On 1 January 2017, P Co. acquired 70% of S Co.'s ordinary shares for $196,000. 2....

 

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On 1 January 2017, P Co. acquired 70% of S Co.'s ordinary shares for $196,000. 2. Fair and book values of net assets of S at date of acquisition were as follows: Book value Fair value Intangible assets Contingent liability Other net assets Total net assets 6. 7. Share capital Retained earnings 3. Fair value of non-controlling interests at date of acquisition was $84,000. 4. Remaining useful life for the intangible assets as at acquisition date was 10 years. 5. The contingent liability of $10,000 relating to lawsuits was recognized as a provision and a loss by S in 2018 and then was paid off by S in 2018. 10% of the original goodwill was assessed to be impaired on 31 December 2019. On 1 July 2018, S transferred its fixed assets to P with details as follows: Transfer price Original cost Less: Accumulated depreciation Net book value Profit on sale $200,000 $200,000 Sales from P to S Original cost Gross profit % unsold to third parties at year-end $160,000 40,000 $200,000 Sales from S to P Original cost Gross profit % unsold to third parties at year-end $60,000 (10,000) 200,000 $250,000 Remaining useful life on 1 July 2018 was 4 years. Assume zero residual value and straight-line depreciation method. 8. The following sales of inventory were made during 2018 and 2019: 2018 $66,000 36,000 $30,000 80% Required: (Ignore deferred taxes.) $40,000 (8,000) $52,000 32,000 $20,000 2019 30% $30,000 20,000 $10,000 40% 9. The financial statements of P and S for the year ended 31 December 2019 are shown in the Consolidation Worksheet on Page 4 a. Prepare the consolidation adjusting entries for the year ended 31 December 2019. b. Prepare the consolidation worksheet for the year ended 31 December 2019. (39 marks) (26 marks) On 1 January 2017, P Co. acquired 70% of S Co.'s ordinary shares for $196,000. 2. Fair and book values of net assets of S at date of acquisition were as follows: Book value Fair value Intangible assets Contingent liability Other net assets Total net assets 6. 7. Share capital Retained earnings 3. Fair value of non-controlling interests at date of acquisition was $84,000. 4. Remaining useful life for the intangible assets as at acquisition date was 10 years. 5. The contingent liability of $10,000 relating to lawsuits was recognized as a provision and a loss by S in 2018 and then was paid off by S in 2018. 10% of the original goodwill was assessed to be impaired on 31 December 2019. On 1 July 2018, S transferred its fixed assets to P with details as follows: Transfer price Original cost Less: Accumulated depreciation Net book value Profit on sale $200,000 $200,000 Sales from P to S Original cost Gross profit % unsold to third parties at year-end $160,000 40,000 $200,000 Sales from S to P Original cost Gross profit % unsold to third parties at year-end $60,000 (10,000) 200,000 $250,000 Remaining useful life on 1 July 2018 was 4 years. Assume zero residual value and straight-line depreciation method. 8. The following sales of inventory were made during 2018 and 2019: 2018 $66,000 36,000 $30,000 80% Required: (Ignore deferred taxes.) $40,000 (8,000) $52,000 32,000 $20,000 2019 30% $30,000 20,000 $10,000 40% 9. The financial statements of P and S for the year ended 31 December 2019 are shown in the Consolidation Worksheet on Page 4 a. Prepare the consolidation adjusting entries for the year ended 31 December 2019. b. Prepare the consolidation worksheet for the year ended 31 December 2019. (39 marks) (26 marks)

Answer rating: 100% (QA)

Parent Company P and Subsidiary S Consolidation for the year ended 31 December 2019 1 Consolidation ... View the full answer