Financial information at December 31, 2013, of Spider and its subsidiary company, Hudson, includes the following.
At January 1, 2010, the date Spider acquired its 80% shareholding in Hudson, all of Hudson’s identifiable assets and liabilities were at fair value except for the following assets:
The plant has an expected life of 10 years, with benefits being received evenly over that period. Differences between carrying amounts and fair values are adjusted on consolidation. The land on hand at January 1, 2010, was sold on November 1, 2010, for $40,000.
Spider uses the full goodwill method. The fair value of the non-controlling interest at January 1, 2010, was $31,500.
Additional information:
1. At the date of acquisition of 80% of its issued shares by Spider, the equity of Hudson was:
Share capital (100,000 shares) .......... $100,000
Retained earnings .............. 40,000
2. Inventory on hand of Hudson at January 1, 2013, included a quantity priced at $10,000 that had been sold to Hudson by its parent. This inventory had cost Spider $7,500. It was all sold by Hudson during the year.
3. In Spider’s inventory at December 31, 2013, were various items sold to it by Hudson at $5,000 above cost.
4. During the year, intragroup sales by Hudson to Spider were $60,000.
5. It was also learned that Hudson had sold to Spider an item for $20,000 on July 1, 2012. Spider had treated this item as an addition to its plant and machinery. The item was put into service as soon as received by Spider and depreciation charged straight line over five years. The item had been fully imported by Hudson at a landed cost of $15,000 on the day of the sale.
6. Management and consulting fees derived by Spider were all from Hudson and represented charges made for administration $2,200 and technical services $2,800. The latter were charged by Hudson to manufacturing expenses.
7. All bonds issued by Hudson are held by Spider.
8. Cumulative other comprehensive income relates to movements in the fair values of the financial assets. The balance of this account at January 1, 2013, was $10,000 (Spider) and $8,000 (Hudson).
9. The tax rate is 40%.
Prepare the consolidated financial statements for Spider and its subsidiary, Hudson, for the year ended December 31, 2013.

  • CreatedJune 09, 2015
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