Coco Ltd$.($Coco$)$ purchased $90\%$ of the voting shares of Ferdinand Inc. $($Ferdinand$)$ for $$612,000$ on January $1,2022.$ On that date, Ferdinand's common shares and retained earnings were valued at $$200,000$ and $$250,000,$ respectively.

Unless otherwise stated, assume that Coco uses the cost method to account for its investment in Ferdinand.

Coco uses the fair value enterprise $($FVE$)$ method.

Ferdinand $\text{'}$s fair values approximated its carrying values with the following exceptions:

Ferdinand $\text{'}$s trademark had a fair value which was $$60,000$ higher than its carrying value.

Ferdinand $\text{'}$s bonds payable had a fair value which was $$20,000$ higher than their carrying value.

The trademark had a useful life of exactly ten years remaining from the date of acquisition. The bonds payable mature on January $1,2032.$ Both companies use straight line amortization exclusively.

The financial statements of both companies for the year ended December $31,2023$ are shown below:

Income Statements

Coco Ltd$.$ Ferdinand Inc.

Sales $$700,000$ $$640,000$

Other revenues $300,000$ $$160,000$

Less: expenses:

Cost of goods sold $280,000256,000$

Depreciation$/$amortization expense $30,00014,000$

Other expenses $240,000155,000$

Income tax expense $90,00075,000$

Net income $$360,000$ $$300,000$

Retained Earnings Statements

Coco Ltd$.$ Ferdinand Inc.

Balance, January $1,2023$ $$200,000$ $$100,000$

Net income $$360,000$ $$300,000$

Less: dividends $($$$60,000)($$$50,000)$

Retained Earnings, Dec $31,2023$ $$500,000$ $$350,000$

Balance Sheets

Coco Ltd$.$ Ferdinand Inc.

Cash $$200,000$ $$150,000$

Accounts receivable $50,000150,000$

Inventory $50,000150,000$

Investment in Ferdinand $612,000$

Equipment $($net$)500,000150,000$

Trademark $200,000$

Total assets $$1,412,000$ $$800,000$

Current liabilities $$292,000$ $$150,000$

Bonds payable $120,000100,000$

Common shares $500,000200,000$

Retained earnings $500,000350,000$

Total liabilities and equity $$1,412,000$ $$800,000$

Other Information:

A goodwill impairment test conducted during August $2023$ revealed that the acquired goodwill amount on the date of acquisition had been impaired by $$10,000.$

During $2022,$ Coco sold $$50,000$ worth of inventory to Ferdinand, $60\%$ of which was sold to outsiders during the year. During $2023,$ Coco sold inventory to Ferdinand for $$90,000.75\%$ of this inventory was resold by Ferdinand to outside parties.

During $2022,$ Ferdinand sold $$40,000$ worth of inventory to Coco, $80\%$ of which was sold to outsiders during the year. During $2023,$ Ferdinand sold inventory to Coco for $$50,000.90\%$ of this inventory was resold by Coco to outside parties.

All intercompany sales as well as sales to outsiders earn a gross margin on sales of $30\%.$ The effective tax rate for both companies is $25\%.$

Since Coco acquired Ferdinand, Coco has charged Ferdinand an annual management fee of $$70,000.$ Ferdinand has paid Coco for the management services on January $31$st of the following year

Show me the steps to solve

$1.$Calculate the amounts of acquisition deferential and goodwill arising from this business

combination on acquisition date. $(4$ marks$)$

$2.$Cost method is used by Coco, provide the journal entry to record the dividends received by Coco

during $2023.(2$ marks$)$

$3.$Calculate the amount of sales revenue that would appear on Coco's consolidated income statement

for the year ended December $31,2023.(4$ marks$)$

$4.$Calculate the amount of other revenue that would appear on Coc's consolidated income statement

for the year ended December $31,2023.(4$ marks$)$

$5.$Calculate the total amount of before tax profits from the $2022$ intercompany sales that were

realized during $2022.(4$ marks$)$

$6.$Calculate the total amount of before tax unrealized profits in inventory at the start of $2023.(4$

marks$)$

$7.$Calculate the total changes to the acquisition differential for $2023.(3$ marks$)$