Question

On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $600,000. On January 1, Year 6, Pic Company acquired an additional 2,000 ordinary shares of Sic Company for $166,000. On January 1, Year 5, the shareholders’ equity of Sic was as follows:
Ordinary shares (10,000 no par value shares issued)... $200,000
Retained earnings................ 300,000
......................... $500,000
The following are the statements of retained earnings for the two companies for Years 5 and 6:
Additional Information
• Pic uses the cost method to account for its investment in Sic.
• Any acquisition differential is allocated to customer contracts, which are expected to provide future benefits until December 31, Year 7. Neither company has any customer contracts recorded on their separate-entity records.
• There were no unrealized profits from intercompany transactions since the date of acquisition.
Required:
(a) Calculate consolidated profit attributable to Pic’s shareholders for Year 6.
(b) Calculate the following account balances for the consolidated statement of financial position at December 31, Year 6:
(i) Customer contracts
(ii) Non-controlling interest
(iii) Retained earnings


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  • CreatedJune 08, 2015
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