The goodwill impairment loss occurred In Year 7 Grant's accounts receivable contains $30,000 owing from Lee. Amortization expense is grouped with distribution expenses and impairment losses are grouped with other expenses. Required (a) Calculate consolidated retained earnings at December 31. Year 7. dinput all values as positive numbers. Omit:S sign in your response.) DS calculation of consolidated retained earnings Dec 31. Yeart Recline Gant Retina Lee ReLearnings en acquisition The 5 C. La cuisition different (bingere consolidated financial statement on vesiput all values a positive numbers.) Grant oration consoleted Income Statement Yearded De (b) Prepare consolidated financial statements for Year 7. (Input all values as positive numbers.) Grant Corporation Consolidated Income Statement Year ended December 31. Year Gross margin 0 Total 0 $ $ 0 Attributable to: Grant's shareholders Non-controlling interest Grant Corporation Consolidated Balance Sheet - December 31. Year 2 Assets 0 Attributable to: Grant's shareholders Non-controlling interest $ Grant Corporation Consolidated Balance Sheet - December 31. Year Assets Liabilities and Equity
