Laughlin Ltd. gained control of Harwood Ltd. by acquiring all its shares on January 1, 2010. The equity at that date was:
Share capital .......... $100,000
Retained earnings.......... 35,000
At January 1, 2010, all the identifiable assets and liabilities of Harwood were recorded at fair value except for:
The inventory was all sold by December 31, 2010. The plant had a further five-year life but was sold on January 1, 2013, for $50,000. The land was sold in March 2011 for $150,000.
At January 1, 2010, Harwood had guaranteed a loan taken out by Swede Ltd. Harwood had not recorded a liability in relation to the guarantee but, as Swede was not performing well, Laughlin valued the contingent liability at $5,000. In January 2013, Swede repaid the loan. Harwood had also invented a special tool and patented the process. No asset was recorded by Harwood, but Laughlin valued the patent at $6,000, with an expected useful life of six years. The tax rate is 30%.
Financial information for these companies for the year ended December 31, 2013, is as follows:
Prepare the consolidated financial statements for Laughlin Ltd. as at December 31, 2013.

  • CreatedJune 09, 2015
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