9. Peak Inc. purchased 80% of the outstanding voting shares of Summit Inc. for $700,000 on...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
9. Peak Inc. purchased 80% of the outstanding voting shares of Summit Inc. for $700,000 on July 1, 2019. On that date, Summit Inc. had Common Stock and Retained Earnings worth $210,000 and $70,000. respectively. The Equipment had a remaining useful life of 10 years from the date of acquisition. Summit's Bonds Payable mature on July 1, 2039. The inventory was sold in the year following the acquisition. Both companies use straight line amortization, and no salvage value is assumed for assets. Peak Inc. and Summit Inc. declared and paid $10,000 and $5,000 in dividends, respectively during the year. (9 marks) The Balance Sheets of both companies, as well as Summit's Fair Market Values on July 1, 2019 are: Balance Sheets: Summit Inc. Fair Value Cash $230,000 $230,000 85,000 75,000 Accounts Receivable Inventory Investment in Summit Inc. Equipment (net) Land Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities & Equity Peak Inc. $535,000 140,000 60,000 700,000 50,000 115,000 $1,600,000 $ 100,000 160,000 800,000 540,000 $1,600,000 85,000 45,000 80,000 200,000 $640,000 $300,000 60,000 210,000 70,000 $640,000 90,000 200,000 300,000 80,000 The following are the Income Statement and R/E Statement for both companies for the fiscal year ended June 30, 2021: Income Statements: Sales Investment Revenue Less: Expenses: Cost of Goods Sold: Amortization Interest Expense Other Expenses Net Income Retained Earnings Statements: Balance, July 1, 2019 Net Income Less: Dividends Balance, June 30, 2020 Peak Inc. $800,000 16,000 240,000 10,000 12,000 8,000 $546,000 $ 536,800 546,000 (10,000) $1,072,800 Summit Inc. $300,000 180,000 20,000 40,000 10,000 $ 50,000 $ 70,000 50,000 ($ 5,000) $115,000 9. cont'd The following is the Balance Sheet for both companies for the fiscal year ended June 30, 2021: Balance Sheets: Peak Inc. Summit Inc. Cash $ 680,000 $ 465,000 250,000 35,000 712,000 90,000 750,000 $2,482,000 $ 449,200 160,000 800,000 1,072,800 $2.482,000 Accounts Receivable Investment in Summit Inventory Equipment (net) Land Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities & Equity 45,000 70,000 115,000 $730,000 $325,000 80,000 210,000 115,000 $730.000 Both companies use a FIFO system, and all of Summit's inventory on the date of acquisition was sold during the following year. The Goodwill on acquisition was impaired by $35,000 in the 2020 fiscal year. During 2019, Summit Inc borrowed $10,000 in Cash from Peak Inc. interest free to finance its operations. Peak uses the equity method to account for its Investment in Summit Inc.. Required: a) Prepare Peak's Consolidated Income Statement for the Year ended June 30, 2021. (5 marks) 9. cont'd b) Prepare Peak's Consolidated Retained Earnings Statement as at June 30, 2021. (1 mark) c) Calculate $ value for just the Non-Controlling Interest Account (on the Balance Sheet as at June 30, 2021. (4 marks) 9. Peak Inc. purchased 80% of the outstanding voting shares of Summit Inc. for $700,000 on July 1, 2019. On that date, Summit Inc. had Common Stock and Retained Earnings worth $210,000 and $70,000. respectively. The Equipment had a remaining useful life of 10 years from the date of acquisition. Summit's Bonds Payable mature on July 1, 2039. The inventory was sold in the year following the acquisition. Both companies use straight line amortization, and no salvage value is assumed for assets. Peak Inc. and Summit Inc. declared and paid $10,000 and $5,000 in dividends, respectively during the year. (9 marks) The Balance Sheets of both companies, as well as Summit's Fair Market Values on July 1, 2019 are: Balance Sheets: Summit Inc. Fair Value Cash $230,000 $230,000 85,000 75,000 Accounts Receivable Inventory Investment in Summit Inc. Equipment (net) Land Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities & Equity Peak Inc. $535,000 140,000 60,000 700,000 50,000 115,000 $1,600,000 $ 100,000 160,000 800,000 540,000 $1,600,000 85,000 45,000 80,000 200,000 $640,000 $300,000 60,000 210,000 70,000 $640,000 90,000 200,000 300,000 80,000 The following are the Income Statement and R/E Statement for both companies for the fiscal year ended June 30, 2021: Income Statements: Sales Investment Revenue Less: Expenses: Cost of Goods Sold: Amortization Interest Expense Other Expenses Net Income Retained Earnings Statements: Balance, July 1, 2019 Net Income Less: Dividends Balance, June 30, 2020 Peak Inc. $800,000 16,000 240,000 10,000 12,000 8,000 $546,000 $ 536,800 546,000 (10,000) $1,072,800 Summit Inc. $300,000 180,000 20,000 40,000 10,000 $ 50,000 $ 70,000 50,000 ($ 5,000) $115,000 9. cont'd The following is the Balance Sheet for both companies for the fiscal year ended June 30, 2021: Balance Sheets: Peak Inc. Summit Inc. Cash $ 680,000 $ 465,000 250,000 35,000 712,000 90,000 750,000 $2,482,000 $ 449,200 160,000 800,000 1,072,800 $2.482,000 Accounts Receivable Investment in Summit Inventory Equipment (net) Land Total Assets Current Liabilities Bonds Payable Common Shares Retained Earnings Total Liabilities & Equity 45,000 70,000 115,000 $730,000 $325,000 80,000 210,000 115,000 $730.000 Both companies use a FIFO system, and all of Summit's inventory on the date of acquisition was sold during the following year. The Goodwill on acquisition was impaired by $35,000 in the 2020 fiscal year. During 2019, Summit Inc borrowed $10,000 in Cash from Peak Inc. interest free to finance its operations. Peak uses the equity method to account for its Investment in Summit Inc.. Required: a) Prepare Peak's Consolidated Income Statement for the Year ended June 30, 2021. (5 marks) 9. cont'd b) Prepare Peak's Consolidated Retained Earnings Statement as at June 30, 2021. (1 mark) c) Calculate $ value for just the Non-Controlling Interest Account (on the Balance Sheet as at June 30, 2021. (4 marks)
Expert Answer:
Answer rating: 100% (QA)
Peak Inc Summit Inc Consolidated Income Statement For the Year Ended June 30 2021 Rev... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
Students also viewed these accounting questions
-
On January 1, 20X2, Porter Inc. purchased 80% of the outstanding voting shares of Sloan Ltd. for $ 3,000,000 in cash. On this date, Sloan had common shares outstanding in the amount of $ 2,200,000...
