Question: On January 1 19X8 Partial Company acquired 80 of the

On January 1, 19X8, Partial Company acquired 80% of the outstanding voting shares of the Sum Company for $ 3,900,000 in cash. On this date, Sum Company had $ 2,000,000 in common shares outstanding and $ 2,000,000 in retained earnings. Any excess of cost over carrying value is to be recorded in the consolidated financial statements as goodwill and is tested annually for impairment. On December 31, 20X5, the statements of financial position of the two companies are as follows:

Additional Information
1. Sum Company sells merchandise to Partial Company at a price that provides Sum with a gross margin of 50% of the sales price. During 20X5, these sales amounted to $ 1,000,000. The December 31, 20X5, inventories of Partial contain $ 200,000 of these purchases while the December 31, 20X4, inventories of Partial contained $ 100,000 in merchandise purchased from Sum.
2. At the end of 20X5, Partial owes Sum $ 60,000 for merchandise purchased on account. The account is non- interest- bearing.
3. On December 31, 20X2, Partial Company sold equipment to Sum Company for $ 550,000. At the time of the sale, the equipment had a net carrying value in Partial’s records of $ 450,000. The remaining useful life of the asset on this date was 10 years.
4. There has been no impairment in goodwill since January 1, 19X8.

Prepare a consolidated statement of financial position for Partial Company and its subsidiary, Sum Company, at December 31, 20X5. Ignore the impact of incometaxes.

  • CreatedMarch 13, 2015
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