Pure Company purchased 70% of the ordinary shares of Gold Company on January 1, Year 6, for $483,000 when the latter company’s accumulated depreciation, ordinary shares and retained earnings were $75,000, $500,000 and $40,000, respectively. Non-controlling interest was valued at $195,000 by an independent business valuator at the date of acquisition. On this date, an appraisal of the assets of
Gold disclosed the following differences:
The plant and equipment had an estimated life of 20 years on this date.
The statements of financial position of Pure and Gold, prepared on
December 31, Year 11, follow:
Additional Information
• Goodwill impairment tests have resulted in impairment losses totalling $18,000.
• On January 1, Year 1, Gold issued $500,000 of 8½% bonds at 90, maturing in 20 years (on December 31, Year 20).
• On January 1, Year 11, Pure acquired $200,000 of Gold’s bonds on the open market at a cost of $230,000.
• On July 1, Year 8, Gold sold a patent to Pure for $63,000. The patent had a carrying amount on Gold’s books of $42,000 on this date and an estimated remaining life of seven years.
• Pure uses tax allocation (40% rate) and allocates bond gains between affiliates when it consolidates Gold.
• Pure uses the equity method to account for its investment.
Prepare a consolidated statement of financial position as at December 31, Year 11.

  • CreatedJune 08, 2015
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