Retic Ltd. acquired 100% of the share capital of Dorado Ltd. for $102,000 on January 1, 2011,
Question:
Retic Ltd. acquired 100% of the share capital of Dorado Ltd. for $102,000 on January 1, 2011, when the equity of Dorado consisted of:
Share capital€”50,000 shares........ $50,000
Retained earnings ............ 30,000
All of Dorado€™s identiï¬able assets and liabilities were recorded at amounts equal to fair value, except as follows:
![](https://dsd5zvtm8ll6.cloudfront.net/si.question.images/images/question_images/1609/4/0/1/0065fed82aeebc3a1609401006040.jpg)
The plant is expected to have a further useful life of ï¬ve years. All the inventory on hand at January 1, 2011, was sold by December 31, 2011. The income tax rate is 40%. At December 31, 2013, the following information was obtained from both entities.
![Retic Ltd. acquired 100% of the share capital of Dorado](https://dsd5zvtm8ll6.cloudfront.net/si.question.images/image/images7/469-B-A-C(765)-2.png)
Required
(a) Prepare the consolidation process adjustments for the preparation of consolidated financial statements for Retic and its subsidiary, Dorado, as at January 1, 2011.
(b) Prepare the consolidated ï¬nancial statements for Retic and its subsidiary, Dorado, as at December 31, 2013.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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