Large Ltd. purchased 80% of Small Company on January 1, Year 6, for $800,000, when the statement of financial position for Small showed common shares of $490,000 and retained earnings of $190,000. On that date, the inventory of Small was undervalued by $51,000, and a patent with an estimated remaining life of five years was overvalued by $76,000.

Small reported the following subsequent to January 1, Year 6:

	Profit (Loss)			Dividends
Year 6	$	116,000		$	34,000
Year 7		(44,000	)		19,000
Year 8		99,000			49,000

A test for goodwill impairment on December 31, Year 8, indicated a loss of $20,200 should be reported for Year 8 on the consolidated income statement. Large uses the cost method to account for its investment in Small and reported the following for Year 8 for its separate-entity statement of changes in equity:

Retained earnings, beginning	$	590,000
Profit		290,000
Dividends		(61,000	)
Retained earnings, end	$	819,000

 

 

  

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(b) Compute the following on the consolidated financial statements for the year ended December 31, Year 8: (i) Goodwill Goodwill $ (ii) Non-controlling interest on the statement of financial position Non-controlling interest (ii) Retained earnings, beginning of year Retained earnings, beginning of year (iv) Profit attributable to Large's shareholders Profit attributable to Large's shareholders (v) Profit attributable to non-controlling interest Profit attributable to non-controlling interest %24 (b) Compute the following on the consolidated financial statements for the year ended December 31, Year 8: (i) Goodwill Goodwill $ (ii) Non-controlling interest on the statement of financial position Non-controlling interest (ii) Retained earnings, beginning of year Retained earnings, beginning of year (iv) Profit attributable to Large's shareholders Profit attributable to Large's shareholders (v) Profit attributable to non-controlling interest Profit attributable to non-controlling interest %24

Answer rating: 100% (QA)

Solution Requirement cost ot 801 investmentr Implied co... View the full answer