On January 1 2011 Rexol acquired 35 of the shares
On January 1, 2011, Rexol acquired 35% of the shares of Birch for $65,158. At this date, the equity of Birch consisted of:
Share capital ....... $120,000
Retained earnings ..... 40,000
At this date, the identifiable assets and liabilities of Birch were recorded at fair value. At December 31, 2013, the goodwill was written down by $3,000 as the result of an impairment test. During the three years since acquisition, Birch has recorded the following annual results:
Year ended .......... Profit(Loss)
December 31, 2011 ......... $ 5,000
December 31, 2012 ......... (27,000)
December 31, 2013 ......... (12,000)
There have been no dividends paid or declared by Birch since the acquisition date.
Required
(a) Calculate the share of profit or loss in Birch for each of the years 2011 to 2013.
(b) Calculate the balance in the Investment in Birch account as at December 31, 2013.
Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
    Tutors
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
OR
Relevant Tutors available to help