On January 1, Year 1, Shannon Corporation (SC)  acquired 70 percent (70,000 shares of $2 par common stock) of Kanada Corporation (KC) for $30 per share.  Shortly after the acquisition the remaining KC shares had a fair value of $28 share.   At the time of the acquisition KC had a book value of $2,000,000 and had only one specific asset whose fair value differed from its book value.  Customer Lists with a useful life of 5 years had a book value of $0 and a fair value of $300,000. Kanada sold Shannon inventory costing $140,000 for $200,000 during Year 4.  At December 31, Year 4, 30 percent was still in SC’s inventory.  KC sold SC inventory costing $270,000 for $400,000 in Year 5.  As of December 31, Year 5, 20 percent of that was still in SC’s inventory. On 1/1/Year 2 SC sold equipment to KC for $400,000.  The equipment had an original purchase price of $600,000 and a book value of $250,000 .  KC plans to depreciate the equipment over the next 10 years using the straight-line method with no salvage value. On 1/1/Year 4 SC sold land to KC for $200,000 that had a book value of $150,000. KC has made no payments on the land but plans to pay off the debt on April 1, Year 6.

Determine consolidated totals for Shannon Corporation and Kanada Corporation for Year 5 using the provided worksheet.

Answer rating: 100% (QA)

ANS WER Cons olid ated totals for Shannon Corporation and Kan ada Corporation for Year 5 Total asset... View the full answer