On January 1 Year 5 PET Company acquired 900 ordinary
On January 1, Year 5, PET Company acquired 900 ordinary shares of SET Company for $63,000. On this date, the shareholders’ equity accounts of SET Company were as follows:
Ordinary shares (1,000 no par value shares issued)....... $20,000
Preferred shares (4,000 no par value shares issued) (Note 1) ...40,000
Retained earnings..................... 30,000
.......................... $90,000
The following are the statements of retained earnings for the two companies for Year 5:
Additional Information
• PET uses the cost method to account for its investment in SET.
• Any acquisition differential is allocated to patents with an estimated useful life of six years as at January 1, Year 5. Neither company has any patents recorded on their separate-entity records.
Required:
(a) Prepare a consolidated statement of retained earnings for Year 5.
(b) Prepare an independent calculation of consolidated retained earnings at the end of Year 5.
(c) Calculate non-controlling interest for the consolidated income statement for Year 5 and non-controlling interest for the consolidated statement of financial position at the end of Year 5.
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