On January 1, 2010, Excelate acquired all the share capital of Tryon for $300,000. The equity of

Question:

On January 1, 2010, Excelate acquired all the share capital of Tryon for $300,000. The equity of Tryon at

January 1, 2010, was:

Share capital............ $200,000

Retained earnings......... 70,000

.................$270,000

At this date, all identiï¬able assets and liabilities of Tryon were recorded at fair value. Goodwill is tested annually for impairment. By December 31, 2013, no impairment has occurred. At January 1, 2010, no goodwill had been recorded by Tryon.

Additional information:

1. At December 31, 2013, Tryon holds $100,000 of 7% bonds issued by Excelate on January 1, 2012. All necessary interest payments have been made.

2. At the end of the reporting period, Tryon owes Excelate $1,000 for items sold on credit.

3. Tryon undertook an advertising campaign for Excelate during the year. Excelate paid $8,000 to Tryon for this service.

4. The beginning and ending inventories of Excelate and Tryon in relation to the current period included the following unsold intragroup inventory:

On January 1, 2010, Excelate acquired all the share capital

Excelate sold inventory to Tryon during the current period for $3,000. This was $500 above the cost of the inventory to Excelate. Tryon sold inventory to Excelate in the current period for $2,500, recording a pre-tax proï¬t of $800.
5. Excelate sold an item to Tryon on January 1, 2013, for use as part of plant and machinery. The item cost Excelate $4,000 and was sold to Tryon for $6,000. Tryon depreciated the item straight line over 10 years.
6. Excelate received dividends totalling $63,000 during the current period from Tryon. All of this is related to dividends declared in the current period.
Required
The current tax rate is 30%. Assuming consolidated ï¬nancial statements are required for the period January 1, 2013, to December 31,2013, calculate the adjustments (including the pre-acquisition adjustment) that would be made in the consolidated ï¬nancial statements.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...