ACCT $216-$ Intermediate Financial Accounting $2$

Assignment #$1$

LO $1-$ Chapter $9$ Name:

$2.$ The summarized balance sheets of Abyssinian Corporation and Norwegian Investment

Enterprises Inc. are as follows as at their year end date of May $31,2024$:

$10$ marks

Abyssinian Corporation

Balance Sheet

May $31,2024$

Assets $ $10,888,734$

Liabilities $ $4,899,930$

Common shares $3,811,057$

Retained earnings $2,177,747$

Total liabilties and shareholders' equity $ $10,888,734$

Norwegian Investment Enterprises Inc.

Balance Sheet

May $31,2024$

Assets $ $19,055,285$

Liabilities $ $5,716,586$

Common shares $3,811,057$

Retained earnings $9,527,642$

Total liabilties and shareholders' equity $ $19,055,285$

On the May $31,2024$ balance sheet of Abyssinian Corporation, the

depreciable assets are undervalued by the following amount:

$ $78,887$

The undervalued depreciable assets have the following estimated

remaining useful life $($in years$)$:

$6$

On May $31,2024,$ Norwegian Investment Enterprises purchased a significant portion of the common shares outstanding in Abyssinian Corporation. The details of this purchase follow:

On October $15,2024,$ Abyssinian Corporation declared and paid a total

dividend of the following amount:

$ $213,300$

For the year ended May $31,2025,$ Abyssinian Corporation reported net income of the following amount:

$ $533,327$

ACCT $216-$ Intermediate Financial Accounting $2$

Assignment #$1$

LO $1-$ Chapter $9$

$2.($Continued$)$

Abyssinian Corporation and Norwegian Investment Enterprises both follow ASPE. Norwegian Investment Enterprises will use the equity method to account for this investment.

Required:

$1.$ Calculate the portion of the purchase price paid by Norwegian Investment

Enterprises for the Abyssinian shares that represents goodwill $(3$ marks$).$

$2.$ Prepare all journal entries required by Norwegian Investment Enterprises to

account for its investment in Abyssinian Corporation for the $2024$ and $2025$ years $(7$ marks$).$