-
On December 31, Year 1, the Peach Company purchased 80% of the outstanding voting shares of the Orange Company for $964,000 in cash. The balance sheet of Orange on that date and the fair values of...
-
On January 1, Year 1, Handy Company (Handy) purchased 70% of the outstanding common shares of Dandy Limited (Dandy) for $7,000. On that date, Dandys shareholders equity consisted of common shares of...
-
As an employer, what are steps you can take to avoid discrimination litigation?
-
You have been assigned the task of projecting the cost of 2014 employee fringe benefits for your firm and have identified number of employees, total labor hours, and total labor cost as candidate...
-
Agency rules are not as legally binding as the laws that Congress enacts. (True/False)
-
Describe how an auditor searches for unrecorded liabilities.
-
The Texas Consolidated Electronics Company is contemplating a research and development program encompassing eight research projects. The company is constrained from embarking on all projects by the...
-
What is strategic planning? Is strategic planning an effective or ineffective tool for organizations? What are some common reasons that strategic planning is ineffective? How can organizations...
-
A girl has an age of x years. Her grandfather is aged y years. Write an expression for: a. Their combined age. b. The difference between their ages. c. The grandfathers age 10 years ago. d. The girls...
-
If f(x) = 2x and g(x) 1. (fg)(3) II. (f - g) (4) = x-4 2x determine the values of the following operations: III. - (2) 9 IV. ( + g) (1) The largest value of all four operations is
-
Which of the following is not a purpose of using lanes to describe the conversion process? a. Document the sequence of activities in the process. b. Expose potential problems in the handoff between...
-
According to the FASB, who are the primary users of externally published financial statements? a. Investors and creditors b. Tax authorities c. Internal company managers d. Working interest owners e....
-
During 2018, Aggie Petroleum made the following transactions relating to testwell contributions: a. Contracted with Garth Energy Corporation, agreeing to pay $80,000 if a well was drilled on Garths...
-
Which of the following statements about sequence flows is not true? a. Sequence flows are continuous from the start event through activities and gateways, if any, to an end event in a pool. b....
-
What is your view on the extent to which accounting practice should be neutral in its treatment of stakeholders, and the extent to which it should be the result of political pressure from those...
-
Small cluster size ( ( N ) ) is desirable to Question 3 3 Answer a . . Increase user capacity b . . Reduce CCI c . . Increase traffic intensity d . . Increase SNIR
-
Chapter 9 Stock Valuation at Ragan Engines Input area: Shares owned by each sibling Ragan EPS Dividend to each sibling Ragan ROE Ragan required return Blue Ribband Motors Corp. Bon Voyage Marine,...
-
Commencing in 2007, foreign companies that were using IFRSs did not have to reconcile their reported shareholders' equity to shareholders' equity under U.S. GAAP . Access the 2011 and 2010 annual...
-
D Ltd. and H Corporation are both engaged in the manufacture of computers. On July 1, Year 5, they agree to a merger, whereby D will issue 300,000 shares with current market value of $9 each for the...
-
Harmandeep Ltd. is a private company in the pharmaceutical industry. It has been preparing its financial statements in accordance with ASPE. Since it has plans to go public in the next 3 to 5 years,...
-
The U-tube in Fig. P2.160 rotates at \(2.0 \mathrm{rev} / \mathrm{sec}\). Find the absolute pressures at points \(C\) and \(B\) if the atmospheric pressure is 14.696 psia. Recall that \(70{ }^{\circ}...
-
A failure report states that a safety transmitter signaled a high pressure in a vessel and initiated a trip. Other pressure measurements did not indicate any high pressure. A diagnostic in the safety...
-
Each of the 50 transmitters in identical service had a test time of 7,640 hours. During this period, no failures occurred. Describe the procedure for calculating the failure rate.
Study smarter with the SolutionInn App