The following financial statements were prepared on December 31, Year 6. Additional Information: Pearl purchased 80% of the outstanding voting
The following financial statements were prepared on December 31, Year 6.
Pearl purchased 80% of the outstanding voting shares of Silver for $3,300,000 on July 1, Year 2, at which time Silver's retained earnings were $445,000, and accumulated depreciation was $69,000. The acquisition differential on this date was allocated as follows:
• 20% to undervalued inventory
• 40% to equipment-remaining useful life eight years
• Balance to goodwill
During Year 3, a goodwill impairment loss of $79,000 was recognized, and an impairment test conducted as at December 31, Year 6, indicated that a further loss of $29,000 had occurred.
Amortization expense is grouped with cost of goods sold and impairment losses are grouped with administrative expenses.
Silver owes Pearl $84,000 on December 31, Year 6.
(a) Prepare consolidated financial statements on December 31, Year 6.
(c) Calculate goodwill and non-controlling interest on the consolidated balance sheet at December 31, Year 6, under parent company extension theory.
*(d) Prepare the consolidated financial statements using the worksheet approach.
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