Tymen Jungle Inc. Statement of financial position As at December 31 (in '000s) Carrying value Fair Remaining value useful life/term to 20X7 20X6 20X6 Cash maturity $ 68 $ 35 Accounts receivable 75 48 Inventory 74 62 $ 68 N/A Land 325 175 164 N/A Building (net) 285 300 345 15 years Equipment (net) 232 400 380 5 years Patent 30 30 142 16 years Total assets $1,089 $1,050 Accounts payable $ 52 $ 37 Notes payable 50 0 Long-term debt 300 400 Bonds payable 250 250 262 6 years Common shares 180 180 Retained earnings 257 183 Total liabilities and equity $1,089 $1,050Tymen Jungle Inc. Statement of comprehensive income For the year ended December 31, 20X7 (in '000s) Sales revenue $ 885 Cost of goods sold 440 Gross profit 445 Sales, general, and administrative expenses 361 Interest expense 27 Depreciation and amortization expense 25 32 Other income 135 Earnings before income tax expense 167 Income tax expense 33 Net income $ 134Canaan's Curios Corp. Draft statement of financial position As at December 31, 20X6 (in '000s) 20X6 Cash $ 861 Accounts receivable 698 Inventory 128 Land 550 Building (net) 850 Equipment (net) 1,250 Patent 450 Total assets $4.787 Accounts payable $ 65 Long-term debt 1,500 Bonds payable 500 Common shares 830 Retained earnings 1.892 Total liabilities and equity $4.787Canaan's Curios Corp. Canaan's Curios Corp. (CCC) is a company located in Western Canada that reports its financial results in accordance with IFRS. On December 31, 20X6, CCC acquired common shares of Tymen Jungle Inc. (TJI). Four independent questions based on different quantities of shares acquired, but using the same financial results for TJI, are set out below.Intercompany transactions: . CCC provided management services to TJI during the entire year. TJI paid $4,500 per month for this service. At December 31, 20X7, the amount owing for the services provided in December 20X7 remained unpaid. TJI rented a building to CCC for $7,000 per month. CCC rented the building for the entire year. At December 31, 20X7, CCC owed TJI $14,000 for November and December's rent. Land sale: . On December 31, 20X7, CCC sold land to TJI for $150,000. CCC's net book value at time of sale was $100,000, which was the same as the estimated fair value at the acquisition date of the shares of TJI (December 31, 20X6). In consideration of the transfer, TJI paid $100,000 cash and signed a note payable to CCC for the $50,000 balance. The note is payable in full on December 31, 20X8. Interest at 5% per annum, which is the market rate of interest for an obligation of this nature, is first payable on December 31, 20X8. Inventory sales: . During 20X7, CCC sold $125,000 of inventory to TJI. CCC's cost of the inventory was $95,000. 25% of these goods remained unsold by TJI as at December 31, 20X7. . During 20X7, TJI sold goods that it had purchased for $150,000 to CCC for $210,000; 35% of these goods remained unsold by CCC as at December 31, 20X7.Equipment sale: . On January 1, 20X7, TJI sold equipment to CCC for $70,000 cash. TJI's carrying value of the equipment, which had a remaining useful life of five years, was $44,000. Additional information: 1. Both companies pay income tax at a rate of 30%. 2. Both companies use the first in, first out (FIFO) cost-flow assumption to value their inventories. 3. Both companies depreciate their depreciable assets on a straight-line basis. 4. The fair value increment on the bonds is amortized using the straight-line method. 5. Both companies account for share-issuance costs using the retained earnings method. 1Question 1 (10 marks) Assume that when CCC acquired an interest in TJI on December 31, 20X6, CCC paid $125,000 cash to acquire 25% of TJI's outstanding common shares. CCC tested TJI for impairment on December 31, 20X7, and the investment was found to be impaired by $3,500. Required: In worksheet Q1(a) JEs and calcs a) Prepare journal entries to record CCC's acquisition of TJI and all events during 20X7 that affect CCC's Investment in TJI account. Ensure that you provide support for your calculations. Also remember to provide a brief explanation for each journal entry as to its nature. (7 marks)In worksheet Q1(b) JEs and calcs b) Independent of part (a), assume that on December 31, 20X9, the balance of CCC's Investment in TJI account was $140,000. All the results of TJI's activities during 20X9 are included in this amount. At the end of 20X9, CCC owned 25% of the common shares of TJI. Two independent scenarios follow. In each one, the amount paid or received represents the fair market value of the ownership stake purchased or sold. Remember to support the journal entries with a brief explanation as to their nature. i) On December 31, 20X9, CCC purchased an additional 20% of the outstanding common shares of TJI for $130,000 cash. Based on this purchase, calculate what impact this transaction had on CCC's ownership and prepare the journal entries that CCC would record for this transaction. (1 mark) ii) On December 31, 20X9, CCC purchased an additional 30% of the outstanding common shares of TJI for $195,000 cash. Based on this purchase, calculate what impact this transaction had on CCC's ownership and prepare the journal entries that CCC would record for this transaction. (2 marks)Question 2 {5 marks} Assume that when CCC acquired an interest in TJI on December 31, 20116. 000 paid $000,000 cash to acquire 100% of the net assets of TJI. Required: In worksheet (:2 AD schedule a} Calculate and allocate the acquisition differential on the date of acquisition. including determination of goodwill. (2 marks} is} Prepare CCC's journal entry:' to record the acquisition. Remember to provide a brief explanation for each journal entry. [3 marks} Question 3 (6 marks) Assume that when CCC acquired an interest in TJI on December 31, 20X6, CCC issued 100,000 of its common shares to acquire 100% of the common shares of TJI. On this date, CCC's common shares were being actively traded at $6. In order to facilitate the acquisition, CCC paid $29,000 cash for direct costs of acquisition. CCC also paid $17,000 cash for the cost of issuing the additional shares. CCC's draft non-consolidated statement of financial position as at December 31, 20X6, follows. This statement was prepared after all CCC's year-end adjustments had been processed but does not include the investment that was made in TJI on December 31, 20X6.Required: In worksheet Q3 Consol. SFP 20X6 Prepare CCC's consolidated statement of financial position at the December 31, 20X6, acquisition date. (Refer back to the acquisition differential allocation schedule that you prepared in Question 2, but complete your work in Worksheet Q3.) Provide a brief explanation of all adjustments made to arrive at the consolidated SFP figures. For sake of clarity, these are the adjustments made while preparing the consolidated SFP, rather than adjusting journal entries. Note: From the Project Data file, copy and paste the template in the worksheet titled "Q3 Consolidated SFP 20X6" into your project submission file. Do not show your work in the Project Data file