Question

On January 1, 20X5, Par Ltd. purchased 80% of the voting shares of Sub Ltd. for $ 906,400. The SFP of Sub Ltd. on that date was as follows:


The accounts receivable, inventory, and current liabilities have “turned over” by December 31, 20X5, and the net capital assets will be amortized over 10 years, on a straight- line basis.
Additional Information
1. During 20X5, Par Ltd. sold goods costing $ 100,000 to Sub Ltd. for $ 140,000. At December 31, 20X5, 20% of these goods were still in the inventory of Sub Ltd.
2. In 20X5, Sub Ltd. sold goods costing $ 200,000 to Par Ltd. for $ 250,000. At December 31, 20X5, 30% of these goods were still in the inventory of Par Ltd.
3. In 20X5, Sub Ltd. sold land to Par Ltd. for $ 300,000. The land had cost Sub $ 240,000.
4. Both companies pay income taxes at the rate of 40%.
The statements of financial position and statements of comprehensive income for Par Ltd. and Sub Ltd. at December 31, 20X5, are presented below.

Continue..


Required
Under the entity method
a. Prepare the consolidated statement of comprehensive income for the year ended December 31, 20X5.
b. Present the following as they would appear on the consolidated SFP at December 31, 20X5:
1) Net capital assets
2) Goodwill
3) Retainedearnings


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  • CreatedMarch 13, 2015
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