2. On January 31, 2021, Port Arthur Ltd. acquired a large percentage of the common shares...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
2. On January 31, 2021, Port Arthur Ltd. acquired a large percentage of the common shares of arks Fort William Inc. Information about the investment in the Fort William shares follows: $ 525,377 Book value of Fort William's assets on January 31, 2021 Book value of Fort William's liabilities on January 31, 2021 Purchase price of investment: $ 110,329 $ 157,613 $ 85,170 Net income earned by Fort William for the year ended January 31, 2022 Dividends paid by Fort William to all of its common shareholders on November 30, 2021 $ 25,551 Percentage of outstanding common shares purchased by Port Arthur Ltd. in Fort William Inc. 31% Assume that Port Arthur Ltd. applies IFRS, and that this investment gives Port Arthur significant influence over Fort William Inc. Also assume that 75% of the amount paid by Port Arthur in excess of the book value of the investment can be attributed to depreciable assets that have been undervalued. The remaining useful life of these depreciable assets is 6 years. Required: 1. Calculate the portion of the purchase price of the investment that is considered to be goodwill. (3 marks) 2. Prepare any applicable journal entries for Port Arthur's investment in the shares of Fort William on each of the following dates: (a) January 31, 2021 (1 mark) (b) November 30, 2021 (2 marks) January 31, 2022 (4 marks) (c) 2. On January 31, 2021, Port Arthur Ltd. acquired a large percentage of the common shares of arks Fort William Inc. Information about the investment in the Fort William shares follows: $ 525,377 Book value of Fort William's assets on January 31, 2021 Book value of Fort William's liabilities on January 31, 2021 Purchase price of investment: $ 110,329 $ 157,613 $ 85,170 Net income earned by Fort William for the year ended January 31, 2022 Dividends paid by Fort William to all of its common shareholders on November 30, 2021 $ 25,551 Percentage of outstanding common shares purchased by Port Arthur Ltd. in Fort William Inc. 31% Assume that Port Arthur Ltd. applies IFRS, and that this investment gives Port Arthur significant influence over Fort William Inc. Also assume that 75% of the amount paid by Port Arthur in excess of the book value of the investment can be attributed to depreciable assets that have been undervalued. The remaining useful life of these depreciable assets is 6 years. Required: 1. Calculate the portion of the purchase price of the investment that is considered to be goodwill. (3 marks) 2. Prepare any applicable journal entries for Port Arthur's investment in the shares of Fort William on each of the following dates: (a) January 31, 2021 (1 mark) (b) November 30, 2021 (2 marks) January 31, 2022 (4 marks) (c)
Expert Answer:
Answer rating: 100% (QA)
Requirement 1 Purchase amount Total fair Value Total Book Value of net asset Excess of fair value ov... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
Posted Date:
Students also viewed these accounting questions
-
In three successive years the price of the common shares of Bedrock Resources Ltd. fell 40%, 60%, and 70%, ending the third year at 50 cents. a. What was the share price at the beginning of the...
-
In three successive years the price of the common shares of Abysmal Resources Ltd. fell 35%, 55%, and 80%, ending the third year at 75 cents. a. What was the share price at the beginning of the...
-
1 Draw a logic diagram of edge-triggered two-phase (formerly, master-slave) D-F/F and explain how it works. 2 Draw a 3bit Moore FSM and its circuit with three inputs and three outputs. 3 Draw 4-to-1...
-
Compensation System Change Introduction As Melanie Griffith gazed through the window of her office, she could see some employees walking to the parking lot to get to their cars; others were on their...
-
For each of the following cases, indicate (a) to what interest rate columns and (b) to what number of periods you would refer in looking up the discount rate. (1) In Table 3 (present value of 1): (2)...
-
David has a quasi-linear utility function of the form U(x, y) = x + y, with associated marginal utility functions MUx = 1/(2x) and MUy = 1. a) Derive David's demand curve for x as a function of the...
-
Stock splits a. Decrease par value per share b. Increase the number of shares of stock issued c. Both a and b d. None of the above
-
The mix of salary and commission Belleville Fashions sells high-quality womens, mens, and childrens clothing. The store employs a sales staff of 11 full-time employees and 12 part-time employees....
-
For the sake of exercise, students will consider Canada as their home country. Students will be selecting 1. their dream role/job and 2. Their dream country - this would be a country that you have...
-
YouPay is a Fintech company, which began as a digital wallet and has now evolved into an organisation taking on new verticals within payments many times over the years. To its credit, Paytm has...
-
You may purchase a stock for $23.28. It will pay a dividend of $1.9. If you sell it for $30.64 just after collecting the dividend, what is your total rate of return? Calculate.
-
5. Write down the balanced chemical equation for the formation of ammonia. Remember the definition of a formation reaction. It's very specific on how many moles of reactants and products you use....
-
Crane Company completed its first year of operations on December 31, 2022. Its initial income statement showed that Crane had sales revenue of $197,500 and operating expenses of $71,300. Accounts...
-
In this problem, you will apply kinematic equations to a jumping flea. Take the magnitude of free - fall acceleration to be 9.14 m / s 2 . Ignore air resistance. A flea jumps straight up to a maximum...
-
What will the final temperature be if you add 400 kJ of heat to1.00 L of liquid water at 20 C? The density of water is 1.00 g/mLat this temperature. The specific heats of liquid and gaseous waterare...
-
Vinyl Resting Place Company manufactures vinyl records only. Annual production costs incurred in the manufacturing process are shown below for two levels of production. Costs Incurred Production in...
-
Given the following code, answer the questions: int value 0; StringBuilder build = new StringBuilder(); do { build.append(value++); } while (value++ < 10); System.out.println (build.toString()); //...
-
Refer to P4-6. During 20X8, the following events occurred: 1. Serena Inc. had sales of $ 800,000 to Pradeesh Corp. Serenas gross margin was still 40% of selling price, and its income tax rate...
-
In general, how would fair values be determined for productive assets?
-
Office Plus Corporation is a retailer of office supplies and equipment in Vancouver. On March 5, 20X6, Office Plus formed a new corporation in Calgary to operate the same type of business. Office...
-
A rotor which is balanced statically but not dynamically is supported on two bearings \(\mathrm{L}\) apart and at high speed of the rotor, reaction of the left bearing is \(R\). The right side of the...
-
If a number of forces act on a rigid body, each force may be replaced by an equal and parallel force acting through a fixed point, together with a couple. For the rigid body to be in equilibrium, (a)...
-
A machine of \(100 \mathrm{~kg}\) mass has a \(20 \mathrm{~kg}\) rotor with \(0.5 \mathrm{~mm}\) eccentricity. The mounting springs have stiffness \(85 \mathrm{kN} / \mathrm{m}\) and damping is...
Study smarter with the SolutionInn App