On January 1, 2010, Septor acquired 75% of the issued shares of Zejest for $125,750. At this date, the records of Zejest included the following balances:

Share capital.......... $80,000

Retained earnings........ 60,000

All the identifiable assets and liabilities of Zejest were recorded at fair value except for the following:

The plant has a further three-year life. All the inventory was sold by December 31, 2010. Septor uses the partial goodwill method.
During the four years since acquisition, Zejest has recorded the following annual results:
Year ended Net income (loss)
December 31, 2010....... $10,000
December 31, 2011...... 23,000
December 31, 2012...... (6,000)
December 31, 2013...... 22,000
Additional information:
1. There have been no dividends paid or declared by Zejest since the acquisition date.
2. The land owned by Zejest on January 1, 2010, was sold on September 1, 2011, for $75,000.
3. The tax rate is 30%.
4. On January 1, 2014, Septor paid $50,000 on the open market to acquire an additional 10% of Zejest.
Required
(a) Prepare the consolidated financial statement adjustments as at January 1, 2010.
(b) Prepare the consolidated financial statement adjustments for the year ended December 31, 2013.
(c) Calculate the effect on equity due to the additional purchase by Septor on January 1, 2014.

Transcribed Image Text:

Plant (cost $50,000) Land Inventory Carrying amount $35,000 50,000 20,000 Fair value $41,000 70,000 24,000